The Bangalore Income Tax Appellate Tribunal (ITAT) has recently held that income from sale of residential flats obtained under the joint development agreement taxable as capital gain hence it was not business income.
Assesee Vankadari Chinna Reddappa Chetty is an Individual primarily engaged in agricultural operations and other allied activities. The assessee is not required to maintain books of accounts as he is not engaged in any business activity. When the return of the income was filed by the assesee it was also included income from Long Term Capital Gains LTCG. Which Consisted LTCG from sale of residential flats obtained under Joint development agreement and LTCG from sale of agricultural plots.
After the scrutiny process assessing officer make an order under section 143(3) of the Income Tax Act 1961 by treating income from LTCG from sale of residential flats under JDA and LTCG from sale of agricultural plots as ‘Income from Business’. Against the assessment order assesee filed an appeal before the ITAT.
Aggrieved by the assessment order, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals) -Subject to this, the assessee was also subject to a search proceeding under section 132 of the Income Tax Act 1961 Consequent to such search, an assessment under section 153C of the Income Tax Act 1961 was carried out an order under section 143(3) of the Income Tax Act 1961 was passed. Against the assessment order assesee filed an appeal before the ITAT.
Bharath L. counsel for the assesee submits that, characterization of the income as business income is contrary to the position adopted by the Revenue in the search proceedings.
While in the search proceedings the said transactions have been considered as being exigible to capital gains tax, in the impugned appeal, the very same transactions have been considered as business income.
Shankar Ganesh K counsel for the revenue confirmed the decision of the assessing officer.
After considering the contention of the both parties the division bench of the ITAT comprising N.V. Vasudevan, (Vice President) and Chandra Poojari, (Accountant Member) denied assessee’s claim.
And further observed that ,”This assessment has been settled by the assessee under VSVS Scheme, 2020 when it is pending before CIT (A) indicating full and final settlement of tax arrears under section 5(2) read with section 6 of Direct Tax Vivad Se Vishwas Act, 2020 in Form 5 has been passed by the Principal Commissioner of Income Tax (Central), Bengaluru confirming the payment of Rs.1,64,73,385/- under VSVS scheme, 2020”.
Therefore the assessment of income from “Ramya Residency” project has been accepted by the department as income from short term capital gain.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
