Adventure in the nature of trade: organised land development and sale treated as business income, not capital gain.

Profit from sale of land was characterised as business income rather than capital gain where the land was acquired over different periods, pooled with other owners, developed through a common project, and sold in plotted form through a developer-led arrangement. The determining test was the cumulative effect of the assessee's conduct, the organised manner of development and sale, repeated purchases in the same vicinity, and the commercial character of the venture. On those facts, the dominant intention was profit-making through a business project, so the transaction was treated as an adventure in the nature of trade and the sale proceeds were taxable as business income.

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Issues: Whether the profit arising from sale of land was assessable as capital gain or as business income on the ground that the transactions constituted an adventure in the nature of trade.

Analysis: The assessee had acquired agricultural land over different periods, entered into an arrangement with a developer for development and sale of the land, and the land was ultimately sold in plotted form through a common development project. The determining factors were the assessee's conduct, the manner of development and sale, the common pool of land owners, the role of the developer, the repeated purchase of land in the same vicinity, and the overall commercial character of the venture. On a cumulative assessment of these circumstances, the dominant intention was found to be profit-making through a business project rather than mere realisation of an investment asset.

Conclusion: The receipt from sale of land was rightly assessed as business income and not as capital gain.

Ratio Decidendi: Where land is acquired and thereafter developed and sold in an organised and commercial manner through a coordinated project, the true nature of the transaction must be determined from the cumulative facts and the assessee's conduct, and the resultant profit is taxable as business income if the venture is in the nature of trade.

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