itxa 1720 2016.odt IN HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1720 OF 2016 Pr. Commissioner of Income Tax 19 .. Appellant. v/s. M/s. Jogani & Dialani Land .. Respondent. Mr. Ashok Kotangle with Mr. Prabhakar Ranshur, for Appellant. Mr. Jitendra Jain with Mr. Aamir Ali Shaikh and Ms. Nikia i/b. I. V. Merchant & Co., for Appellant. CORAM: AKIL KURESHI & M.S.SANKLECHA, JJ. DATE : 26th FEBRUARY, 2019. P.C: This Appeal under Section 260 of Income Tax Act, 1961 (the Act), challenges order dated 16 th December, 2015 passed by Income Tax Appellate Tribunal (the Tribunal). impugned order dated 16th December, 2015 is in respect of Assessment Year 2008 09. 2 Revenue urges following question of law for our consideration: Whether on facts and in circumstance of case and in law, Tribunal was justified in treating income received of Rs.69 crores assessable on sale of Non agricultural land as Long Term Capital Gain instead of Business income ignoring business aspirations of assessee? S.R.JOSHI 1 of 4 ::: Uploaded on - 28/02/2019 ::: Downloaded on - 01/03/2019 13:41:32 ::: itxa 1720 2016.odt 3 Respondent is partnership firm, engaged in business of building construction and land developers. In its return of income for subject Assessment Year, Respondent declared its total income of Rs.62.85 Crores. During course of scrutiny proceedings, Assessing Officer noted that Respondent had shown amount of Rs.62.34 Crores as long term capital gains on account of sale of plot ad measuring 2.10 lakh sq. mtrs. This land was part of 2.60 lakh sq. mtrs. purchased by Respondent in year 1986 and conveyance was made in year 1989. part of purchased property had been developed by construction of buildings. remaining portion of property ad measuring 2.10 lakhs sq. mtrs had been sold by Respondent in previous year relevant to Assessment Year for total consideration of Rs.69 Crores and after deducting expenditure, Respondent had offered long term capital gains on sale of land at Rs.62.34 Crores. However, Assessing Officer was of view that as business of Respondent Assessee was construction, 2.10 lakhs sq. mtrs. should be treated as its stock in trade and income/gain arising on same should be taxed under head 'income from business' and not as capital gain in its Assessment Order dated 30th December, 2011. 4 Being aggrieved with order dated 30th December, 2011, Respondent filed appeal to Commissioner of Income Tax (Appeals) [CIT(A)]. In appeal, CIT(A), on consideration of entire record, found that: (i) Respondent had shown sufficient compliance with CBDT Circular No.4 of 2007 dated 16th June, 2007 to justify that 2.10 lakhs sq. mtrs. was held by it as investment; S.R.JOSHI 2 of 4 ::: Uploaded on - 28/02/2019 ::: Downloaded on - 01/03/2019 13:41:32 ::: itxa 1720 2016.odt (ii) 2.10 lakhs sq. mtrs. was shown in its books of account as investment w.e.f. 1st April, 2000 and not as stock in trade; (iii) conversion of land as investment was accepted by Revenue in earlier Assessment Orders passed under Section 143(3) of Act; (iv) Statement of purchasers of land that land purchased was agricultural land and they had obtained necessary permission to make it non agricultural; (v) 2.10 lakhs sq. mtrs. of land was valued at cost year after year and not at cost or market price whichever is lower as applicable as stock in trade. Therefore, on aforesaid finding of fact, it allowed appeal of Respondent. 5 Revenue being aggrieved by order of CIT(A), filed appeal to Tribunal. impugned order dated 16 th December, 2015 of Tribunal confirmed fact that, land was purchased in 1986 and since 2000, land has shown in its books of account as investment. It further records that in earlier Assessment Year i.e. A. Y.2008 09, Inspector was deputed by Assessing Officer to verify correctness of status of land i.e. investment or not. On inspection, Inspector reported that no construction was carried out on 2.10 lakhs sq. mtrs. of land which was held as investment. On above facts, Tribunal upheld finding of fact by CIT(A) to hold that 2.10 lakhs sq. mtrs of land is investment. In above view, impugned order dated 16th December, 2015 dismissed Revenue's appeal. 6 Mr. Kotangle, learned Counsel in support of appeal S.R.JOSHI 3 of 4 ::: Uploaded on - 28/02/2019 ::: Downloaded on - 01/03/2019 13:41:32 ::: itxa 1720 2016.odt submits that, as business of Respondent is of construction, purpose and object of holding land could only be for business purposes and not as investment. Therefore, any gain/profit earned by Respondent on sale of land ought to be taxed under head 'business income' and not as 'capital gains'. 7 We find that, both CIT(A) as well as Tribunal have come to concurrent finding of fact on examination of record, that 2.10 lakhs sq. mtrs of land has been held by Respondent as investment. This, it found is evident from books of account, balance sheet of Appellant and treatment given to it in its accounts. This finding of fact was further confirmed by visit of Inspector who was deputed by Assessing Officer to verify correctness of Respondent's claim that 2.10 lakhs sq. mtr of land was being held as investment as no construction activity was carried out on same. submission made on behalf of Appellant completely ignores fact that, it is always open to assessee to hold same class of assets as investment and also as stock in trade. There is no bar in law for person dealing in land to also have investment in land. Thus, there is no substance in above submission. 8 impugned order dated 16th December, 2015 of Tribunal is essentially finding of fact, which is not shown to be perverse in any manner. Therefore, proposed question does not give rise to any substantial question of law. Thus, not entertained. 9 Accordingly, Appeal dismissed. No order as to costs. (M.S.SANKLECHA,J.) (AKIL KURESHI,J.) Pr. Commissioner of Income-tax-19 v. Jogani & Dialani Land