TaxTMI 
TaxTMI 
1998 (2) TMI 159
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....62 to 1982 on the following dates: . Rs. P. 14th Nov., 1962 2,700.00 9th Nov., 1966 900.00 1st Aug., 1968 2,400.00 31st Dec., 1968 1,200.00 15th Jan., 1971 2,000.00 15th Jan., 1971 25.00 9th Dec., 1978 3,500.00 21st Dec., 1978 10,639.50 4th May, 1982 1,000.00 4th May, 1982 9,000.00 1st June, 1982 7,456.35 Total : 40,820.85 3.1 The possession of the said plot was received in the year 1982. The assessee thereafter started construction of a residential house on the said plot and incurred a cost of Rs. 3,05,000 during the year 1982 to 1985. The assessee claimed cost of acquisition of the aforesaid property as well as the index cost as per details mentioned below: F.Y. . Cost Index Cost 1981-82 Plot 41,000 91,430 1981-82 Construction 1,25,000 2,78,750 1982-83 Construction 90,000 1,84,128 1983-84 Construction 75,000 1,44,181 1984-85 Construction 15,000 26,760 . . 3,46,000 7,25,249 3.2 Since the construction of the house could not be completed, the assessee entered into an agreement with a builder, namely, B.K. Uppal vide a....
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....om business. 5. The CIT(A) confirmed the view taken by the AO and dismissed the assessee's appeal. 6. The learned counsel for the assessee submitted that this was an isolated transaction carried out by the assessee during his entire lifetime. The assessee is a journalist. He never carried on any business. The sale of property cannot be regarded as a business activity on the facts and circumstances of the assessee's case. He submitted that the crucial test for determining as to whether a transaction amounts to an adventure in the nature of trade, will depend on the intention with which the plot was acquired by the assessee. The assessee did not own any residential house. He, therefore, booked a plot in the year 1962. The purchase price of the plot was paid in instalments over a period of 10 years from 1962 to 1982. There is no material to show that the plot was purchased by the assessee with a view to carry on business of purchase and sale of land/buildings. The assessee started construction of the residential house property, which continued during the year 1982 to 1985. Since the assessee could not complete the construction of the residential house property, he decided to sel....
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....as business income. He submitted that in the present case, the assessee entered into an agreement with the builder, got three flats constructed and those three flats were sold individually vide three separate sale deeds. The facts are almost similar to the facts of the aforesaid judgment. He submitted that intention to make profit by selling the property after developing it in joint venture with a builder clearly amounts to a business activity. He submitted that a careful reading of the agreement executed by the builders indicates that profit on the sale of aforesaid property was derived by the assessee as a business activity. He strongly supported the order of the CIT(A). 8. We have carefully considered the submissions made by the learned representatives of the parties and have perused the order of the learned Departmental authorities as well as all other documents submitted in the compilation to which our attention was drawn during the course of hearing. We have also gone into various judgments cited by the learned representatives of both sides. 8.1 The Hon'ble Supreme Court in the case of G. Venkataswami Naidu & Co. vs. CIT has, inter alia, held as under: "In cases wher....
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....ld, on the facts found by the Tribunal, that the sale by the assessee was not an adventure in the nature of trade and the excess realised by the sale of the two plots did not constitute income from business. Profit-making would normally not be an irrelevant consideration for every honest and prudent purchaser but will not in every case make the purchase a venture in the nature of trade. To bring a transaction within this category it has to be shown that the sole intention at the time of purchase was to sell the property purchased later on at a profit. The burden is upon the Department to show that a transaction effected by the assessee is an adventure in the nature of trade." 8.3 The aforesaid judgments of the Hon'ble Supreme Court and Hon'ble Delhi High Court clearly indicate that the intention at the time of purchase of the property is an important and relevant factor for deciding the point in issue. It is true that various other factors may also be relevant for arriving at a conclusion as to whether a particular activity amounts to an adventure in the nature of trade. The facts of the present case clearly indicate that the assessee had booked the said plot in the year 1962. A....