1 TXA No. 30 of 2013 dtd. 21.02.2020 Suchitra IN HIGH COURT OF BOMBAY AT GOA TAX APPEAL NO. 30 OF 2013 M/s. Afonso Real Estate Developers, No.14/4, Garden View Bldg., Near Collectorate office, Margao, Goa. Appellant Versus 1. Commissioner of Income Tax, having office at Aayakar Bhavan Patto Plaza, Panaji, Goa. 2. Income Tax Officer, Ward-2, Margao, Goa. Respondents Mr. S. R. Rivonkar, Senior Advocate along with Ms. N. Rivonkar, Advocate for Appellant. Ms. Amira Razaq, Standing Counsel for Respondent. Coram:- M. S. SONAK & NUTAN D. SARDESSAI, JJ. Date:- 21st February, 2020 ORAL JUDGMENT (Per M. S. Sonak, J.) Heard Mr. S. R. Rivonkar, learned Senior Advocate along with Ms. N. Rivonkar for Appellant and Ms. Amira Razaq, learned Standing Counsel for Income Tax Department - Respondent. 2 TXA No.30 of 2013 dtd. 21.02.2020 2. On 10.12.2013, this appeal was admitted on following substantial questions of law: i. Whether learned Tribunal was right in holding that transaction is business transaction when there was only one transaction and not series of transactions? ii. Whether learned Tribunal has correctly interpreted provisions of Section 2(14) of Income Tax Act? 3. Mr. S. R. Rivonkar, learned Senior Advocate for appellant submits that in fact, only substantial question of law at (i) above arises for determination and should same be answered in favour of appellant, then, impugned judgment and order dated 23.08.2013 made by Income Tax Appellate Tribunal (ITAT) will have to be set aside and order of CIT (Appeals) dated 26.03.2013 will have to be restored. 4. Ms. Amira Razaq, learned Standing Counsel for respondent also accepts that aforesaid position stated by Mr. Rivonkar is correct. Hence, we proceed to decide only first substantial question of law which arises in present appeal. 5. appellant-assessee is partnership firm constituted vide Partnership Deed dated 29.07.1989. This firm was however registered only on 04.04.2006, about which there is no serious dispute. 3 TXA No.30 of 2013 dtd. 21.02.2020 record indicates that firm had acquired agricultural land at Cavelossim admeasuring 28,200 sq.mtrs. vide Deed of Exchange dated 15.08.1990. This land along with another property admeasuring 2,525 sq.mtrs., was sold by appellant-assessee vide Sale Deed dated 13.07.2006 to Headway Resorts Line Pvt. Ltd. Company for total consideration of 1,69,20,000/-. 6. appellant-assessee filed return of income on 30.01.2008 for Assessment Year 2007-08 declaring total income of 1,57,069/-, claiming deduction to extent of 1,69,20,000/- inter alia on ground that amount received towards sale of properties were assessable as long term capital gains which were entitled to be deducted in terms of Section 54E and 54EC of Income Tax Act, 1961 (I.T. Act). 7. Assessing Officer (AO) did not agree with contention of appellant-assessee inter alia on ground that Cavelossim property fell within distance of 8 kms. from limits of Margao Municipal Council. appellant-assessee appealed to CIT (Appeals) vide ITA No.163/MRG/10 (AY 2007-08). 8. Soon thereafter, respondent no.2 issued notices under Sections 147 and 148 of I.T. Act to appellant-assessee seeking 4 TXA No.30 of 2013 dtd. 21.02.2020 to reopen assessment for Assessment Year 2007-08. After hearing assessee, revised assessment order was made on 21.02.2011 computing entire income of appellant-assessee as business income and bringing same to tax. appellant-assessee therefore, preferred yet another appeal being ITA No.348/MRG/10-11 to CIT (Appeals). 9. CIT (Appeals), disposed of both appeals by common judgment and order dated 26.03.2013. Both appeals were allowed and orders of AO were set aside. 10. Revenue instituted appeal being ITA No.98/PNJ/2013 before ITAT to question common judgment and order dated 26.03.2013 made by CIT (Appeals). appellant-assessee filed cross- objections which were numbered as 26/PNJ/2013. ITAT vide common order dated 23.08.2013 allowed Revenue s appeal and dismissed cross-objections of appellant-assessee, thereby, restoring orders made by AO that income derived by appellant-assessee from sale of properties was business income . Hence present appeal on aforesaid substantial question of law. 11. Mr. Rivonkar, learned Senior Advocate for appellant 5 TXA No.30 of 2013 dtd. 21.02.2020 submits that business of appellant-assessee was to develop properties into plots or by constructing buildings and thereafter engage in real estate business. He submits that fact that agricultural land was purchased in year 1990 and same was not even converted suggests that appellant-assessee was not carrying on any business in relation to such property. He submits that on basis of single transaction of this nature, it could not have been held that appellant-assessee was carrying on business in selling and purchasing properties. He submits that there is absolutely no material on record to establish that appellant-assessee was engaged in business of selling and purchasing agricultural properties and therefore, ITAT, was not at all right in recording finding that proceeds from sale constitute income from business. He relied upon decision of Supreme Court in Narain Swadeshi Weaving Mills vs. Commissioner of Excess Profits Tax AIR 1955 SC 176 . 