1.Feeling aggrieved and dissatisfied with the impugned judgment and order dated 04.09.2017 passed by the High Court of Judicature at Bombay in Income Tax Appeal Natarajan the Revenue, thereby confirming the order passed by the Income Tax Appellate Tribunal, “G” Bench, Mumbai (hereinafter referred to as the ITAT) by which the addition made by the Assessing Officer (AO) of Rs. 15,94,06,500/ was deleted, the Revenue has preferred the present appeal.
2.The dispute pertains to the Assessment Year (AY) 2009-10 i.e., Financial Year (FY) 2008 09. The assessee entered into an agreement dated 06.05.2008 with one M/s Kirit City Homes Pvt. Ltd. The development rights in a property at Vasai were sold for a total consideration of Rs. 15,94,06,500/-. It appears that as per paragraph 6 of the development agreement and as per the receipt of the deed, consideration of Rs. 15,94,06,500/- was agreed and received by the assessee. During assessment, it was noticed by the AO that the aforesaid was not disclosed while filing the return of income. The assessee did not enter the aforesaid income into his profit and loss account. The assessee was asked to explain the transaction as it was not appearing in its profit and loss account. The agreement dated 06.05.2008 was also furnished to the assessee along with the notice. In response, the assessee vide letter dated 04.10.2011 stated that the transaction was duly offered to tax in AY 2008-09 reflecting a consideration of Rs. 5,24,27,354/-. The assessee also stated that it had entered into a “rectification deed” with the said party on 30.05.2008. By the said ratification, it was claimed that the value of the development rights was reduced from Rs. 15,94,06,500/- to Rs. 5,24,27,354/-. As the transaction was pertaining to AY 2009-10, the assessee was served a further notice dated 10.10.2011 under Section 142(1). The assessee was requested to explain as under: (i) “You are aware that perusal of AIR information, copy of 'Development Agreement' dt. 06.05.2008 revealed that you had entered into "Development Agreement" with M/s. Kirit City Homes Mau, Pvt. Ltd in respect of various properties as detailed in the said agreement. It is also seen that you had received Rs. 13,94,06,500/- on account of granting/allowing development rights assigned. (ii) As per the agreement, the transaction is dt. 06.05.2008, so this transaction falls under the A.Y. 2009-10 whereas you had offered this transaction in the A.Y. 2008-09. Please explain the logic and basis thereof (iii) Perusal of the 'Development Agreement' dt. 06.05.2008, you had claimed to had received the entire sale proceeds of Rs. 15,94,06,500/ -. In this regard, you are requested to furnish the details of sale proceeds received mode there details of proceeds realized, etc in respect of sale proceeds of Rs. 15,94,06,500/-. Please also furnish the copy of 'Bank Book' / 'Cash Book' reflecting the receipts and narrations thereof alongwith copy of the bank account statement reflecting credits thereof. (iv) Vide 'Deed of rectification' dt. 30.05.2008, you had claimed to have revised the value from Rs. 15,94,06,500/- to Rs. 5,24,27,354/-. In this regard, please explain whether you had refunded the differential amount. If yes, please furnish the mode and details thereof with supporting documentary evidences. (v) Vide 'Deed of rectification' dt. 30.05.2008, you had claimed to have revised the value from Rs. 15,94,06,500/- to Rs. 5,24,27,354/-. In this regard please furnish the basis thereof with supporting documentary evidences. (vi) Considering the above, I am of the view that for the above transaction, provisions of section 50C of the I.T. Act 1961 are clearly applicable despite the reduction in your agreement value. In this regard, you are requested to explain as to why the provisions of section 50C of the I.T. Act should not be initiated as well as please explain as to why the sale proceeds should not be treated at Rs. 15,94,06,500/-. (vii) Perusal of all the documents furnished by you in respect of above transactions, I am of the view that the transaction definitely belongs to this year and market value u/s. 50C should be considered as the sale consideration. In this regard, please explain as to why the treatment as mentioned above does not be made applicable in your case. In view of the above, it is proposed to treat the transaction for this year and to add the sale proceeds of Rs. 15,94,06,500/ in your hands. You are requested to furnish your explanation, if any, with supporting documentary evidences.” 