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Issues: Whether the excess amount realised on enhanced compensation for land acquired under notification was income from business as an adventure in the nature of trade.
Analysis: The land had been purchased after it was already notified for acquisition, and the purchase was found to have been made not for holding, enjoying, or reselling the land in the ordinary course of trade, but to obtain compensation under the land acquisition process. The character of a transaction as an adventure in the nature of trade depends on the totality of circumstances and is a mixed question of law and fact. Mere expectation of gain, by itself, does not convert an isolated transaction into trading activity. On the facts, the enhanced compensation awarded by the civil court was a result of the statutory process of valuation and not of a trading venture or profit-making scheme undertaken by the assessee.
Conclusion: The surplus of Rs. 2,08,739 was not income from business and was not assessable as profit from an adventure in the nature of trade; the answer was against the Revenue and in favour of the assessee.
Final Conclusion: The receipt was held to be a capital accretion arising from the acquisition proceedings and not taxable business income.
Ratio Decidendi: An isolated purchase of property after acquisition notification, made for obtaining compensation and not for resale in the ordinary course of trade, does not constitute an adventure in the nature of trade; enhanced compensation in such circumstances is not business income.
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