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II. Direct Taxes Case Law:
1.
Afonso Real Estate Developers Vs. CIT, Tax Appeal No. 30 of 2013, Date
of Pronouncement: 21.02.2020, High Court of Bombay at Goa
Whether
the income derived by the Assessee firm on purchase and sale of the
agricultural land will be assessed as income from business instead of
capital gains, where the Assessee is engaged in buying and selling of
properties and the land was held by the Assessee firm for the purpose of
business.
Held: Yes
Brief facts:
The appellant-assessee is a partnership firm and filed return of
income on 30.01.2008 for the A.Y. 2007-08 declaring a total income of
Rs.1,57,069/-, claiming deduction to the extent of Rs.1,69,20,000/-
inter alia on the ground that the amount received towards the sale of
the properties were assessable as long term capital gains which were
entitled to be deducted in terms of Section 54E and 54EC of the Income
Tax Act, 1961 (I.T. Act). However, the ld. AO computed the entire income
of the appellant-assessee as “business income” and bringing the same to
tax. The appellant-assessee therefore, preferred appeal to the CIT
(Appeals) and the order of the AO were set aside. Thereafter, the
Revenue instituted appeal before the ITAT and the ITAT allowed the
Revenue’s appeal and thereby, restoring the orders made by the AO that
the income derived by the appellant-assessee from the sale of the
properties was “business income”. Hence the appeal was made on the
aforesaid substantial question of law.
Held:
The Hon’ble Court held that in the partnership deed, it is clear that
the business of the appellant-assessee is buying and selling properties
situated in various places in Goa either wholly or in plots.
Considering the wide phraseology employed, it is obvious that the
business of the appellant assessee includes buying and selling even
agricultural properties. Therefore, the findings recorded by the AO and
the ITAT that the income derived by the Assessee on purchase and sale of
the agricultural land will be assessed as income from business, were
sustained.
Therefore, the substantial question of law was answered against the appellant-assessee and in favour of the respondent Revenue.
Case Reviewed:
Narain Swadeshi Weaving Mills v/s Commissioner of Excess Profits Tax – AIR 1955 SC 176
(Please click here for judgment)
2. Shri Ramphal Hooda Vs. ITO, I.T.A. No. 8478/Del./2019, Date of Pronouncement: 02.03.2020, ITAT - Delhi
Whether the assesse is eligible for exemption u/s 54/54F, is investment in new property is made in the name of his wife?
Held: Yes
Brief facts:
The long term capital gain from the sale of two properties was
invested by the assesse in the name of his wife and exemption of LTCG
u/s 54/54F of I.T. Act, 1961 was claimed. However, the A.O. denied the
exemption under sections 54/54F of I.T. Act, 1961, to the assesse while
relying on the judgment of the Hon’ble Punjab and Haryana High Court in
the case of CIT, Faridabad vs Dinesh Verma in ITA No. 381 of 2014 dated
06.07.2015, wherein it was held that “the assessee is not entitled to
the benefit conferred under section 54B if the subsequent property is
purchased by a person other than the assessee, including his close
related even such as wife and children.”
Held:
The Hon’ble ITAT held that since the entire sale amount of long term
capital gain have been invested in purchase of other property in the
name of wife of assessee, the assessee would be entitled for exemption
on account of long term capital gains. Also, In CIT v. Podar Cement
(P.) Ltd. (1997 (5) TMI 2 - SUPREME Court), the Hon’ble Supreme Court
has also accepted the theory of constructive ownership. Moreover,
Section 54F mandates that the house should be purchased by the assessee
and it does not stipulate that the house should be purchased in the name
of the assessee only. In this view of the matter, the Orders of the
below authorities were set aside and the entire addition was deleted.
Hence, the appeal was held in favour of the assessee.
Cases Refered:
CIT v. Podar Cement (P.) Ltd. (1997 (5) TMI 2 - SUPREME Court
CIT vs., Ravinder Kumar Arora [2012] 342 ITR 38 (Del.)
CIT-XII vs. Shri Kamal Wahal [2013] 351 ITR 4 (Del.)
(Please click here for judgment)
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