2.1 The assessee replied to the same and with regard to the applicability of provision of Section 50C, the assessee stated that the assessee had sold its stock in trade and not the assets. The AO made the addition of Rs. 15,94,06,500/- by treating the same as short term capital gains and consequently, added the same to the income for the year under consideration. The Commissioner, IT (Appeals), Mumbai dismissed the appeal and confirmed the addition made by the AO and upheld the view of the AO to treat the transaction as income for capital gains for the AY 2009-10. The CIT (A) also discarded the submissions made by the assessee that transfer of development rights were made in FY 2008-09 pursuant to the MOU dated 27.12.2007. In the absence of proof to buttress such claim, the CIT (A) also discarded the claim of the assessee that value of the transfer of development rights was reduced from Rs. 15,94,06,500/- to Rs. 5,24,27,354/ 2.2 The assessee filed an appeal before the ITAT. The ITAT, after examining the chart submitted by the assessee pertaining to opening balance and closing balance for the assessment years 1996-97 to 2007-08 held that the assessee in all these years showed inventory and expenses. Consequently, ITAT held that the assessee is engaged in the business of building and development. The ITAT further noted that the assessee showed the cost of land along with related expenditure as work in progress/inventory since 1999-2000 and the assessment orders were subsequently made under Section 143(3) of the IT Act, wherein the AO accepted the nature of business of the assessee. Therefore, ITAT concluded that what was sold by the assessee was part of its inventory and not a capital asset. The ITAT also held that the assessee has reduced the sale consideration from Rs. 15,94,06,500/- to Rs. 5,24,27,354/- during FY 2007-08 on the basis of MOU dated 27.12.2007 and the said amount of the income has already been declared in the AY 2008-09 i.e., FY 2007-08 and therefore, such income cannot be declared in AY 2009-10 i.e., FY 2008-09. The ITAT also confirmed and/or agreed with the assessee that the sale consideration was Rs. 5,24,27,354/- only. Based on these findings, the ITAT reversed the findings of the AO as well as the CIT (A) and allowed the appeal by deleting the addition made by the AO of Rs. 15,94,06,500/-. 2.3 The Revenue preferred an income tax appeal before the High Court by way of ITA No. 1756/2014. By the impugned judgment and order, the High Court has dismissed the said appeal filed by the Revenue by holding that none of the questions proposed by the Revenue are substantial questions of law. 2.4 Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the High Court dismissing the appeal, the Revenue has preferred the present appeal.
3.Shri Balbir Singh, learned ASG has appeared on behalf of the Revenue and Shri S.K. Bagaria, learned Senior Advocate has appeared on behalf of the assessee.
4.Shri Balbir Singh, learned ASG appearing on behalf of the Revenue has vehemently submitted that the High Court has failed to appreciate that the order of the ITAT was perverse and contrary to facts on record. It is submitted that the ITAT failed to appreciate that the assessee has taken contrary stands before the assessing authority and the Tribunal, on account of sale of development rights. It is submitted that firstly, the assessee vide its letter dated 25.11.2011 submitted the Ledger Account in respect of development agreement. The perusal of the said Ledger Account revealed that the assessee claimed to have received income of Rs. 15,94,06,500/- from a development agreement on 31.03.2008 and the said entry was reversed on the same day by passing a rectification entry on 31.03.2008 itself. Therefore, it was reflected that the aforesaid payment was paid by the purchasing party on 31.03.2008 to an entity SICCL and all these entries were reflected on the same date. Based on the Ledger furnished by the assessee, pertinent questions were raised by the Assessing Officer which included reason of rectification and confirmation of the fact that the differential amount of Rs 10,69,79,146/- was refunded to the purchaser. However, perusal of the order passed by the ITAT reflects that the fact of receipt of money on 31.03.2008 was not even discussed. On the contrary, a reference was made to the MOU dated 27.12.2007 for a total consideration of Rs. 5,24,27,354/-. It is submitted that the ITAT without examining the true nature of transaction and entry made in the books of accounts of the assessee simpliciter confirmed that the transactions pertained to earlier years i.e., Assessment Year 2008-09 and the reduction of amount arising out of the Development Agreement dated 06.05.2008 and Rectification dated 30.05.2008 was due to mistake. 4.1 It is further submitted by Shri Balbir Singh, learned ASG, that the ITAT failed to take into account the fact that the entry made and reflected in the Ledger Account of the assessee as on 31.03.2008 was on account of a third party i.e., SICCL and that too for a total of Rs. 15,94,06,500/-. Further, the ITAT did not even question the factum of refund of differential amount of Rs. 10,69,79,146/- to the purchaser on account of Rectification Deed dated 30.05.2008. That the ITAT has failed to appreciate that the moment the receipt of amount is received and recorded in the books of accounts of the assessee, unless shown to be refunded/returned, is to be treated as income in the hands of the recipient. 