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TMI Blog2016 (8) TMI 1038X X X X Extracts X X X X X X X X Extracts X X X X ..... is case, the assessee had no record of carrying on agricultural operations. The size of the land also suggests that it was not intended to carry on agricultural operations. The assessee is engaged in trading PVC Flex Sheets, SS Coils & Other Trading, Finance, Derivatives which throws light on the intention of the parties for the purpose of trading or investment. There is no evidence on record to suggest that the said purchase of land was to enjoy the 'pride of possession' of agriculture, which are some of the factors enumerated by the apex Court to facilitate a judicial body to analyse the nature of transaction of sale. At any rate, as against the contention of the assessee that the property was retained for investment, the fact remains that it was sold within short time. Thus, the attendant circumstances of the case, the process of purchase of land jointly, and also sale of purchased land jointly, compel us to come to the conclusion that the purchase of land, in itself, was with an intention to sell at a profit in the form of an 'adventure in the nature of trade' and hence though it is an isolated transaction the income thereon can still be considered as business income. - Deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ornprised of Shri Khimraj Sakariya and Shri Nishank Sakariya purchased 13 acres and 20 cents comprised in various Survey Numbers jointly from Shri Pallavarajha and Shri T Anoop Bora wde registered document No 2997 of 2006 on 21 8 2006 and purchased 6 acres and 44 cents comprised in various survey numbers from Shri Pallavarajha, T Anoop Bora and others on 21 8 2006 vide registered document no 2998 of 2006. Summing up from the above it is clear that the vendors aggregated the land as they purchased land from various parties and lands cornpr sed in various survey numbers The vendor no 4 not only jointly sold the land but also purchased the lands jointly. The vendor 4 held the land only for a very short period of 8 months As all of them jointly sold to single party they had common agenda! purpose of aggregating selling the land. Their coordinated activity is more vivid as the vendor No 4 purchased land from vendor No 1 moreover vendor No 1 acted as power agent for vendor 2 and vendor 3. They sold the land to a real estate company. Therefore it is clear that the above vendors were engaged in real estate activity, through coordinated activity by aggregating and selling the lands. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , even to reopen the cases where the assessee has fully disclosed material facts. The only condition for reassessment is that the AO should have reasoned to believe that income chargeable to tax had escapement. Such belief can be reached in any manner and is not quantified by precondition of full and true disclosure of material facts by the assessee as contemplated in the pre-amended section 147(a) of the Act. In the instant case, AO reopened the assessment, after recording reasons mentioned hereinabove in para-3.1 of this order. As such in our opinion, there is no infirmity in the order of Ld.CIT(A) and the same is confirmed. This ground of assessee is rejected. 7. The assessee has raised one more ground on merit with regard to treatment of sale of agricultural land as income from business. 8. The facts of the case are that the assessee had along with Shri Nishank Sakaria (Vendor 4), Shri T.Anoop Bora (Vendor No.2) and Shri Raju (Vendor No.3) had jointly sold 30 acres and 93 cents of land to V.G.Panneerdas Co. P Ltd., a company registered under the Companies Act, 1961, who is a property developer vide document No.3136/07 having 12 pages registered with Sub-registrar of ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ef facts and observations in the case of G. Venkataswami Naidu Co. (supra) while following the set of principles which are relevant/may act as a guiding factor to come to a conclusion as to whether a particular transaction is an adventure in the nature of trade or not. 11. In the afore cited decision, the assessee firm acted as managing agents of Janardana Mills Ltd., Coimbatore, and it purchased four continuous plots of land admeasuring Acs. 5.26 under four sale deeds. After about five years these properties were sold in two lots to Janardana Mills Ltd. A question arose as to whether the amount realized in excess of the purchase price on the sale of the land is assessable under the head 'Business'? The case of the AO was that the assessee has not placed any evidence to show that it purchased the lands for agricultural purposes. There was also no evidence to show that it had acquired them as an investment. Since the lands were adjacent to Janardana Mills, he drew an inference that the assessee must have purchased them solely with a view to sell them to the said mills with a profit. Under the circumstances, though the transaction was in the nature of solitary transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, from definite sources'. Then the learned Judge proceeded to observe that 'income has been likened pictorially to the fruit of a tree, or the crop of a field'. It is essentially the produce of something, which is often loosely spoken of as 'capital'. In our opinion, it would be unreasonable to apply the test involved in the use of this pictorial language to the decision of the question as to whether a single or an isolated transaction can be regarded as an adventure in the nature of trade. In this connection, we may, with respect, refer to the comment made by Lord Wright in Raja Bahadur Kamakshya Narain Singh of Ramgarh vs. CIT (1943) 11 ITR 513(PC), that 'it is clear that such picturesque smiles cannot be used to limit the true character of income in general'. We are inclined to think that, in dealing with the very prosaic and sometimes complex questions arising under the IT Act, use of metaphors, however poetic and picturesque, may not help to clarify the position but may instead introduce an unnecessary element of confusion or doubt. As we have already observed it is impossible to evolve any formula which can be applied in determining the character ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged to be in the nature of trade. In considering these decisions, it would be necessary to remember that they do not purport to lay down any general or universal test. The presence of all the relevant circumstances mentioned in any of them may help the Court to draw a similar inference; but it is not a matter of merely counting the number of facts and circumstances pro and con; what is important to consider is their distinctive character. In each case, it is the total effect of all relevant factors and circumstances that determines the character of the transaction; and so, though we may attempt to derive some assistance from decisions bearing on this point, we cannot seek to deduce any rule from them and mechanically apply it to the facts before us. 10.2 In the case of Smt. Indramani Bai vs. Addl. CIT (1993) 112 CTR (SC) 241: (1993) 200 ITR 594(SC), the apex Court had an occasion to consider an identical issue, wherein the assessees were wives of two brothers, who were partners in a firm. The two ladies purchased a piece of land admeasuring 8,479 sq. yds. (approx. Acs. 2) in Banjara Hills, Hyderabad, and shortly after purchasing the land, they carved it into four plots and so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the profit derived there-from is assessable to tax as an adventure in the nature of trade. 10.4 Tribunal, Hyderabad Bench, had an occasion to consider an identical issue in the case of Vitta Kristappa vs. ITO (2005) 92 TTJ (Hyd)(TM) 38: (2005) 92 ITD 1(Hyd)(TM), wherein by majority view the Bench observed that, in the absence of any material to show that the purchase was with an intention to treat it as an investment, the chronology of the events of the purchase of the land, conversion of the land into house sites of smaller sizes, carrying on improvement to the land, like making provision for roads etc., would clearly show that the intention was not to set up oil mill and it was only to make profit in the form of an adventure in the nature of trade. The incidents after purchase of the land clearly depict that the purchase was not with an intention to hold it as pride of possession of the land and thus even single transaction of purchase and sale outside the assessee's line of business may constitute an adventure in the nature of trade. 10.5 In G. Venkataswami Naidu Co. (supra), the apex Court, at para 26 observed as under : What then are the relevant facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. It is really not one transaction of purchase and resale. It is a series of four transactions undertaken by the appellant in pursuance of a scheme and it was after the appellant had consolidated its holding that at a convenient time it sold the lands to the Janardana Mills in two lots. When the Tribunal found that, as the managing agent of the mills the appellant was in a position to influence the mills to purchase its properties its view cannot be challenged as unreasonable. If the property had been purchased by the appellant as a matter of investment it would have tried either to cultivate the land, or to build on it; but the appellant did neither and just allowed the property to remain unutilized except for the net rent of ₹ 80 per annum which it received from the house on one of the plots. The reason given by the appellant for the purchase of the properties by the mills has been rejected by the Tribunal; and so when the mills purchased the properties it is not shown that the sale was occasioned by any special necessity at the time. In the circumstances of the case, the Tribunal was obviously right in inferring that the appellant knew that it would be able to sell the la ..... X X X X Extracts X X X X X X X X Extracts X X X X
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