9911796707
TMI Blog1982 (8) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... aforesaid amount, claimed that his share in the aforesaid income was only 1/9th, because in his 1/3rd share there were three co-owners, namely, the assessee himself and his two sons, Hakam Singh and Pargat Singh. In support of this claim, the assessee produced decrees passed on 14th March, 1972, 4th November, 1972, 18th May, 1972, and 7th December, 1972, by the Civil Court in the suits filed by the assessee's sons against him. The ITO did not recognise these decrees on the ground that the same had been passed by the Civil Court after the previous year for the assessment year 1971-72, ended on 31st March, 1971. The ITO, there. fore, did not accept the assessee's contention and 1/3rd income from the aforesaid property was taken as the assessee's income. The assessee had invested a sum of Rs. 1,25,500 in a firm known as M/s. Indra Tractors, Ludhiana, and his share of the loss therefrom had been taken at Rs. 89. The assessment of the firm was said to be pending and subject to action later on either under s. 154 or under s. 147 of the I.T. Act, 1961 (hereinafter referred to as " the Act"), the ITO treated the assessee's share income from the aforesaid firm at Rs. 1,000. The assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act were filed, requiring the Tribunal to refer certain questions of law which arose out of its order dated 19th January, 1976. The Tribunal, on a consideration of the matter, found that certain questions of law did arise which required decision by this court. Accordingly, the following questions of law have been framed by the Tribunal for our opinion : " (1) Whether, on the facts and in the circumstances of the case and in view of the award of the arbitrator dated August 5, 1972, read with the judgment dated November 4, 1972, of the Sub-judge, III Class, Sangrur, and award dated March 14, 1972, read with the judgment of the same date of the Sr. Sub-judge, Sangrur, the Tribunal was right in law in holding that the assessee was the owner of 1/3rd share in the property known as " Krishan Bagh Kothi " along with land measuring 107 kanals and 4 marlas ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the income derived by the assessee from the sale of plots was from an adventure in the nature of trade ? (3) Whether the Tribunal was right in law in holding that there was no right of appeal against the levy of interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of the other 28 plots. The question to be determined is whether the assessee simply made an investment in the purchase of immovable property wherein by sale of a part of the property, there was an accretion to his capital or the assessee indulged in an adventure in the nature of trade... It is to be noted that the assessee originally belonged to Sangrur but for some time he shifted to U.P. and then came down to Sangrur and along with his brothers invested moneys in two properties. The property near Zila Parishad House purchased for Rs. 26,000 in 1965, as admitted by the learned counsel for the assessee, has been utilised for the purpose of a cold storage. The Krishan Bagh Kothi itself has been given on rent to a college and some part of the land has been given to the college for the purpose of playground. It is only a part which has been converted into plots for the purpose of sale. The number of plots, as admitted by the assessee, is 42. Seven plots were admittedly sold in this year and advances were received for another 28 plots. Conversion of a part of the land in plots and the sale thereof, on the facts and circumstances of the case, does constitute an activity in the natu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion conferred on the High Court by section 66(1) is limited to entertaining references involving questions of law. If the point raised on reference relates to the construction of document of title or to the interpretation of the relevant provisions of the statute, it is a pure question of law; and, in dealing with it, though the High Court may have due regard for the view taken by the Tribunal, its decision would not be fettered by the said view. It is free to adopt such construction of the document or the statute as appears to it reasonable. In some cases, the point sought to be raised on reference may turn out to be a pure question of fact; and if that be so, the finding of fact recorded by the Tribunal must be regarded as conclusive in proceedings under section 66(1). If, however, such a finding of fact is based on an inference drawn from primary evidentiary facts proved in the case, its correctness or validity is open to challenge in reference proceedings within narrow limits. The assessee or the Revenue can contend that the inference has been drawn on considering inadmissible evidence or after excluding admissible and relevant evidence; and, if the High Court is satisfied that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion one of mixed law and fact ......... Even if the conclusion of the Tribunal about the character of the transaction is treated as a conclusion on a question of fact, it cannot be ignored that, in arriving at its final conclusion on facts proved, the Tribunal has undoubtedly to address itself to the legal requirements associated with the concept of trade or business. Without taking into account such relevant legal principles it would not be possible to decide whether the transaction in question is or is not in the nature of trade. If that be so, the final conclusion of the Tribunal can be challenged on the ground that the relevant legal principles have been misapplied by the Tribunal in reaching its decision on the point; and such a challenge would be open under section 66(1) because it is a challenge on a ground of law. The same result is achieved from another point of view and that is to treat the final conclusion as one on a mixed question of law and fact. On this view the conclusion is not treated as one on a pure question of fact, and its validity is allowed to be impeached on the ground that it has been based on a misapplication of the true legal principles. It would thus b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of trade. There can be no gainsaying that even a single venture may be regarded as a trade or business, but there have to be circumstances which may give rise to such a conclusion. As earlier observed, in this case the Tribunal has fallen in error in holding the venture as trade or business merely on the ground that 42 plots were carved out, out of which 7 were disposed of in the year in question. In this view of the matter, in the circumstances of the case and on the facts found, the Tribunal was not right in law in holding that the income derived by the assessee from the sale of plots was from an adventure in the nature of trade. Consequently, the answer to this question is returned in favour of the assessee and against the Revenue. So far as question No. 3 is concerned, it was conceded at the Bar that in view of the judgment of this court in CIT v. Raghubir Singh and Sons [1980] 125 ITR 256 and an unreported judgment in CIT v. Himalaya Woollen Mills, I.T.R. No. 83 of 1976, decided on 12th March, 1981(since reported in [1983] 144 ITR 765 (P H)) the answer to this question has to be in the negative, i.e., against the Revenue and in favour of the assessee. In the circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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