Mr.Vinod D Motiwala Vs. ITO (ITAT Mumbai)-
AO has considered the fact that the assessee did not carry on any agricultural activity. In our view, the absence of agricultural activity cannot be considered to be the sole ground to determine the intention of the assessee. The question relating to presence or absence of agricultural activity may be relevant to determine the character of land, but, in our view, the same may not be relevant to determine the intention of the assessee to hold the same as investment or as stock in trade. Similarly, the joint purchase of land cannot also be considered to be the main determinative factor, since it is quiet normal to make investments jointly with others. It is well settled proposition that the intention of the assessee at the time of purchase of plot would determine the nature of asset either as investment or as stock in trade. In the instant case, the submission of the assessee is that these assets were purchased by him to hold them as his investments. In our view, the assessing officer is very much entitled to examine the veracity of the claim of the assessee that he purchased the plots as investment on the basis of his conduct and surrounding circumstances. However, the assessing officer should contradict the claim of the assessee with proper reasoning and material, if any.
We notice that the assessee has been holding various plots for quiet a reasonable time and hence he has declared long term capital gain on sale of two adjacent plots. We also notice that the assessee continues to hold other plots as his investments only. The long holding period, in our view, supports the case of the assessee. Further, it is not shown to us that the assessee has been indulging in repetitive transactions of purchase and sale in plots. It was also not shown that the assessee has borrowed funds for the purpose of purchasing plots. Since the AO has not brought on record any valid reason to support his case, we are of the view that the tax authorities are not justified in assessing the capital gain as his business income. Hence, we are not able to agree with the view taken by the Ld CIT(A) on this issue. Accordingly, we set aside the order of Ld CIT(A) on this issue and direct the AO to assess the profit arising on sale of plots as Capital gains.
INCOME TAX APPELLATE TRIBUNAL” F” BENCH, MUMBAI
BEFORE S/SHRI B.R.BASKARAN (AM) AND SANJAY GARG, (JM)
I.T.A. No.1063/Mum/2014
(Assessment Year : 2009-10)
Mr.Vinod D Motiwala
Vs.
Income Tax Officer
PAN :AACPM2414Q