4.2 Secondly, balance sheets for the Assessment Years 2006-07 to 2009-10 were examined by the Assessing Officer and it was recorded that there was not even a single sale during all these years and there were negligible expenses and the transaction in question was the only transaction i.e., transfer of development rights in respect of land and consequently, it was held that the transaction was that of transfer of capital asset and not that of transfer of stock in trade. However, the ITAT in its order, after examining the opening and closing balance for the year 1996-97 upto 2007-08 held that in multiple years there was inventory shown in the Balance Sheet and since subsequent assessment orders were made under Section 143(3) of the Income Tax Act, without disputing the claim of assessee, held that the transaction in question is sale of stock in trade. It is contended that the ITAT neither dealt with the findings given by the Assessing Officer nor verified/examined the total sales made by the assessee during the relevant year and during the previous years. Therefore, the ITAT as well as the High Court have materially erred in holding that, merely because the entry made in the books of accounts involved recording of inventory, the transaction in question becomes sale of stock in trade. That, it is well settled that in order to examine whether a particular transaction is sale of capital asset or business transaction, multiple factors like frequency of trade, volume of trade, nature of transaction over the years etc. are required to be examined. However, in the present case, the ITAT without examining any of the relevant factors confirmed that the transaction was transfer of stock in trade. 4.3 It is further submitted that the ITAT without any basis and solely on the basis of claim made by the assessee, contrary to the accounts produced before the Assessing Officer, agreed that the transaction was reflected as sale in the tax return for the Assessment Year 2008-09. That, interestingly, the ITAT did not even question as to what happened to the differential amount of Rs. 10,69,79,146/- on account of reduction of sale value of development rights. 4.4 It is further submitted by Shri Balbir Singh, learned ASG, that the High Court has failed to examine the inherent contradiction in the order of the ITAT and that the claim was allowed by the Tribunal, contrary to the records produced before the Assessing Officer. Therefore, the order of the High Court holding that there was no substantial question of law involves is illegal and perverse. 4.5 It is further submitted that the High Court has failed to appreciate that, even in the event of acceptance of claim made by the assessee, including the assertion that Rs. 5,24,27,354/- was shown in the tax return for the earlier Assessment Year i.e., 2008-09, the differential amount of Rs. 10,69,79,146/ on account of reduction in the sale consideration of development rights is to be assessed in the current year as either as capital gain or business income. This is without prejudice to the submission that the Assessing Officer has correctly assessed the income in his Assessment Order dated 29.11.2011. 4.6 Making the above submissions, it is prayed that the present appeal be allowed and the order passed by the ITAT as well as the High Court be set aside and the order of the Assessing Officer be restored.
5.Shri S.K. Bagaria, learned Senior Advocate
appearing on behalf of the assessee has taken
us to the findings recorded by the High Court
as well as the ITAT. It is submitted that the
assessee is engaged in the business of
building and development of properties since
the year 1999-2000. That the assessee's
balance sheets show that it had work-in
progress/inventories year after year, since
1999-2000. The same has been accepted by
the department all these years; even after
scrutiny assessments under Section 143(3) of
the Income Tax Act, 1961.
5.1 It is submitted that the assessee had entered
into an MOU dated 27.12.2007 with M/s Kirit
City Homes Private Limited, whereby,
Development Rights in a property at Vasai
were sold for a total consideration of Rs.
5,24,27,354/-. That the said MOU was on
record before the lower authorities and has
been referred in the Assessment Order as well
as in the order passed by the CIT (A). In
connection with the said transaction, detailed
findings were given by the Income Tax
Appellate Tribunal (Tribunal/ITAT) and these
were also duly considered by the High Court.
The findings given by the Tribunal were pure
findings of facts and therefore, the High Court
has rightly dismissed the appeal after
considering the facts and the tribunal’s order
and by holding that no substantial question
of law arises in the matter.
5.2 Shri S.K. Bagaria, learned Senior Advocate
has taken us to the following facts recorded
by the High Court in the impugned judgment
and order:
a) It is a common ground that the
assessee is in the business of
building and development of
properties. There was no change in
the activities of the assessee during
the year under consideration.
b) For the year ending 31/03/2006 the
assessee disclosed inventories at Rs
8.66 crores
c) For the year ending 31/03/2007
there was no change and the same
figure of Rs 8.66 crores was
disclosed.
d) For the year ending 31/03/2008
(assessment year 2008-09), the
assessee showed sale of land
development rights at Rs
5,24,27,354/- and the cost of land
was shown at Rs 5,21,37,454/-.
