CIT Kolkata IV Vs Machino Techno Sales Limited (Calcutta high court)
Date 20th February 2023
Sub- Whether area sharing by the land owner is eligible to be treated as capital gains in a development agreement and not business income?

The division bench of Calcutta high court in this case was considering appeal of department where the ITAT Kolkata benches held that the return which was received by the Respondent on account of area sharing of land was taxable as capital gains in view of the fact that the land was used as a capital asset for the purpose of its business and it continued to treat the asset as capital asset in its accounts. The Ld Judges without any evidence to show the land was purchased for resale or was converted into stock in trade refused to interfere and dismissed the departments’ appeal.

This judgement will be helpful in case of land owners who treat the revenue from area sharing as capital gains.

Ramesh Patodia
27-02-2023.