Capital gains on property resale, execution date governs transfer, and appeal against interest was maintainable.

Acquisition and resale of the Fort property was treated as a transfer of a capital asset, not an adventure in the nature of trade, because the property was acquired as capital, was not converted into stock-in-trade, and the surrounding circumstances did not show real-estate trading; the profit was therefore chargeable under capital gains. The income was held assessable in assessment year 1969-70, as the previous year is linked to the source of income, and the registered sale deed operated from the date of execution under section 47 of the Registration Act rather than the date of completion of registration. The appeal against levy of interest under section 217 was maintainable because the challenge went to the underlying liability.

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Issues: (i) Whether the assessee's acquisition and resale of the Fort property was a transfer of a capital asset chargeable under the head "Capital gains", or an adventure in the nature of trade. (ii) Whether the income from the transfer was assessable in the assessment year 1969-70 or 1968-69, and whether the date of registration altered the date of transfer. (iii) Whether the appeal against levy of interest under section 217 was maintainable.

Issue (i): Whether the assessee's acquisition and resale of the Fort property was a transfer of a capital asset chargeable under the head "Capital gains", or an adventure in the nature of trade.

Analysis: The property was found to have been acquired by the assessee as a capital asset and not converted into stock-in-trade. The isolated nature of the transaction, the assessee's conduct, and the cumulative surrounding circumstances showed that the assessee was not carrying on real-estate trading in the property. Entries in the books of account were held not to be conclusive. Applying the settled tests for distinguishing capital accretion from trading profit, the transaction was not an adventure in the nature of trade.

Conclusion: The transaction was a transfer of a capital asset and the profit was chargeable under the head "Capital gains". This issue was decided against the assessee and in favour of the Revenue.

Issue (ii): Whether the income from the transfer was assessable in the assessment year 1969-70 or 1968-69, and whether the date of registration altered the date of transfer.

Analysis: The expression "previous year" was held to be linked to the source of income, not to the head under which the income is ultimately assessed. Since the assessee had itself treated the transaction as falling in the accounting year ending 31 August 1968, the relevant assessment year remained 1969-70. On the Registration Act point, section 47 was applied to hold that a registered document operates from the date of execution and not from the date on which registration is completed under section 61(2).

Conclusion: The income was assessable in assessment year 1969-70, and the transfer was effective from the date of execution of the sale deed. This issue was decided against the assessee and in favour of the Revenue.

Issue (iii): Whether the appeal against levy of interest under section 217 was maintainable.

Analysis: As no advance tax was payable on capital gains, the challenge to interest under section 217 was treated as a challenge to the liability itself, and the ruling recognising maintainability of appeal against interest was applied.

Conclusion: The appeal against levy of interest was maintainable. This issue was decided in favour of the assessee.

Final Conclusion: The reference was answered by holding that the transaction gave rise to capital gains, the relevant assessment year was 1969-70, and the assessee could maintain an appeal against interest under section 217.

Ratio Decidendi: For income-tax purposes, the previous year is determined with reference to the source of income, and a transaction involving land is treated as a capital asset rather than trading stock unless the facts clearly establish an adventure in the nature of trade; a registered conveyance also operates from the date of execution under section 47 of the Registration Act.

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