Case Law Details
Model Properties Pvt. Ltd. Vs ACIT (ITAT Jaipur)
The fact of showing this land in the books of account as stock in trade is not in dispute, however, the ld. CIT(A) has denied the claim on the ground that the assessee has not undertaken any activity which could lead to the inference that the assessee was trading in immovable properties. Though, there was no sale by the assessee for all these years, therefore, the transaction in question is only the purchase of land however, to determine whether this is stock in trade or capital asset, the intention of the party has to be taken into consideration. The assessee has undisputedly right from the year in which the land in question was acquired shown it as stock in trade in the books of account from year after year and therefore, it is not a case of claiming the land in question as stock in trade only for the year under consideration. The revenue has not disputed that for the A.Y. 2002-03 and 2003-04, the assessee’s claim was accepted U/s 143(1) of the Act and therefore, if non-scrutiny of the return of income cannot be taken against the assessee once the fact of showing the land in question as stock in trade is not in dispute. Accordingly, even if there is no sale transaction after purchasing of land in question, but when the lands in question is shown as stock in trade in the books of account then whenever the assessee sales the land or any part of the land in question, the same will be business income of the assessee and the expenditure which is incurred for taking loan for purchase of land in question cannot be disallowed on the ground that after purchasing the land, the assessee has not carried out any business activity. Hence, in view of the undisputed fact that the assessee has right from the year in which the land in question was purchased treated the same as stock in trade in the books of account then the Assessing Officer cannot substitute the business decision of the assessee merely because there was no subsequent activity of sale of land. Accordingly, the claim of the assessee is an allowable revenue expenditure and in absence of any business income, the same would be allowed as carry forward of the losses for the A.Y. 2004-05.
FULL TEXT OF THE ITAT JUDGMENT
These two appeals by the assessee are directed against the two separate orders of ld. CIT(A)-I, Jaipur, both dated 14/09/2015 for the A.Y. 2004-05 and 2005-06 respectively. For the A.Y. 2004-05, the assessee has raised following grounds of appeal:
“1. On the facts and in circumstances of the case, the ld. CIT(A) was not justified in confirming the disallowance of following expenses claimed by appellant company as revenue expenses before lower authorities:
Please become a Premium member. If you are already a Premium member, login here to access the full content.
