9911796707
TMI Blog2003 (2) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of trade' as assessed by the Assessing Officer? (ii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law that the case record reported in CIT v. Shahsi Kumar Agrawal [1992] 195 ITR 767 (All) is distinguishable as in the above said case agricultural land has been sold in pieces whereas in the case of the assessee developed plots are sold with an intention to earn more profit as mentioned in the statement of facts?" This court had issued notice to the assessee on whose behalf Mr. Sumit Nema, learned counsel has entered appearance. In support of the application, it is submitted by Mr. Rohit Arya, learned counsel for the Revenue, that the Tribunal has erred in law by rejecting the application forming the subject matter of R.A. No. 24/JAB of 1998 contained in annexure P 4 by refusing to refer the aforesaid questions to this court. It is submitted by him that on scrutiny of facts in entirety, it is graphically clear that the assessee had inherited some agricultural land and there was a compulsory acquisition by the Jabalpur Development Authority and the assessee instead of accepting compensation accepted the offer of the Jabalpur Devel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions; and in dealing with it all the judges appear to be agreed that no principle can be evolved which would govern the decision of all cases in which the character of the impugned transaction falls to be considered. When section 2, sub-section (4) refers to an adventure in the nature of trade it clearly suggests that the transaction cannot properly be regarded as trade or business. It is allied to transactions that constitute trade or business but may not be trade or business itself. It is characterised by some of the essential features that make up trade or business but not by all of them; and so, even an isolated transaction can satisfy the description of an adventure in the nature of trade. Sometimes it is said that a single plunge in the waters of trade may partake of the character of an adventure in the nature of trade. This statement may be true; but in its application due regard must be shown to the requirement that the single plunge must be in the waters of trade. In other words, at least some of the essential features of trade must be present in the isolated or single transaction. On the other hand, it is sometimes said that the appearance of one swallow does not make a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icult to decide whether a given transaction is an adventure in the nature of trade or not. It is the cases on the border line that cause difficulty. If a person invests money in land intending to hold it, enjoys its income for some time, and then sells it at a profit, it would be a clear case of capital accretion and not profit derived from an adventure in the nature of trade. Cases of realisation of investments consisting of purchase and resale, though profitable, are clearly outside the domain of adventures in the nature of trade. In deciding the character of such transactions several factors are treated as relevant. Was the purchaser a trader and were the purchase of the commodity and its resale allied to his usual trade or business or incidental to it? Affirmative answers to these questions may furnish relevant data for determining the character of the transaction. What is the nature of the commodity purchased and resold and in what quantity was it purchased and resold? If the commodity purchased is generally the subject-matter of trade, and if it is purchased in very large quantities, it would tend to eliminate the possibility of investment for personal use, possession or enjo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on will have to be made between initial intention to resell at a profit which is present but not dominant or sole; in other words, cases do often arise where the purchaser may be willing and may intend to sell the property purchased at a profit, but he would also intend and be willing to hold and enjoy it if a really high price is not offered. The intention to resell may in such cases be coupled with the intention to hold the property. Cases may, however, arise where the purchase has been made solely and exclusively with the intention to resell at a profit and the purchaser has no intention of holding the property for himself or otherwise enjoying or using it. The presence of such an intention is no doubt a relevant factor and unless it is offset by the presence of other factors it would raise a strong presumption that the transaction is an adventure in the nature of trade. Even so, the presumption is not conclusive; and it is conceivable that, on considering all the facts and circumstances in the case, the court may, despite the said initial intention, be inclined to hold that the transaction was not an adventure in the nature of trade. We thus come back to the same position and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased on appreciation of evidence do not give rise to any referable question of law. In the instant case also, we are satisfied that the findings of the Tribunal are findings of fact and do not, therefore, give rise to any referable question of law." On the anvil of the aforesaid law, we have to analyse the present fact situation. On a perusal of the assessment order, it is quite luminescent that she had inherited the land from Smt. Kamla Jaiswal, her mother, who expired on January 18, 1976. Her name was duly mutated in the revenue records in respect of the land in question. The land was acquired by Jabalpur Development Authority which had issued a letter on July 15, 1985, to the assessee proposing allotment of certain plots in consideration of the acquisition of agricultural land. This action is purported to be taken under section 56 of the 1973 Adhiniyam. Thus, it is a compulsory acquisition. The Tribunal in paragraph 6 of its original order has held as under: "6. We have carefully considered the arguments of both the sides and have perused the material placed before us. When a transaction is entered into with the primary or the sole intention of making profit, it would amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on different facts and, therefore, will not be applicable. In view of the totality of the above facts and the legal position, we entirely agree with the Commissioner of Income-tax (Appeals) that the profit arising from the sale of plot has to be taxed as capital gains and not as "profit arising from the adventure in the nature of trade." When the application for reference was filed by the Revenue for referring the matter to this court, the Tribunal in paragraph 2 has expressed the view as under: "2. We have heard both the parties. We find that the Income-tax Appellate Tribunal has considered this matter at length. The conclusion of the Income-tax Appellate Tribunal is recorded in para. 6 of its order. From the perusal of the same, it is seen that the Income-tax Appellate Tribunal has recorded the finding that in this case, the assessee had not purchased the land, but it was received by her as per the will of her late mother. It was further found that the assessee has not shown the land by her own volition, but it was compulsorily acquired by the Jabalpur Development Authority. When the land was compulsorily acquired by the Government, the assessee did try to maximise the compe ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
