Ita/160/2011 Commissioner Of Income Tax, Kolkata Iv, Kolkata v. M/S. Machino Techno Sales Ltd

IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE ITA/160/2011COMMISSIONER OF INCOME TAX, KOLKATA IV, KOLKATAVS.M/S. MACHINO TECHNO SALES LTD. BEFORE : THE HON’BLE JUSTICE T.S. SIVAGNANAM AndTHE HON’BLE JUSTICE HIRANMAY BHATTACHARYYADate : 20[th] February, 2023 Appearance :Mr. Tilak Mitra, Adv.… for appellant The Court : This appeal filed by the revenue under Section 260A of theIncome Tax, 1961 (the Act) is directed against the order dated 13[th] April, 2011passed by the Income Tax Appellate Tribunal, “B” Bench, Kolkata (Tribunal) inITA No.92/Kol/2010 for the assessment year 2005-06. The appeal was admitted on 16[th] August, 2011 on the followingsubstantial question of law :- “Whether the learned Tribunal below committed substantial error of law inholding that the income, derived by way of return from a DevelopmentAgreement in favour of the owner of the land, should be treated as capitalgain instead of income from business ?” We have heard Mr. Tilak Mitra, learned standing counsel appearing for theappellant/revenue. The short question involved in this appeal is whether in the absence of anyevidence to show that the lands which were purchased by the assessee during1985/1990 was intended for resale or in the absence of any evidence that theland was converted into stock-in-trade, whether the earnings of the assesseepursuant to a development agreement entered into with the developer would bebusiness income. The learned Tribunal had taken into consideration the factualposition which was not disputed by the revenue that the said land and factoryshed was used by the assessee as its workshop and was shown as capital assetin its balance-sheet. Further, the revenue did not dispute the fact that the purchase priceswere debited by the assessee under the head ‘land account’. On 13[th] November,1994 the assessee entered into a development agreement with the developerunder which the assessee in exchange of the land in question was entitled to get45% of the constructed area and the remaining portion of the land and shedcontinued to be used by the assessee for its own workshop purchase. TheTribunal noted that no documents have been referred to by the revenue to showthat the assessee had treated the asset as stock-in-trade. On the other hand, the assessee continued to show the land as capitalasset even after 1994, which fact was accepted by the department. The learnedTribunal had distinguished the decisions which were cited by the revenue bynoting the facts of the case that the lands were purchased by the assesseeduring 1985/1990 and used as capital asset for its business purposes and continued to treat the same as capital asset in the accounts. Thus, the Tribunal agreed with the assessee that there was no intention on the part of the assesseeto enter into an adventure in the nature of trade to deal in the land as itsbusiness. Accordingly, the appeal filed by the department before the Tribunalwas dismissed upholding the view taken by the CIT(A). In the light of the cogent reasons assigned by the Tribunal on theundisputed factual position, we find no grounds to interfere with the orderpassed by the learned Tribunal. Accordingly, the appeal is dismissed and the substantial questions of laware answered against the revenue. (T.S. SIVAGNANAM, J.) (HIRANMAY BHATTACHARYYA, J.) SN/S.Pal