TaxTMI 
TaxTMI 
2018 (3) TMI 796
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....ire driveway adjacent to Plot No.39, Vasant Vihar, New Delhi and proportionate rear courtyard to provide spiral staircase for the servants to go up and for installation of a generator set for the use of servants to go up and for installation of a generator set for the use of 2nd and 3rd floor only. Owner's Share - (a) Entire basement; (b) Entire ground floor with front lawn and proportionate courtyard. (c) Entire first floor. (d) Entire third floor with terrace. (e) Independent driveway adjacent to plot No.41 Poorvi Marg. (f) 50% of entire driveway adjacent to Plot No.39 Poorvi Marg for use of the third floor with terrace." During the assessment proceeding for the assessment year 2003-04, the original assessee passed away. His widow, who is the respondent before us as legal representative of his estate continued to conduct the assessment proceeding on behalf of estate of the deceased. The dispute in this appeal is primarily concerned with the sale proceeds of Rs. 80 lakh in respect of the third floor of the building along with roof rights developed on the aforesaid land. This transaction was undertaken by the respondent in this appeal. The aforesaid sale was ....
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....gement was in the nature of trade. He sought to sustain his argument by referring to the intervening agreement for sale and its subsequent cancellation. According to him, this factor established that the assessee was undertaking business venture in selling of a part of the building. He has referred to a decision of the Hon'ble Supreme Court in the case of Raja J. Rameshwar Rao Vs. Commissioner of Income Tax, Hyderabad (XLII ITR 179) in support of his submission that even a single transaction can qualify for being described as a business venture. The other authority he relied upon is also a decision of the Supreme Court in the case of Khan Bahadur Ahmed Alladin Vs. Commissioner of Income Tax in 68 ITR 573. This was a case arising out of Hyderabad Income Tax Act, parts of which corresponded to the Indian Income Tax Act, 1922. The assessee in that case, being a firm, had purchased a factory with buildings, residential quarters and certain other ancillary items from the Government of India. Some of these assets which were resold. Question arose as to whether surplus realized from the resold part would constitute capital accretion or not. The Appellant Tribunal in that case, on facts t....
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....the Revenue does not apply on facts to the case of the assessee. There was clear intention of the assessee in that case to undertake business venture and on that basis the immovable property was treated to be stock-in-trade. In the cases of R.V. Gupta (supra), Mohakampur Ice and Cold Storage (supra), intention to resell the immovable assets was considered to be a major factor to determine a question of this nature, and the length of time the property was held by the assessee was also considered by the Court in each case to deal with the questions raised in those cases. On that yardstick, the Commissioner and the Tribunal rightly decided the issue in favour of the assessee in this appeal. In Razia Sulaiman (supra), the fact that the assessee was not in the business of selling of sites or flats weighed in favour of the assessee. In the cases Sohan Khan (supra) and Shanti Banerjee (supra) the same factors were applied to reject Revenue's contention that development of immovable properties with aid of a builder and income generated from sale of flats of the developed property per se would not render such income to be taxable as business income. So far as assessee in this appeal is conc....
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....profitable, are clearly outside the domain of adventures in the nature of trade. In deciding the character of such transactions several factors are treated as relevant. (ii) Was the purchaser a trader and were the purchase of the commodity and its resale allied to his usual trade or business or incidental to it? Affirmative answers to these questions may furnish relevant data for determining the character of the transaction. (iii) What is the nature of the commodity purchased and resold and in what quantity was it purchased and resold? If the commodity purchased is generally the subject matter of trade, and if it is purchased in very large quantities, it would tend to eliminate the possibility of investment for personal use, possession or enjoyment. (iv) Did the purchaser by any act subsequent to the purchase improve the quality of the commodity purchased and thereby made it more readily resalable? 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? (v) In regard to the purchase of the commodity and its subsequent possession by the purchase....
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....s may, however, arise where the purchase has been made solely and exclusively with the intention to resell at a profit and the purchaser has no intention of holding the property for himself or otherwise enjoying or using it. The presence of such an intention I no doubt a relevant factor and unless it is offset by the presence of other factors it would raise a strong presumption that the transaction is an adventure in the nature of trade. Even so, the presumption is not conclusive; and it is conceivable that, on considering all the facts and circumstances in the case, the court may, despite the said initial intention, be inclined to hold that the transaction was not an adventure in the nature of trade." Mr. Chowdhury has drawn our attention to fourth and fifth factors formulated in that decision and submitted that the transaction out of which this appeal arises ought to result in answer to the question on which the appeal was admitted in favour of the Revenue. According to him, the intention of higher profit clothed the transaction with the character of adventure in the nature of trade and no element of pride of possession came into the picture. Whether a particular transaction f....