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TMI Blog2018 (11) TMI 1179X X X X Extracts X X X X X X X X Extracts X X X X ..... apital gains has achieved finality and what remains is only computation in accordance with the provisions of the IT Act - I.T.A. No. 113 of 2016 - - - Dated:- 29-10-2018 - MR K.VINOD CHANDRAN AND MR ASHOK MENON, JJ. For The APPELLANT : SRI.P.K.R.MENON, SENIOR COUNSEL, GOI(TAXES) AND SRI.JOSE JOSEPH, STANDING COUNSEL FOR GOI (TAXES) For The RESPONDENT : ADVS. SRI.NAVIN R NATH SMT.GEETHA JOB (OZHUKAYIL) AND SRI. TOM JOSE JUDGMENT Vinod Chandran,J. The appeal by the Revenue, is against the order of the Tribunal, alleging that the Tribunal has misconstrued the facts and the law, in confirming the order of the first appellate authority, which found that there is no 'adventure in the nature of trade' involved in the transactions entered into by the respondent-assessee. It is submitted that the Tribunal had failed to look into the facts and had merely extracted the order of the Commissioner (Appeals), in which was noticed the mere submission made by the assessee without any supporting material. The learned Senior Counsel for Government of India (Taxes) also points out that an agreement of sale and a further sale made to the assignee of the inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for sale with one individual, whose assignee was a builder to whom the sale was eventually made. The first appellate authority found that there is no adventure in the nature of trade in the transaction of the assessee and, hence, there could be no assessment made on that count treating the transaction as a regular business of the assessee. 5. The Tribunal extracted the findings of the first appellate authority and accepted it. We find that the Tribunal had committed a mistake in observing that the properties purchased prior to 15 years was sold to an individual who, later, transferred the property to the builder. However, the mistake so committed would not be so grave as to make a remand especially considering the decision of the Hon'ble Supreme Court relied on by the Revenue in G.Venkataswami Naidu Co. ( supra ). 6. G.Venkataswami Naidu Co. ( supra) was a partnership firm, acting as managing agents of one Janardana Mills Ltd., Coimbatore. They purchased four contiguous plots of land ad-measuring 5 acres and 26 cents under four sale deeds executed in October and November, 1941 and June and November, 1942 for a total consideration of little more than ₹ 8,700/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of mixed law and fact . Examining the question whether the consideration would be on facts alone or on the law, the Hon'ble Supreme Court found that the question would be a mixed question of fact and law and framed the question as under: Whether, on the facts and circumstances proved in the case, the inference that the transaction in question is an adventure in the nature of trade is in law justified? This is the question we too have to answer in the instant case, but looking at the facts cropping up in this appeal. 9. Finding that there can be no strict principles evolved which would govern the decision of all cases in which the character of the impugned transaction falls to be considered,the Hon'ble Supreme Court laid down certain specific aspects of a transaction being taken as an adventure in the nature of trade. They were - (1) that the transaction cannot properly be regarded as trade or business, (2) it is s allied to transactions that constitute trade or business, but may not be trade or business itself, (3) it is characterised by some of the essential features that make up trade or business but not by all of them, and (4) even an isolated transac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d thereby made it more readily resaleable? What were the incidents associated with the purchase and resale? Were they similar to the operations usually associated with trade or business? Are the transactions of purchase and sale repeated? In regard to the purchase of the commodity and its subsequent possession by the purchaser, does the element of pride of possession 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 mere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty 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 . 14. We find here, that the assessee had made investments in the lands long prior to the sale and had held the land for a considerable period of time; almost 12-15 years. It is an admitted fact that the assessee had not derived any income from the lands and also not made any improvements in the land. However, there can be no adventure in the nature of trade found, since the assessee had not identified the seller long prior and had not purchased the land holdings with a definite and sole intention to sell it. That is, the sale for profit being the intention it is distinguished from an adventure in the nature of trade by the fact that the assessee intended to hold the property and there was no specific sale in contemplation at the time of purchases. On sufficient profits being received the assessee eventually sold the property, which results in an accretion of capital; for which if there is liability to tax on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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