5.3 It is submitted that in connection with the
aforesaid transaction during financial year
2007-08, the High Court has further
considered the following facts in the
impugned judgment and order:
i. In MOU dated 27/12/2007 with
KCH transfer of development rights
was for the said total consideration
of Rs 5,24,27,354/-.
ii. The assessee was holding 50.16
acres of land, out of which 27.44
acres of land was the subject matter
of the aforesaid MOU dated
27/12/2007. Total cost of the land
was determined proportionately. iii. On 02/01/2008 necessary entries
were passed debiting the account of
KCH but crediting the account of
one M/s SICCL. The assessee owed
SICCL a sum of Rs 8.10 crores and
it therefore directed KCH to pay the
consideration directly to SICCL. iv. Corresponding entries relating to the
aforesaid transaction were also
made in the accounts of SICCL. v. On 02/01/2008 possession of the
land was also handed over. vi. The aforesaid events took place
during the financial year 2007- 08
relating to assessment year 2008
09. In that assessment year, the
assessee offered to tax the income
arising out of the aforesaid
transaction under the head
"business income".
vii. In the development agreement dated
06/05/2008 the sale consideration
was incorrectly mentioned as Rs
15,94,06,500/- and on realising the
mistake, a Deed of Rectification of
executed on 30/05/2008. This deed
of rectification was registered with
the office of the Sub Registrar,
Vasai.
5.4 Shri Bagaria, learned Senior Advocate has
also taken us to the following further facts
recorded and findings given by the ITAT:
a) The aforesaid 50.16 acres of land
was acquired by the assessee in the
financial year 1996-97. The tribunal
gave year wise details from 1996-97
which clearly showed that the
acquisition of land was in financial
years 1996-97 and 2004-05. During
the financial year 2007- 08, cost of
the inventory was Rs. 9,53,06,475/
and the tribunal gave a definite
finding that "the above inventory
represents the cost of 50.16 acres of
land out of which 27.44 acres has
been sold vide Memorandum of
Understanding dated 27/12/2007". b) The assessee was showing work in
progress under the head current
assets and loans and advances in
the balance sheets filed with the
Department and in the Income Tax
Returns. The tribunal considered
the year-wise position and gave the
following findings for different years. c) For assessment year 2001-02 the
assessee's Return was selected for
scrutiny assessment and the
assessment was completed under
section 143 (3) vide order dated
11/09/2003, wherein, the assessing
officer gave a categorical finding that
the assessee was engaged in the
business of builder and developer,
erectors, construction of building,
houses, apartments, ownership
flats. Work in progress of Rs 7.66
crores was also mentioned in the
assessment order and it covered cost
of land and various expenses
including land development, stamp
charges etc. d) For financial year 2002-03, work in
progress was shown at Rs. 8.51
crores. e) For financial years 2003-04 and
2004-05 (year ending 31/03/2004
and 31/03/2005), inventories were
shown at Rs 8.58 crores and Rs 8.66
crores respectively. For the
assessment year 2005-06 (financial
year 2004-05) the assessee was
again subjected to scrutiny
assessment and its assessment was
completed under Section 143 (3) by
order dated 30/11/2007 and the
assessing officer again
acknowledged the business of the
assessee as that of builder and
developer, erectors, construction of
building, houses, apartments,
ownership flats. The assessing
officer specifically found that there
was no change in the activities of
the assessee during the year under
consideration. f) For the financial years 2006-07 and
2007-08 the inventories were shown
at Rs 8.66 crores and there was no
change. For the financial year 2007
08 (year ending 31/03/2008) the
assessee had shown sale of land
development right at Rs.
5,24,27,354/- and cost of the said
land was shown at Rs 5,21,37,454/
The facts relating to MOU dated
27/12/2007, necessary entries
being made in the books of accounts
on 02/01/2008, debiting the
account of KCH and crediting the
account of SICCL, mistake in the
development agreement dated
06/05/2008 and its being corrected
by the said registered deed of
rectification were also mentioned. g) It was found that since 1999-2000
the assessee was showing cost of
land along with other related
expenditures as work in
progress/inventory in the balance
sheets and its Income Tax Returns
for several intervening years as the
above were assessed under Section
143 (3) wherein the nature of the
assessee's business was accepted by
the assessing officer. It was held
that what was sold by the assessee
was part of its inventory and not a
capital asset and the tribunal
decided the matter by taking into
consideration these undisputed
facts.
