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TMI Blog2018 (3) TMI 796X X X X Extracts X X X X X X X X Extracts X X X X ..... character of business venture. We are, however, unable to agree with this submission. It might be natural for a person, who is not undertaking any business venture, to seek higher return from sale of his assets. That would be a rational pursuit and in our view reflects normal human behaviour and not a special attribute for a trader or a businessman. Just because for a particular unit, an intervening transaction is aborted for the reason that the property would fetch a better price, if sold to another person, grievance may be caused to the person with whom the earlier arrangement was entered into. But such an exercise would not transform the nature of activity from normal sale of capital asset to a business venture. There is substantial gap in time between the day of acquisition of the asset and its development and part-sale. The original assessee was not a property dealer but a member of the Indian Revenue Service, working with the Income Tax department itself. Only a portion of the property was sold. In these circumstances, the test laid down in the case of G.Venkataswami Naidu & Co. (1958 (11) TMI 5 - SUPREME Court) has to be decided in favour of the assessee. - ITA No.383 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd advance thereof was received, which constituted a sum of ₹ 45 lakh. One Jaspreet Thapar was the other party to that prior agreement. The aforesaid agreement for sale as well as subsequent receipt of consideration thereof were both undertaken prior to handing over possession of the third floor of the building. The Assessing Officer treated the said sum of ₹ 80 lakh as business income. In the opinion of the Assessing Officer, this transaction constituted adventure in the nature of trade. The respondent, however, wants the said sum to be taxed as long term capital gains after the indexing exercise. She failed in her appeal before the Commissioner of Income Tax, who agreed with the view of the Assessing Officer as regards treatment of the said sum. She appealed against the Commissioner s order before the Income Tax Appellate Tribunal. The Tribunal invalidated the order of the Assessing Officer as well as the First Appellate forum and sustained the assessee s stand that the consideration money of ₹ 80 lakh ought to be treated as long term capital gain. The decision of the Tribunal was delivered on 18th January, 2008. The Revenue s appeal was admitted by a Coor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking and that it had the intention of the exploiting the properties. This view was sustained by the High Court and a detailed analysis of the nature of transaction entered into by the Assessee was made. In that case, the Supreme Court of India confirmed the view of the High Court that such transaction was an adventure in the nature of trade and the same was in the course of a profit making scheme. As regards the other two authorities referred to in the question formulated admitting the appeal, Commissioner of Income Tax Vs. Ganga Prasad Birla (HUF) 199 ITR 173(Cal.) and J.K. Synthetics Ltd. Vs. Assistant Commissioner of Income Tax. [200 ITR 584 (Delhi)], Mr. Chowdhury has not placed them before us as according to him, they do not apply in the facts of this case. In the case of Ganga Prasad Birla (supra) the question was as to whether a solitary speculative transaction could adventure in the nature of trade and in J. K. Synthetics Ltd. (supra), the propositions of law laid down do not apply in the facts of this case. Appearing on behalf of the estate of the Assessee, Mr.Gupta primarily relied on a decision of this Court delivered by a Coordinate Bench, to which one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it had carried on the business of property development. In the absence of any evidence that the assessee undertook the business of property development, the object clause in the memorandum cannot be treated to be determining factor to conclude that this was part of the assessee s regular business. On the same reasoning, reference to property in corporate name of the assessee cannot make the assessee a property development company. The Tribunal as well as the Commissioner of Income Tax have concurrently found that gain of the assessee from the transactions of sale of flats did not constitute adventure in the nature of trade. The orders of the assessing officer on the same point for the two other assessment years were also dismissed by the Commissioner and the Tribunal. We do not find any perversity in such finding and hence confirm such finding. Mr. Gupta s submission is that the ratio of that decision squarely applies to the facts of this case. Mr. Chowdhury on the other hand, has referred to the intervening arrangement in the form of agreement for sale and from that factor, he wants us to conclude that the intention of the Assessee was to undertake business venture. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ession come into the picture? A person may purchase a piece of art, hold it for some time and if a profitable offer is received may sell it. During the time that the purchaser had its possession he may be able to claim pride of possession and aesthetic satisfaction; and if such a claim is upheld that would be a factor against the contention that the transaction is in the nature of trade. These and other considerations are set out and discussed in judicial decisions which deal with the character of transactions alleged 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital accretion or quasi business venture would have to be largely inferred from materials available and involves determination of mixed questions of fact and law. The Tribunal ought to be the ultimate fact finding body in a similar context and unless perversity is shown in finding by the Tribunal, this Court in exercise of its appellate power under Section 260A of the Income Tax Act, 1961 would be reluctant to enter into such domain of facts. The question as formulated does not indicate any perversity was hinted by the Revenue in the decision of the Tribunal. At the time of admission, this Court had formulated the question so as to test as to whether the Tribunal s decision was contrary to the ratio of the decisions of the Supreme Court of India but even if we indulge into brief fact finding exercise, we do not find any material from records to suggest that at the time of acquisition of the properties such acquisition was for the purpose of undertaking a business venture. What we are to look at now is as to whether there was a business venture simultaneously with the development agreement. Major portion of the developed building was to remain with the assessee after construction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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