12. On other hand, Ms. Razaq defends impugned judgment and order made by ITAT on basis of reasoning reflected therein. She submits that finding recorded by ITAT is borne out by material on record and therefore warrants no interference in this appeal. 13. rival contentions now fall for our determination. 6 TXA No.30 of 2013 dtd. 21.02.2020 14. main issue involved in this appeal is whether proceeds from sale of properties vide sale deed dated 13.07.2006 can be regarded as income from business or not. 15. appellant-assessee was constituted vide Deed of Partnership dated 29.07.1989. business of partnership is that of real estate developers. Clause 2 of Partnership Deed is most relevant and same reads as follows: 2. business of partnership firm shall be that of buying and developing properties into plots including construction works and/or any other business as parties hereto may mutually agree upon from time to time. business shall include buying or selling of properties situated at various places in Goa either wholly or in plots. 16. From aforesaid, it is quite clear that business of appellant-assessee is buying and selling properties situated in various places in Goa either wholly or in plots. Mr. Rivonkar s contention that business of appellant-assessee is only to purchase properties, develop them into plots or construct buildings upon them and thereafter to sell them cannot be accepted, looking to aforesaid provisions in Deed of Partnership by which appellant-assessee came to be constituted. business of appellant-assessee very specifically includes buying and selling properties situated in various places in Goa either wholly or in plots. Considering wide 7 TXA No.30 of 2013 dtd. 21.02.2020 phraseology employed, it is obvious that business of appellant- assessee includes buying and selling even agricultural properties. Accordingly, we are unable to accept that sale of properties by appellant-assessee vide sale deed dated 13.07.2006 has no nexus with business of appellant-assessee. 17. Besides, we find that both Assessing Officer as well as CIT (Appeals) have noted that by sale deed dated 13.07.2006, appellant-assessee sold not merely agricultural property but also another property admeasuring 2,525 sq.mtrs. to Headway Resort Line Pvt. Ltd. Therefore, this is not case of sale of solitary property, by way of one off transaction. appellant-assessee, in terms of Clause 2 of Partnership Deed is clearly involved in buying and selling properties situated in various places in Goa either wholly or in plots. By sale deed dated 13.07.2006, appellant-assessee has indeed sold properties purchased by it for considerable profit. This material, according to us, is more than sufficient to sustain findings recorded by AO and ITAT. finding of fact cannot be regarded as perverse, so as to give rise to any substantial question of law or so as to warrant interference. 18. decision in Narain Swadeshi Weaving Mills (supra), is entirely distinguishable, since, it turns on its own peculiar facts. There, 8 TXA No.30 of 2013 dtd. 21.02.2020 assessee firm had virtually stopped its business mainly because no raw material was available due to war. factory premises were then leased and issue was whether lease rent could be treated as business profits liable to excess profits tax. In this fact situation, Honble Apex Court held that such lease could not be described as business of assessee firm and lease rent would therefore not qualify as business income. These facts, offer no parallel whatsoever to fact situation in present case. 19. We therefore answer substantial question of law against appellant-assessee and in favour of respondent Revenue. 20. appeal is accordingly liable to be dismissed and is hereby dismissed. There shall be no order as to costs. NUTAN D. SARDESSAI, J. M. S. SONAK, J. ss Afonso Real Estate Developers v. CIT, Panaji / ITO, Ward-2, Margao