TaxTMI 
TaxTMI 
TaxTMI 
2018 (11) TMI 1179
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....nd a further sale made to the assignee of the intended purchaser has been construed as two separate sales by the Tribunal, which indicates that the Tribunal has not applied its mind properly in considering the essential facts with respect to the transaction. Reliance is also placed on the decision of the Hon'ble Supreme Court in G.Venkataswami Naidu & Co. v. Commissioner of Incom e -Tax [(1959) XXXV ITR 594]. 2. The question of law framed is re-framed as follows: Whether on the facts and circumstances of the case the Tribunal erred in finding no adventure in the nature of trade when there were purchases made of properties steadily over a period and a transaction of sale carried out in the subject assessment year leading to a clear presumption of 'adventure in the nature of trade' as contemplated under Section 2(13) of the Income Tax Act, 1961 [for brevity "IT Act"]? 3. On facts, it has to be noticed that the Assessing Officer [for brevity "AO"] initiated the proceedings under Section 143(3) of the Act on the basis of the return filed by the assessee showing the amount received on sale of certain properties and claiming exemption from capital gains alleging it to be s....
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....Rs. 8,700/-. After four years, the said properties were sold to Janardana Mills Ltd. in two lots, wherein the appellant received a sum, far in excess of the purchase price. The Income Tax Officer [ITO] found that there was no evidence to show that the properties were purchased as agricultural land or that he had acquired it as an investment. We immediately notice the finding of the AO that the assessee therein had not purchased the properties as an investment and had purchased it keeping in mind the possibility of immediate sale on profit to the seller who eventually acquired the property. This is also one of the considerations which weighed with the Hon'ble Supreme Court in dismissing the appeal and finding on facts that there is an adventure in the nature of trade in the transactions as dealt with in G.Venkataswami Naidu & Co.(supra). 7. The findings of the Tribunal was also elaborately detailed by the Hon'ble Supreme Court. The Tribunal had found that the first purchase made was in the name of the son-inlaw of the Managing Partner of the assessee firm, who was also an Assistant Manager in Janardana Mills Ltd. The subsequent acquisitions were made in the name of the firm....
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....he description of an adventure in the nature of trade. 10. The learned Senior Counsel for Government of India (Taxes) would specifically stress on the finding of the Hon'ble Supreme Court that even an isolated incident could result in, it being characterised as an adventure in the nature of trade. We cannot and do not at all dispute the said proposition. However, it has to be noticed that the Hon'ble Supreme Court had further elucidated the matter in the following manner: "Sometimes it is said that a single plunge in the waters of trade may partake of the character of an adventure in the nature of trade. This statement may be true; but in its application due regard must be shown to the requirement that the single plunge must be in the waters of trade. In other words, at least some of the essential features of trade must be present in the isolated or single transaction". Hence, the mere fact that there was an isolated transaction of sale which generated a huge profit to the assessee would not by itself result in the transaction being treated as an adventure in the nature of trade. 11. Distinguishing an investment from an adventure in the nature of trade, it was held so....
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....nd circumstances pro and con; what is important to consider is their distinctive character. In each case, it is the total effect of all relevant factors and circumstances that determines the character of the transaction; and so, though we may attempt to derive some assistance from decisions bearing on this point, we cannot seek to deduce any rule from them and mechanically apply it to the facts before us". 12. We have to notice that none of these tests have been employed by the AO in finding out an adventure in the nature of trade in the transactions in land entered into by the respondent-assessee. The AO has merely recorded the purchases made about 15 years back and a solitary purchase made in the year 2006-07 as also the sale of properties for the previous year to the assessment year. The AO has also examined other purchases made in different parts of the State and outside the State, again of landed properties by the assessee. It is on this premise alone that the assessee was found to have indulged in adventure in the nature of trade. The AO has not examined whether the properties purchased were lying contiguously or there was any connection between the intended purchaser in th....