5.5 It is submitted that based on the aforesaid
facts and findings, the ITAT has rightly held
that the impugned transaction related to
transfer of stock in trade and that the
assessee had shown “stock in
trade/inventories” year after year in its
balance sheets and its contention was
accepted by the Assessing Officer and twice
the assessments were completed under
Section 143(3). It is submitted that ultimately
the Tribunal concluded the issues as under: a) The impugned transaction related to
transfer of stock in trade and that
the assessee had been showing
"stock in trade/inventories" year
after year in its balance sheets and
its contention was accepted by the
assessing officer and twice the
assessments were completed under
Section 143(3). b) The said transaction had taken
place during the financial year
2007-08 pertaining to assessment
year 2008-09. The assessee had
shown the sale consideration as also
the cost of land in its balance sheet
and profit and loss account filed
with the Return of Income for the
said assessment year 2008-09. Even
in the abstract from AST, the
assessing officer had referred the
said sale as part of the return for
assessment year 2008-09. c) Considering the MOU and the Deed
of Rectification, the consideration
was Rs 5.24 crores. The assessing
officer completed assessments
simply by relying on AIR data
received from the office of the Sub
Registrar, Vasai but failed to
consider the Deed of Rectification
registered by the same Sub
Registrar and did not even care to
verify the figure from the said Sub
Registrar, Vasai. d) Perusal of balance sheets of the
assessee since 1999-2000 clearly
showed that the assessee had been
showing work in
progress/inventories year after year
and apportioned the cost in
proportion to the part of the land
transferred and the cost of the land
was as per the cost shown in the
Return of Income for assessment
year 2008-09. e) Since the impugned transaction
related to the business of the
assessee and was to be assessed as
such under the head "profit and
gains of business or profession" the
provisions of section 50C of the
Income Tax Act, 1961 were not
applicable to the facts of the case.
5.6 It is submitted that the above findings
recorded by the ITAT which were upheld by
the High Court are pure findings of facts and
therefore, no substantial question of law
arises in the matter. Therefore, it is prayed
that no interference of this Court against the
findings recorded on material and evidence is
called for. Reliance is placed on the decision
of this Court in the case of Mantri Techzone
Private Limited Vs. Forward Foundation
and Ors.; (2019) 18 SCC 494.
5.7 It is further submitted by Shri Bagaria,
learned Senior Advocate appearing on behalf
of the assessee that the assessment order
simply referred to AIR data. As recorded in
the assessment order itself the assessee had
submitted that the transaction in question
was duly offered to tax in assessment year
2008-09 reflecting its consideration at Rs.
5,24,27,354/-. The MOU relating to the said
transaction was already before the assessing
officer and the consideration of Rs.
5,24,27,354/- was duly mentioned in the
MOU. In the Development Agreement, there
was a mistake in mentioning the
consideration and on realizing the error,
within a short period of 24 days, the aforesaid
Deed of Rectification was entered into and
was duly registered. The said consideration of
Rs. 5,24,27,354/- was correctly mentioned in
the MOU which was before the Assessing
Officer as well as before the CIT (Appeals).
The amount mentioned in the Deed of
Rectification, rectifying the mistake in the
Development Agreement also mentioned the
same consideration and the said Deed of
Rectification was duly registered with the
Sub-Registrar, Vasai with whom the
Development Agreement was also registered.
It is important to mention that if the
Department intended to dispute the
valuation, it could have easily referred the
matter to the valuation officer but it did not
do so. Not only this, as recorded by the
tribunal, the development agreement as well
as the deed of rectification were both
registered with the same Sub-Registrar, Vasai
but the income tax officer did not make any
enquiry from the said Sub-Registrar.
5.8 It is further submitted that with regard to the
nature of business of the assessee, the
income tax officer proceeded as if there must
be regular transactions of purchase and sale
every year. Firstly, the income tax
Department itself had accepted that the
assessee's business was of builder and
developer, erectors, construction of buildings,
houses etc and the assessments on that basis
were completed year after year including the
assessments under Section 143 (3) for
different years as mentioned above. Secondly,
the regularity and frequency itself depends on
the nature of business and nothing prevents
the assessee from buying plots of land,
holding them as stock in trade, developing or
continuing to hold as it is and then entering
into the transactions of sale or disposal or
transfer at an appropriate time. Reliance in
this regard is placed on the judgement
reported in (1961) 42 ITR 179 (Raja J.
