Case Law Details
DCIT Vs Virendrabhai Devjibhai Patel (ITAT Surat)
ITAT observed that the transactions were done by the assessee and the real investment in the transaction was carried out by Shri. Dharmeshbhai Patel (in short SDP). The assessee and Shri. Dharmeshbhai Patel (SDP) entered into an arrangement wherein, Shri. Dharmeshbhai Patel (SDP) provided the money required to buy such property, physical possession of which, is not possible in the name of assessee. Therefore these properties would be later sold for profit and the profit is shared at ratio of 10:90 after recovering the investment made by Shri. Dharmeshbhai Patel (SDP). We note that no investment is made by the assessee. The assessee has not incurred any ‘cost of acquisition’. Hence, the lands cannot be called as his capital assets. The assessee has only allowed his name to be used in the transactions and has personally involved in the making of these deals. The income earned by the assessee is not an appreciation of his investment, but it is consideration for being part of the arrangement to earn profit from transactions involving lands. The income earned is towards his personal involvement and for time contributed. There is no transfer of capital asset by the assessee. For this reason too the income earned by the assessee cannot be said to be capital gains. It is evident from the bank account, the amounts invested by Shri. Dharmeshbhai Patel (SDP) and 90% the profit made on two transactions is remitted to his account. Shri. Dharmeshbhai Patel (SDP) has disclosed the profit made from these two transactions in his return of income under the head “Business Income” which is accepted u/s 143(3) vide order dated 26.03.2013. Since the 90% of the profit arising from these transactions has already been taxed as “Business Income” by the Department. Principles of uniformity demands that the balance 10% also to be taxed as “Business Income” in the hands of the assessee. Considering these facts, we do not find any infirmity in the order of ld CIT(A). That being so, we decline to interfere with the order of Ld. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed.
FULL TEXT OF THE ORDER OF ITAT SURAT
Captioned appeal filed by the Revenue, pertaining to assessment year 201112, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals)-3, Surat, [for short ‘Ld.CIT(A)’] dated 12.07.2017, which in turn arises out of an order passed by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961 (in short ‘the Act’), dated 30.03.2014.
2. The grounds of appeal raised by the Revenue are as follows:
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