Capital gains treatment for land sale where possession and ownership transfer were not proved to constitute trading stock.

Land retained as a balance-sheet asset for several years, and earlier treated as giving rise to capital gains, was not shown to have been converted into stock-in-trade. The sale documents indicated that possession would pass only on full payment, while the purchasers had merely a limited licence to enter the property; execution of a power of attorney alone did not establish transfer of ownership. In the absence of conclusive material that possession had actually passed during the relevant year or that the transaction was an adventure in the nature of trade, the receipt was not taxable as business income and was to be assessed as capital gains in the assessee's hands for the year offered.

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Issues: Whether the consideration arising from the sale of land was assessable as business income or as capital gains.

Analysis: The land had been held in the assessee's balance sheet as an asset for several years and was treated in an earlier year as giving rise to capital gains. The agreement for sale and the supplemental agreement showed that possession was to be delivered against payment of the full consideration and that the purchasers were permitted only a limited licence to enter the property; the execution of a power of attorney, by itself, did not establish transfer of ownership. The Revenue did not produce conclusive material to show that possession had actually passed during the relevant previous year or that the land had been held as stock-in-trade rather than as an investment. On these facts, the transaction was not an adventure in the nature of trade.

Conclusion: The receipt was not taxable as business income and was liable to be assessed as capital gains in the assessee's hands for the year offered.

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