TaxTMI 
TaxTMI 
2016 (8) TMI 954
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....appellants/revenue. 3. As such it appears that when the matter was considered by the Tribunal, it was observed by the Tribunal at para 8 to 12 which reads as under:- "8. We have duly considered the rival contention and gone through the record carefully. The question, whether assessee made investment in long-term return or it was an adventure in the nature of trade has always posed a difficult situation before the adjudicator. The expression "business" has been defined in Sec. 2(13) of the Act. It contemplates "business includes any trade, commerce or manufacture or any adventure or concern in the nature of trade or commerce or manufacture". Thus business is an activity performed by an assessee in an organized manner with an intention to earn profit. It includes any trade, commerce, manufacture or both, i.e., trade and manufacture. The Hon'ble Supreme Court in the case of G. Venkataswamy Naidu v. CIT (supra), has observed that this question has been the subject matter of several judicial decisions; and in dealing with it, all the adjudicators had unanimously agreed that no principle can be evolved which would govern all the cases in which the character of impugned transactions....
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....ment. Did the purchaser by any act subsequent to the purchase improve the quality of the commodity purchased and thereby made it more readily resaleable? What were the incidents associated with the purchase and resale? Were they similar to the operations usually associated with trade or business? Are the transactions of purchase and sale repeated? In regard to the purchase of the commodity and its subsequent possession by the purchaser, does the element of pride of possession come into the picture? A person may purchase a piece of art, hold it for some time and if a profitable offer is received may sell it. During the time that the purchaser had its possession he may be able to claim pride of possession and aesthetic satisfaction; and if such a claim is upheld that would be a factor against the contention that the transaction is in the nature of trade. These and other considerations are set out and discussed in judicial decisions which deal with the character of transactions alleged to be in the nature of trade. In considering these decisions, it would be necessary to remember that they do not purport to lay down any general or universal test. The presence of all the relevant circu....
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....ive is an essential ingredient of trade. (5) How the value of the items has been taken in the balance sheet? If the items in question are valued at cost, it would indicate that they are investments or where they are valued at cost or market value or net realizable value (whichever is less), it will indicate that items in question are treated as stock-in-trade. (6) How the company (assessee) is authorized in memorandum of association/articles of association? Whether for trade or for investment? If authorized only for trade, then whether there are separate resolutions of the board of directors to carry out investments in that commodity? And vice versa. (7) It is for the assessee to adduce evidence to show that his holding is for investment or for trading and what distinction he has kept in the records or otherwise, between two types of holdings. If the assessee is able to discharge the primary onus and could prima facie show that particular item is held as investment (or say, stock-in-trade) then onus would shift to Revenue to prove that apparent is not real. (8) The mere fact of credit of sale proceeds of shares (or for that matter any other item ....
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.... business income, he could have booked the flats for sale, recognize the revenue from such advance booking and can set off the interest expenditure, but since he has the intention to earn house property income, therefore, he has to capitalize the interest expenditure. The assessee has not converted his plot of land purchased on 04.09.1998 into stock-in-trade. There is nothing with the Assessing Officer which can create a dent in the explanation of the assessee and can doubt about his intention. The first appellate authority also has observed simplicitor that organized way of entering into such a project is clearly with the business intent. But the Revenue authorities below have failed to demonstrate how the activity has been carried out in such an organized way akin to any business activity. 11. Considering the facts and circumstances, we are of the view that Revenue authorities have erred in treating the capital gain earned by the assessee as business income. We allow this ground of appeal in A.Y. 2009-10, 2010-11 and 2011-12 and direct the Assessing Officer to consider the sale proceeds received by the assessee as capital gain and determine the taxable income accordingly. 1....