Land development activity can constitute business income where purchase, plotting and sales show a commercial venture.

Evidence supported the finding that the assessee was carrying on a business of purchasing, developing and selling land, because it acquired a large village with borrowed funds, implemented a development scheme, plotted the land into numerous sites, incurred development expenditure, and sold substantial plots during the year. These facts were sufficient material to characterise the activity as a commercial venture and to treat the sale proceeds as business receipts for that purpose. The exact profit element could not be finally determined on the available materials, because the venture had not run its full course and a large part of the land remained unsold.

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Issues: Whether there was evidence to support the finding that the assessee was carrying on the business of purchasing, developing and selling land and whether the sale proceeds constituted business profits.

Analysis: The assessee had purchased a large village with borrowed funds, prepared and implemented a development scheme, plotted the land into numerous sites, incurred expenditure on development, and sold a substantial number of plots during the assessment year. These circumstances furnished material from which the finding of business activity could be drawn. As regards the alleged profit of Rs. 47,533, the venture had not run its full course and a large part of the land still remained unsold, so the profit element could not be finally determined on the materials then available.

Conclusion: There was evidence to support the finding that the assessee was carrying on the business of purchasing, developing and selling land. The question of the exact profit figure was not answered.

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