COMMISSIONER OF INCOME TAX Vs. S.K. KAINTAL

JUDGEMENT

(1.) THE controversy in hand pertains to the assessment year 2005 -06. The respondent assessee filed his return declaring his taxable income at Rs. 12,90,630, and in addition thereto, agricultural income of Rs. 2,34,000. The aforesaid return was filed on 30 -9 -2005. The return submitted by the respondent assessee came to be examined by the assessing officer under Section 143(1) of the Income Tax Act, 1961 (hereinafter referred to as "the Act"). Later on, vide an order dated 2 -11 -2005, the return submitted by the respondent assessee was subjected to scrutiny under Section 143(3) of the Act. It is not a matter of dispute that the respondent assessee is running a school, and is deriving income there from, which is assessed under the head "Income from other sources". The income derived by the respondent assessee as a consequence of running the said school, is not subject -matter of dispute in the instant appeal.

(2.) THE issue which is subject -matter of consideration is the sale of agricultural land at the hands of the respondent assessee. The aforesaid agricultural land which was located in Village Sanaur/Ghalori was sold by the respondent assessee for a consideration of Rs. 44,75,500, while the claim of the respondent assessee was, that the aforesaid consideration should be considered as capital gain; the determination at the hands of the assessing officer was that the sale of agricultural land for a total consideration of Rs. 44,75,500 should be treated as income under the head "Profits and gains of business or profession". This assertion at the hands of the assessing officer was primarily based on the fact, that the respondent assessee had purchased agricultural land at substantially lower rate, and had sold it at a substantial profit. In fact the respondent assessee is stated to have purchased the entire land for a sum of Rs. 46,840, and thereafter had sold it for Rs. 44,75,000.

(3.) THE aforestated action of the assessing officer was sought to be challenged by the respondent assessee by preferring an appeal before the Commissioner (Appeals), Patiala (hereinafter referred to as "the Commissioner (Appeals)"). The appellate authority accepted the claim of the respondent assessee by arriving at the conclusion, that the sale of agricultural land referred to hereinabove, was liable to be treated as capital gain. As such the determination rendered by the assessing officer, whereby the sale of the aforesaid land was treated as falling under the head "Profits and gains of business or profession" was set aside.