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TMI Blog2004 (10) TMI 312X X X X Extracts X X X X X X X X Extracts X X X X ..... e lands by making plots in the financial years 1997-98 to 2000-01. About 22 kathas of land were sold at Rs. 2,47,500. The assessee claimed capital gains in respect of profit arising out of transfer of the land. However, the AO did not accept the contention of the assessee and held that the transaction is adventure in the nature of trade. Therefore, the profit was treated as business income. The following reasons were recorded by the AO in his order: "(i) Initially, the purchases of land were made from the black money in the name of Rajesh Maheshwari instead of Rajesh Kabra. It indicates that the land was purchased with the motive of selling it at a profit. The land was later on disclosed under VDIS, 1997 and immediately thereafter from fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a business income placed reliance on the decision of the Supreme Court in the case of G. Venkataswami Naidu & Co. vs. CIT (1959) 35 ITR 594 (SC). Copy of the decision has been filed at p. 5 of the paper book. In the case of Raja Bahadur Kamakhya Narain Singh vs. CIT (1970) 77 ITR 253 (SC), the Hon'ble Supreme Court has held that if the transaction is in the line of the business, there would be hardly any difficulty in concluding that it was a trading transaction. In the case of Harbans Singh vs. CIT (1981) 23 CTR (P&H) 335 : (1981) 132 ITR 77 (P&H), the Punjab & Haryana High Court held that the assessee acquired agricultural lands but those were sold after developing the said lands. This decision has been relied upon by the learned Departme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal, in our opinion, rightly concluded that the transaction was an adventure in the nature of trade. The assessee in preceding two years had indulged in purchase and sale of properties. He is not an agriculturist. Soon after the purchase of the land, he entered into agreements for disposing of the land in small portions. All this indicates that his real intention in acquiring the land was not to retain it for himself but to resell it at profit and the adventure was in the nature of a trade." 6. Now, let us see the fact involved in the case of G. Venkataswami Naidu & Co. which was relied upon by the AO. In that case the assessee was the managing agent of the mill. The assessee purchased land adjoining to the mill with an intention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess. In all the decisions discussed above, I find that immediately after purchase of the lands, the purchasers developed the land and started selling with a motive of profit, whereas in this case after purchasing the lands the assessee held the same for about 10 years and thereafter he sold about 44 kathas of land in the financial years 1997-98 to 2000-01. Had the assessee any intention to make profit out of the said land while the land was purchased by him, he should not have waited for long 10 years. Any investment made in the land may fetch some profit if it is sold subsequently. However, only because some profit was earned the transaction cannot be treated as a business. Looking to the circumstances above and facts of the case, in my op ..... X X X X Extracts X X X X X X X X Extracts X X X X
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