- (1.) The above appeal has been preferred under section 260A of the Income Tax Act and is directed against the judgement and order dated 19th of August, 2011 passed by the Income Tax Appellate Tribunal, Lucknow Bench B, Lucknow in ITA No. 288/LKW/2011. The dispute relates to the assessment year 2006-2007. In the memo of appeal, the following substantial questions of law have been proposed:- 1. "Whether on the facts and the circumstances of the case, the Tribunal was correct in not appreciating the fact that the assessee has sold capital asset (land) and not stock in trade. 2. Whether on the facts and in the circumstances of the case, the Tribunal was correct in not appreciating the fact that the provisions of section 50C are applicable against the sale of land (Capital Asset). 3. Whether on the facts and the circumstances of the case the tribunal was correct in not applying the provision of sec. 50C of the I.T. Act, 1961 where the sale-purchase, transfer of ownership & property even of the stock is affected through a registered sale deed bringing the transition under the purview of sec. 50C unlike other transactions of sale-purchase of stocks which are generally not a subject matter of registration before the competent authority under the Registration Act.
(2.) The background facts may be noticed in brief. The respondent i.e. the assessee, a private limited company is engaged in the business of real estate and construction. It has filed its return of the income declaring the total income at Rs. 38,79,703/-. In the assessment proceedings under section 143 (2) of the Act, the Assessee had shown the following sales at different sites:- 1. Sale of offices at KAN Chambers Rs.3,25,07,000/- 2. Sale of flats at woodland apartments Rs.1,04,25,000/- 3. Sale of shops at Mega Mall Rs.1,57,50,000/- 4. Sale of offices at Mega Mall Rs. 80,00,000/- 5. Sale of plots Rs. 79,84,200/- Total Rs.7,46,66,200/-
(3.) The dispute in the present appeal is confined with regard to the sale of plots for a total sum of Rs. 79,84,200/-. The Assessing Officer by his order dated 12th of December, 2008 treated the above sale transaction as sale of capital assets and accordingly determined the deemed capital gain from sale of plots as per the provisions of section 50C of the Act. The matter was carried by the assessee in appeal before the Commissioner of Income Tax (Appeals)-II Kanpur. It was contended that deemed capital gains under the provisions of section 50C was wrongly added as the sale of plots was not capital assets but was by way of business transaction. In other words, the income from the said transaction is liable to be treated as income from profits and gains of business. To put it differently, the contention in short was that section 50C could not invoked by the Assessing Officer. The Appellate Authority found that the Assessee Company had never purchased any land as a capital asset and has always purchased land as stock in trade. The said fact is further fortified from the balance sheet of the assessee. Consequently, he accepted the aforesaid contention of the assessee in this regard and held that the provisions of section 50C could not be invoked on the facts of the present case. The Revenue carried the matter in further appeal before the Income Tax Appellate Tribunal, Lucknow Bench, Lucknow in ITA No. 288/LKW/2011, unsuccessfully. Endorsing the findings of the First Appellate Court, the Tribunal held that Section 50C of the Act would have no application where transfer of immovable property is on account of sale of stock in trade income. Such income is computed under the head income from business. It has been found that there is no contrary material on record to controvert the contention of the assessee that the plots of land sold were held by the assessee as stock in trade. Questioning the legality and validity of the aforestated two orders the Revenue has filed the present appeal on the questions reproduced in the earlier part of the judgment.;