1939 (10) TMI 6 - HC - Income Tax

Summary

Issues:
1. Whether the assessee is carrying on business in relation to the purchase and sale of land and is liable to be assessed for the profits.
2. Whether there is evidence to support the finding of the Assistant Commissioner regarding the profit earned by the assessee.
3. Whether there is evidence to support the finding that the assessee is engaged in the business of purchasing, developing, and selling land.

Issue 1: Business of Purchase and Sale of Land
The main issue in this case is whether the assessee is carrying on a business in relation to the purchase and sale of land. The Commissioner found as a fact that the assessee is indeed carrying on a business, based on the evidence presented. The Court acknowledged that it cannot interfere with the Commissioner's finding of fact. The Court noted that the assessee had purchased an Inam village, set aside a portion for development and sale, and sold plots from that area. Despite arguments by the assessee that this did not constitute a business of buying and selling land, the Court upheld the Commissioner's finding that the assessee was engaged in a business.

Issue 2: Profit Earned by the Assessee
The Assistant Commissioner had determined a specific amount as the profit earned by the assessee from the sale of plots. However, the Court found this to be largely a question of law. The Court highlighted that the transaction was not yet complete as a significant portion of the purchased land remained unsold. Therefore, the Court was not prepared to accept the Assistant Commissioner's figure as representing profits. The Court emphasized that the determination of profits in such cases usually occurs when the entire venture comes to an end, and in this case, a substantial part of the land was still unsold. Therefore, the Court did not answer whether the mentioned amount was the actual profit earned by the assessee.

Issue 3: Evidence of Business Activity
Regarding the evidence supporting the finding that the assessee was engaged in the business of purchasing, developing, and selling land, the Court noted that the facts presented, such as the purchase of land, borrowing funds for development, and sale of plots, constituted evidence to support the Assistant Commissioner's finding. The Court emphasized that its role was not to determine independently whether the assessee was conducting a business but to ascertain if there was evidence to support the Assistant Commissioner's finding, which the Court found to exist.

In conclusion, the Court affirmed that the assessee was carrying on a business of purchasing, developing, and selling land based on the evidence presented. However, the Court did not confirm the specific amount determined as profit by the Assistant Commissioner due to the incomplete nature of the transaction. The Court's decision was based on the evidence and legal principles surrounding the determination of profits in such business activities.