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TMI Blog1976 (3) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... family, that these lands had been inherited by him from his father, who in turn had purchased the same in court auction in 1925. The money-lending business of the family was closed some time in the year 1940. It is common ground that though these properties were originally acquired in the course of the family money-lending business, as far as the assessee was concerned these properties were inherited not as assets of any business. The total extent of the lands measured 503 grounds. The assessees prepared a lay out for disposing of these lands some time in 1958 and paid the centage to the Corporation on December 10, 1958. He then entered into an agreement with M/s. Ramanathan Company which is a partnership, on February 5, 1959, for the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the sales were adventures in the nature of trade. He then proceeded to consider whether the sale values mentioned in the various documents represent the correct consideration and ultimately on certain probabilities and conjectures held that the market value of the lands during the assessment year 1960-61 was not less than Rs. 5,000 per ground and in the assessment year 1961-62, it was not less than Rs. 6,000 per ground. Since the properties were purchased in the year 1925, the Income-tax Officer valued the cost of the land as on January 1, 1954, at Rs. 4,000 in respect of the assessment year 1960-61. After allowing some rebate for improvement and other incidental expenses he arrived at the figure of Rs. 1,16,778 as the profit on the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... higher price than that disclosed in the document, and sustained the sale estimates. He also confirmed the view that the agreement between the firm of M/s. Ramanathan Co. was a sham transaction. On a further appeal, the Tribunal, relying on the receipt of agricultural income during the assessment year 1960-61, held that in respect of that assessment year the lands will have to be treated as agricultural lands. Therefore, the Tribunal held that it would not be a capital asset as it is exempted from that category by virtue of section 2(4A) of the Indian Income-tax Act, 1922. So far as the assessment year 1961-62 was concerned there was no evidence of deriving of agricultural income and that, therefore, it could not be excluded from the cate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the sum of Rs. 7,41,250 was assessable to tax under the head 'Capital gains' under section 12B of the Indian Income-tax Act, 1922 ? " This is the subject-matter of the reference in T.C. No. 282 of 1969. On a petition filed by the revenue under section 66(2) this court directed the following 4 questions also to be referred and, accordingly, they have also now been referred and they are the subject-matter of the reference in T.C. No. 2 of 1975 : "(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the sale of plots by the assessee did not constitute an adventure in the natur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e were receipts of certain agricultural income during the year, that the assessee had paid kist and that the assessee was assessed to agricultural income-tax. We are of the view that the question whether the lands are agricultural lands from which the assessee was deriving any income during the year in question, is a question of fact and the finding of the Tribunal being that they had not ceased to be agricultural lands during the assessment year 1960-61, we could not interfere with that finding. On the question whether the sale transactions are realisation of capital investment or they constitute adventure in the nature of trade, the point is completely covered by the decision of this court in Commissioner of Income-tax v. Kasturi Estate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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