Rameshwar Rao Vs. Commissioner of
Income Tax, Hyderabad) wherein it was held
inter alia that, "no doubt, this was only a
single venture; but even a single venture may
be regarded as in the nature of trade or
business." As regards the applicability of
Section 50C of Income Tax Act, it is
submitted that when the land in question was
held by and transferred by the assessee as
stock in trade and not as capital asset,
Section 50C could have no application at all.
In the income tax return for assessment year
2008-09 (during which the relevant events as
mentioned above took place) the transaction
in question was duly offered to tax under the
head "profit and gains of business and
profession". All these facts were considered by
the tribunal and findings of fact as mentioned
above were given.
5.9 Making the above submissions that the High
Court is correct in holding that the Tribunal’s
findings were findings of fact supported by
written documents and corroborating
materials and that there was nothing
perverse in the tribunal’s findings and the
case did not involve any substantial question
of law, it is prayed to dismiss the present
appeal.
6.Heard learned counsel appearing on behalf of the respective parties at length.
7.In the present case, the AO treated the transaction as capital assets. ITAT has reversed the said findings and held that the transaction was stock in trade. It appears that the AO specifically recorded the findings on examining the balance sheets for the AY 2006-07 to 2009-10 that there was not even a single sale during all these years and that there were negligible expenses and the transaction in question was the only transaction i.e., transfer of development rights in respect of land and consequently, it was held that the transaction was one of transfer of capital assets and not one of transfer of stock in trade. However, the ITAT after examining the opening and closing balance for the AY 1996-97 to 2007-08 observed that in multiple years, inventory was shown in the balance sheet, without discussing the claim of the assessee and held that the transaction in question is sale of stock in trade. It appears that ITAT has neither dealt with the findings given by the AO nor verified/examined the total sales made by the assessee during the relevant time and during the previous years. Merely on the basis of recording of the inventory in the books of accounts, the transaction in question would not become stock in trade. As per the settled position of law in order to examine whether a particular transaction is sale of capital assets or business expense, multiple factors like frequency of trade and volume of trade, nature of transaction over the years etc., are required to be examined. From the order passed by the ITAT, it appears that the ITAT has without examining any of the relevant factors confirmed that the transaction was transfer of stock in trade. 7.1 The High Court has also failed to appreciate that even in the event of acceptance of claim made by the assessee, including the assertion that Rs. 15,94,06,500/- was shown in the tax return in the earlier AY i.e., 2008-09, the differential amount of Rs. 10,69,79,146/- on account of reduction in sale consideration of development rights was to be assessed in the current year as either capital gain or business income. At this stage, it is required to be noted that as per the claim of the assessee and the entry made and reflected in the ledger account of the assessee as on 31.03.2008, an amount of Rs. 15,94,06,500/ was paid to a third party i.e., SICCL. However, thereafter, according to the assessee there was a rectification deed dated 30.05.2008 and the amount was reduced from Rs. 15,94,06,500/- to Rs. 5,24,27,354/-. The ITAT has not even questioned the factum of refund of differential amount of Rs. 10,69,79,146/- to the purchaser on account of rectification deed dated 30.05.2008. The ITAT ought to have appreciated that the moment the receipt of amount is received and recorded in the books of accounts of the assessee unless shown to be refunded/returned, it is to be treated as income in the hands of the recipient. However, the ITAT has also not considered the aforesaid aspect. 7.2 In view of the above and as observed hereinabove, the ITAT has not considered the relevant aspects/relevant factors while considering the transaction in question as stock in trade and has not considered the relevant aspects as above which as such were required to be considered by the ITAT, the matter is required to be remanded to the ITAT to consider the appeal afresh in light of the observations made hereinabove and to take into consideration the relevant factors while considering the transaction as stock in trade or as sale of capital assets or business transaction.
8.In view of the above and for the reasons stated above, the present appeal succeeds in part. The impugned judgment and order passed by the High Court and that of the ITAT are hereby quashed and set aside and the matter is remitted back to the ITAT to consider the appeal afresh in accordance with law and on its own merits, while taking into consideration the observations made hereinabove and to take an appropriate decision on whether the transaction in question is the sale of capital assets or sale of stock in trade and other aspects referred hereinabove. It is observed that we have not expressed anything on merits in favour of either of the parties. It is ultimately for the ITAT to take an appropriate decision in accordance with law and on its own merits as above. [M.R. SHAH] [B.V. NAGARATHNA] NEW DELHI; MAY 04, 2023