TaxTMI 
TaxTMI 
TaxTMI 
2012 (10) TMI 363
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....the case, Tribunal is legally justified in confirming the order of the Assessing Authority and estimating business income for the sale of the land?" 4. Brief facts giving rise to these income tax appeals are that during the financial year 1984-85 to 1990-91 the assessee serving as employee in Nagar Palika Parishad, Jalaun at Orai, sold agricultural land allegedly belonging to H.U.F. by carving out plots of 60 sq. mtrs. to 1815 sq. mtrs., by 43 sale transactions. The Assessing Officer (AO) after seeking approval from the Deputy Commissioner of Income Tax, Range-3, Kanpur issued notice under Section 148 on which the assessee filed returns declaring total income of Rs.14,240/- for the year 1989-90, and for the same amount for the year 1990-91. The notices under section 143(2) and 143(1) were also sent to the assessee for the years 1990-91 and 1991-92. 5. For the year 1989-90 the AO considered the income under the capital gains at Rs.60,802/-, business income at Rs.29,200/- and salary income as per return at Rs.15,290/-. The assessee was assessed for the total income of Rs.1,05,290/-. A penalty notice was also directed to be issued against him. The agricultural income of Rs.15,000/- ....
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....aken the actual sale consideration for the purpose of computation of income. Therefore, deduction of notional value of land covered under passage and drainage cannot be allowed, therefore, we find no infirmity in the order of CIT (A) in confirming the order of A.O. in respect of quantification of business income. As a result, appellant/ assessee's appeal is treated as dismissed." 9. The land is situate within municipal limits, in respect of which the Zamindari was abolished on 1.7.1961 and therefore the land was treated as capital asset. The assessee converted the land into small pieces and sold them from 1984 onwards to reap the profits, which was rightly treated as business profits. The land was sold in small plots measuring 60 sq. mtrs. to 1815 sq. mtrs. along with facility for roads and drainage. The 43 sale deeds were executed between 1984 to 1991. 10. The Tribunal found that the explanation that the assessee needed funds for constructions of his house is an afterthought, as the investment in residential houses out of sale proceeds of the plots could not be co-related at the first opportunity, and thus ground against the treatment of conversion of asset into stock-in-trade ....
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.... along with his two co-partners filed a declaratory suit no.183 to 1966 in the Court of Sub-Divisional Officer, Orai for the declaration as 'Sirdars' of the land. The suit was filed under Section 229B of the UPZA & LR Act. The Sub Divisional Officer, Orai declared the appellant and his partners as Sirdars vide order dated 5.9.1968. 13. The two sons of Shri Narain Rao named as Sri Ram Chandra Rao and Sri Vishal Narain Rao filed a Civil Suit No.312 of 1967 for cancellation of sale deed and for possession. The Munsif Orai by order dated 28.2.1974 cancelled the sale deed to the extent of 2/3rd but disallowed the claim for possession as it was not found on the basis of the sale deed. Aggrieved they filed appeals before the District Judge, Orai. The appeal filed by the appellant was allowed. Shri Ram Chandra Rao filed second appeal before the High Court, which was dismissed on 23.11.1987. 14. It is submitted that in the year 1977 the appellant was declared as bhumidhar vide entry made in the khatauni. Subsequently three co-partners filed suit for partition. On 11.7.1980 partition suit was decreed and the appellant was allotted a share in the agricultural land to the extent of 4.44 acre....
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....o the extent of, and scope for, urbanization of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette. 17. In G. Venkataswami Naidu & Co. v. CIT [1959] 35 ITR 594, (SC) the Supreme Court held:- "Generally speaking, it would not be difficult to decide whether a given transaction is an adventure in the nature of trade or not. It is the cases on the borderline that cause difficulty. If a person invests money in land intending to hold it, enjoys its income for some time, and then sells it at a profit, it would be a clear case of capital accretion and not profit derived from an adventure in the nature of trade. Cases of realisation of investments consisting of purchase and resale, though profitable, are clearly outside the domain of adventures in the nature of trade." 18. In Janab Abubucker Sait v. CIT [1962] 45 ITR 37 the Madras High Court held:- "One of the essential elements in an adventure in the nature of trade is the intention to trade; that intention must be present at the time of the purchase. The mere circumstance that a property is purchased in the hope that when sol....
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....ssion from the Town Planner U.P. Lucknow and sold the land by 4 sale deeds between 1957 to 1960. The surplus realization were shown in the year 1961 to 1963. This Court held that the word 'business' under Section 2(4) of the Act includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. The object and purpose of including an adventure in the definition of trade is to include the receipts from adventure to tax as receipts from trade. The word 'adventure' has not been defined. The High Court relied upon the judgment of Supreme Court in Commissioner of Excess Profits Tax v. Shri Lakshmi Silk Mills Ltd. [1951] 20 ITR 451 (SC) in which it was held that no general principle could be laid down which could be applicable to all cases and that each case has to be decided on its own facts. 22. In G. Venkataswami Naidu & Co. (supra) the Supreme Court again held that it is impossible to evolve any formula, which can be applied in determining the character of isolated transaction, which comes up before the Court in tax proceedings. It would not be inexpedient to evolve any rule or formula to decide whether in a given case transaction....
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....transaction of sale and purchase of land was in adventure in the nature of trade. The surpluses realized was capital gains and not income or profits from the adventure in the nature of trade. 25. On the tests laid down by the Supreme Court and this Court, we find that the income tax authorities did not commit any error of law. They have applied the correct principles of law and have rightly arrived at the finding that the land in urban area for which the Zamindari was abolished on 1.7.1961 was partly inherited by the assessee from his father. The remaining part was purchased by him by sale deeds dated 16.12.1958 and 16.5.1959. The assessee along with his co-partners had filed suit for declaration, which was decreed on 5.6.1968. The sons of Shri Narain Rao Sapre had filed suits for cancellation of sale deeds and for possession. The suit was decreed cancelling the sale deed to the extent of 2/3rd share but claim for possession was not allowed. In the circumstances, the stand taken by the assessee that the property was inherited as H.U.F., was rightly disbelieved. The assessee was an employee of Nagar Palika Parishad, Jalaun at Orai. He held the land in urban area as capital asset an....