BALAJI BUILDERS Vs. ASST COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) In the present batch of appeal, challenges have been made to the orders dated 17.6.2004, 28.6.2005 & 6.9.2006 passed by the Income Tax Appellate Tribunal, Cuttack Bench, Cuttack in ITA No.32/CTK/2004, ITA No.476 (CTK)/2004 & ITA No.478/CTK/2005 for the assessment years 1999-2000, 2000-2001 & 2001-2002 respectively.

(2.) On perusal of the records, it appears that the appellant, namely, Balaji Builders have entered into an agreement with one M/s. Karani Builders for development and sale of the land on behalf of Balaji builders vide agreement dated 3.1.1997. It further appears that the assessee received consideration on the purported sale of land and it disclosed the profit as "capital gain". The Assessing Officer did not accept the profit earned by the assessee as the "capital gain" since he came to a finding that the appellant itself was in the business of purchasing and developing the land and also constructing houses thereon and selling the same.

(3.) In the present case, the assessee-builder engaged another builder, namely, M/s.Karani Builder to do the needful. Therefore, the Assessing Officer considered the profit of such sale as "business income" and not as "capital gain". From the impugned orders, it appears that the land had been purchased by the assessee in course of his real estate business and after purchasing the said land within a period of about six months, it entered into an agreement with M/s. Karani Builders on 3.1.1997 for development, sale of land and constructed building thereon. It is also a finding arrived at by the Tribunal that in terms of the said agreement between the assesseebuilder and M/s.Karani Builder, the assessee was entitled to get its share in the business apart from separate value for the land.