1972 (12) TMI 5

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....plots of land measuring 1,62,825 sq. yds. from the Archbishop of Bombay. These three plots were situated in different localities. The purchase price for all these three plots together was Rs. 10 lakhs. The sale deed does not mention separately the price of each plot. The purchase in question was made on December 21, 1960. Before the purchase was made the assessee paid an earnest money of Rs. 50,000 and at the time of sale he paid another sum of Rs. 25,000; the balance amount was to be paid within three years from the date of the sale. At one time there was controversy whether the sale in question was an adventure in trade or not. That question has been decided against the assessee. The same is no more in dispute. All the authorities under t....

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.... to spend considerable amounts on litigation to obtain possession of some of the lands purchased by him. All these aspects had been ignored both by the Income-tax Officer as well as the Appellate Assistant Commissioner. The Tribunal did not go into the question as to what could be said to be the correct purchase price of the lands sold. It opined that in a venture like the one before us, the profit and loss can be determined only when all the lands purchased were sold. In arriving at that conclusion it relied on the decision of the Bombay High Court in K. H. Mody, In re. Being dissatisfied with the orders of the Tribunal the department moved the Income-tax Appellate Tribunal to refer the following question to the High Court under section....

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.... is sold. It was further urged that, if the law is as stated by the Bombay High Court in Mody's case it would be extremely easy for an assessee to evade payment of tax. All that he needs to do is not to sell a small portion of the land purchased by him. It was not denied on behalf of the department that the method of averaging adopted by the Income-tax Officer for the purpose of finding the purchasing price of the lands sold was wholly wrong in view of the fact that the quality of the lands purchased differed from plot to plot as the plots purchased were situated in different places, and that the assessee has not been able to take possession of some of the lands. It is not known whether he will be ever able to get possession of some of the ....