2014 (11) TMI 1164

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....nd 64.75 cents of land at Avinissery on 16-08-2006 and sold the same on 20-08-2008.  The assessee claimed the profit on sale of the agricultural land as capital gain.  However, the assessing officer classified the same as business income on the ground that the assessee's activity amounts to adventure in the nature of trade.  The ld.counsel for the assessee submitted that the land is an agricultural land.  It was subjected to cultivation.  Therefore, the profit on sale of such agricultural land has to be treated as capital gain which is exempted from taxation.  The ld.counsel further submitted that the assessee cultivated the land and he never intended to engage himself in business activity.  Therefore, acc....

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.... the assessee purchased the agricultural land it cannot be his intention to cultivate the same since he is not available in India for cultivating the land.  The ld.DR further submitted that after purchase of the land, the assessee claims that he has spent nearly Rs. 1,75,000 for levelling the land before selling the same to St. Antony's Timber Mart.  Purchasing the land, leveling the same, to make it a marketable product / commodity, then executing sale deed clearly establishes that the activity of the assessee is in the nature of trade.  According to the ld.DR merely because certain coconut trees were standing on the land at the time of purchase that would not establish that the assessee subjected the land for cultivation.&n....

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....if the intention is to earn profit by engaging himself in business activity, then naturally it has to be classified as income from business. To find out the actual nature of the activity, the intention of the assessee at the time of purchase of the property has to be ascertained. 7. The material available on record shows that the assessee purchased the property on 16-08-2006.  The assessee himself claims that an amount of Rs. 1,75,000 was incurred for leveling the land before selling. The assessee entered into an agreement for sale with one Falgunan on 22-082007.  Ultimately, the sale deed was executed on 20-08-2008 in favour of St. Antony's timber Depot, Chevoor.  During the course of examination the assessee clarified that....