The Delhi bench of Income Tax Appellate Tribunal (ITAT) recently held that transactions could not be treated as real estate if property was held for a long time.
Assessee Vaijanti Jain, G filed return of income declaring total income of Rs.3, 55,190/ case was selected for scrutiny assessment. After that assessing officer assessee had claimed capital gain out of sale of the properties. Assessing officer found that assessee has sold three properties such properties to be the business income of the assessee solely on the basis of findings concluded in the assessment proceedings for Assessment Year 2012-13 and accordingly computed the business profits. Against the order the assessee filed an appeal before ITAT.
Rano Jain, counsel for the assessee submits that profit from the property sale should be assessed under head capital gains only; also properties were held only for the investment purpose and were sold after realizing the capital appreciation.
Sumesh Swani, counsel for the revenue confirmed the decision of the lower authorities and submits that the assessee is regularly involved in sale and purchase of the immovable properties. Therefore, it couldn’t be inferred that the assessee is making investments and earning capital gain out of the transactions.
After considering the contentions of the both parties the single bench of the ITAT Kul Bharat, (Judicial Member) allowed the appeal filed by the assessee and observed that the assessee claimed it as gain arising out of transfer of capital asset but AO treated it as business receipts arising from real estate business. Assessee did not engage into any systematic real estate business activity.
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