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TMI Blog1985 (2) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... r, on the facts and in the circumstances of the case, the profit arising on the sale of land could be assessed in the hands of the assessee as an association of persons ? The facts of the case are : One Parvathi Devi, w/o Ramaswamy and one Radhakumari, w/o Umamaheswara Rao, joined with one K. Suryanarayana and V. Dasaradha Ramaiah and purchased acres 10-13 guntas (about 50,000 sq. yards) of land situated in Kheiratabad by a registered sale deed dated March 17, 1961, for a total consideration of Rs. 45,000. The land was purchased from the original owner, Mohammed Mirza, and nine others and the four persons had converted this portion of land which was of non-agricultural rocky land into building sites. Within three months after the date o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be treated and assessed in the status of an association of persons of the aforementioned four individuals. The order of assessment made by the Income-tax Officer was confirmed by the Appellate Assistant Commissioner and finally by the Incometax Appellate Tribunal. The assessees had, therefore, applied for and obtained a reference of the above two questions for the opinion of this court. The first question that has been argued at considerable length is that the purchase by the assessees of the aforementioned acres 10-13 guntas of land did not constitute an adventure in the nature of trade. It was argued by Mr. Y. Rathnakar that this purchase was a single transaction and there were no further and subsequent steps taken on the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t servant of a lower rank. None of them are persons who can be said to have an intention to use the land of 10 acres for the purpose of constructing houses. In these circumstances, the purpose of purchasing and keeping that land could not have been dominated by an intention to use it except as a stock-in-trade in their business. One of the assessees, Dasaradha Ramaiah, is a man of no property. He says that he borrowed money from his brother. Parvathi Devi's husband, Ramaswamy, was a person who had been dealing in purchasing and selling real estates. Parvathi Devi herself had purchased and sold house sites earlier in 1958-1960. The husband of Radhakumari, one Umamaheswara Rao, was a Government servant and the President of Venkatramana Co-ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, we have no hesitation in holding that the purchase of this land has been made not as an investment, but clearly for the purpose of trading in the land. We accordingly hold that the transaction is an adventure in the nature of trade. Mr. Rathnakar had referred to several cases. In many of these cases, the courts have held that the transactions involved therein were not adventures in the nature of trade. But, we are of the opinion that no reference to, nor any discussion of, those cases would be useful, because those are all cases which have been decided on the particular facts of those cases. The only point of law Mr. Rathnakar raises in this case is that single transaction may not be regarded as an adventure in the nature of trade. But ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessed as an individual though the gift was made through one single document. On that basis, the Supreme Court held that the gift was not liable to be assessed in the status of an association of persons. In that case, the Supreme Court never found that there is anything legally impossible for tenants-in-common to constitute an association of persons. In fact, it would not logically be possible to lay down that tenants-in-common can never constitute an association of persons within the meaning of either of the Gift-tax Act or of the Income-tax Act with which we are now presently concerned. In CIT v. Indira Balkrishna [1960] 39 ITR 546, the Supreme Court interpreted the word " association of persons " as meaning an association in which two o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s merely because they are tenants-in-common. In the above view of ours, it would not really be necessary to notice the difference of opinion that has developed over the interpretation put by this court in the above Valsala Amma's case [1971] 82 ITR 828 (SC). In (sic) our High Court ruled that a group of individuals can be a body of individuals though not an association of persons within the meaning of the Income-tax Act. In so holding, a Division Bench of this court held that Valsala Amma's case [1971] 82 ITR 828 (SC) should be confined only to gift-tax cases. That view of our Division Bench was disagreed from either in whole or in part by the High Courts of Gujarat, Madras and Kerala. But we may note that in none of those cases any of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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