Law:

Section:

Section 45 of the Income-tax Act, 1961 - Capital gains - Chargeable as - Assessment year 1986-87 - Assessee-firm had sold certain plot of land to a firm 'A' which was carrying on colonization business - Assessee invested entire sale proceeds from said sale of land in capital gain units of UTI and claimed exemption under section 54E - Assessing Officer, however, treated profits arising from sale of land as adventure in nature of trade and disallowed assessee's claim - On further appeal, appellate authorities on finding that firm treated land as a fixed asset and exploited for purpose of business; land was sold as a whole, and not into plots, for a fixed consideration; and development expenses had been borne by 'A' and not by assessee, concluded that profit earned from sale of land was not an adventure in nature of trade but was in nature of capital gain - Whether view taken by appellate authorities was correct - Held, yes FACTS The assessee-firm had sold certain plot of land for a total consideration of Rs. 21,30,173 to a firm 'A' which was carrying on the colonization business. The assessee invested entire sale proceeds from the sale of land in capital gain units of UTI and claimed exemption under section 54E by declaring same under head 'Capital gain'. The Assessing Officer, however, treated the profits arising from sale of land as adventure in the nature of trade and disallowed the assessee's claim. On appeal, the Commissioner (Appeals) held that it was not the case of purchase of land with the intention to resell same at a profit but only for realisation of investment and thereby earning profit. The Commissioner (Appeals) further, on finding that the land was used as a fixed asset of firm and exploited for business of firm; land was sold as a whole and not into plots for a fixed consideration; further development activities as well as expenditure on the said land were incurred by 'A' and not by the assessee-firm concluded that it was a case of realisation of investment and could not be termed as adventure in the nature of trade. On further appeal, the Tribunal confirmed the order of the Commissioner (Appeals). On reference : HELD To treat a transaction with…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492