The Income Tax Appellate Tribunal (ITAT), Pune bench held that income from twin land transactions is taxable under Business Income, not Capital Income.
The assessee, Vasant Haribhau’s assessment was completed under Section 143(1) of the Income Tax Act, 1961. As per the assessment order, the Assessing Officer went on to disallow/add the assessee’s cost of acquisition of the former asset to the tune of Rs. 25,72,000/- and assessed the sale consideration of the latter asset as short-term capital gains to the tune of Rs. 1,01,00,000, respectively.
Aggrieved by the order, the assessee filed an appeal before the CIT(A), who dismissed the appeal filed by the assessee. Thus, the assessee filed a second appeal before the tribunal.
During the proceedings, Kishor Phadke, Counsel for the assessee, argued that the assessee had entered into only an agreement for sale for this land and had not handed over the possession of the land to the transferee, and thus, the profit on this land did not accrue in this year.
M.G. Jasnani, Counsel for Revenue, supported the order of the lower authorities.
The tribunal observed that once the assessee was neither incorporated as the registered owner in possession in the Revenue record nor had carried out any sale transaction in the impugned assessment year in light of the preceding facts on record.
Further, the bench observed that income could be said to have accrued by the principles of reasonable “certainty” rather than reasonable “probability” as is applicable in the case of anticipation of expenditure/losses.
After reviewing the facts and records, the bench of Satbeer Singh Godara (Judicial Member) and Dr. Dipak P. Ripote (Accountant Member) held that profit from twin land transactions is taxable under Business Income, not Capital Income.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
