1984 (12) TMI 62 - HC - Income Tax

Summary

Issues involved:
The judgment addresses the following Issues:
1. Whether the Tribunal was correct in holding that there was an adventure in the nature of trade?
2. Whether the Tribunal was correct in holding that the title in lands vested in the assessee and the sales were valid?
3. Whether the true profit earned by the assessee from the sale of plots during the relevant year can be ascertained and taxed?

Issue 1: Adventure in the nature of trade
The Tribunal found that the assessee, a building contractor, had no intention to build a cinema theatre or hotel when purchasing the land, based on evidence presented. The Tribunal concluded that the transactions may be considered as an adventure in the nature of trade, following established legal principles. The court upheld the Tribunal's decision, stating that the assessee's conduct and lack of intention to invest in the land supported this characterization.

Issue 2: Title in lands and validity of sales
The Tribunal determined that the title in the lands vested in the assessee at the time of sale, regardless of subsequent acquisition by the C.I.T.B. The court noted that possession was taken from purchasers after the sale, and the assessee did not provide evidence of refund claims due to doubtful title. Therefore, the Tribunal's decision on the validity of sales was upheld.

Issue 3: Ascertainment of true profit
The court rejected the assessee's argument that true profit could only be determined after the entire estate was sold. The Commissioner's direction to redo the assessment was deemed beneficial to the assessee. Consequently, the court affirmed the Tribunal's decision that the profit earned from the sale of plots during the relevant year is liable to tax.

In conclusion, the court answered all three questions in the affirmative and against the assessee, supporting the Tribunal's findings on the nature of the transactions, title in lands, and taxation of profits.