Principal Commissioner Of Income Tax-Central, Address: Newcentral Revenue Building, Statue Circle, Jaipur (Raj v. M/S Focal Point Builders And Promoters Pvt. Ltd., Address: A-1/296, Safderjung Enclave New Delhi

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHANBENCH AT JAIPUR D.B.INCOME TAX APPEAL NO. 229 / 2016 Principal Commissioner of Income Tax-central, Address: NewCentral Revenue Building, Statue Circle, Jaipur (Raj.) ----Appellant Versus M/s Focal Point Builders and Promoters Pvt. Ltd., Address: A-1/296, Safderjung Enclave New Delhi - 110029 ----Respondent __________________________________________For Appellant:Mr. Anil Mehta __________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE DINESH MEHTAJudgment ’Per Honble Jhaveri, J. 20/12/2016 By way of this appeal, the Department has challenged the order whereby the Tribunal has dismissed theappeal filed by the Department confirming the order of CIT(Appeal), which has reversed the order of the Assessing Officer. The facts of the case are that respondent - assesseeengaged in the business of purchasing, selling and developingthe land, has earned a profit of Rs. 57,39,980/- from the sale ofagricultural land during the previous year 2007-08 relevant toAssessment Year 2008-09. The assessee claimed this profit as exempt claiming it to be sale of capital asset, being agriculturalland not covered under the definition given under Section 2(14)of the Income Tax Act, 1961. The Assessing Officer treated the investment in theaforesaid agricultural land as stock-in-trade and consequentiallyheld it to be a business income of the assessee. He has alsomade addition of the cash payments made for the purchase ofagricultural land and disallowed the same under section 40 A(3) of the Income Tax Act, 1961. The appellate authority, namely CIT (A) allowed theappeal of the assessee and held that the purchase ofagricultural land was in the nature of investment and not stock-in-trade. Against the said order of CIT (Appeals) dated12.7.2012, the Department filed an appeal before the ITAT,which affirmed the order of the CIT (A). The Tribunal vide its order dated 31.3.2016 rejectedthe appeal filed by the Department and relied upon thejudgment Hon’ble Supreme Court in the case of M/s CIT VersusM/s. Sutlej Cotton Mills Supply Agency {100 ITR 706 (SC)};Attar Singh Gurmukh Singh Versus ITO, Ludhiana, {191, ITR667} and the decision of Rajasthan High Court in the case ofSmt. Harshila Chordia Versus ITO {298 ITR 349} and has heldthat the investment made by the assessee was not in thenature of “adventure” and were in the nature of “trade“ and thesale and purchase of land in question was a sale from the investment port-folio of the assessee. In respect of deletion of addition of Rs. 55,20,000/- made on account of dis-allowance U/s. 44A (3) of the IncomeTax Act, learned ITAT has observed that the said amount wasspent or utilized for purchase of land and paid in cash to Sh.Ram Kishan and Ms. Anjaleka. The Tribunal has observed thatsince the activity of assesss is not in the nature of “adventure”and it was a capital asset, the rigorous of Section 40A (3) willnot be attracted. We have heard learned counsel for the parties andperused the orders of the authorities below and materialavailable on record. The CIT (A) has given a categorical finding that theland in question was beyond 10 Kms. of the municipal limitsand hence the same was agriculture land as defined underSection 2(14) of the Income Tax Act, 1961. According to us, theissue in question is duly settled by the Supreme Court and thisCourt and hence no interference is warranted. Appeal, therefore, is dismissed in limine. (DINESH MEHTA)J. (K.S. JHAVERI)J.