TaxTMI 
TaxTMI 
2020 (2) TMI 1275
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.... 2008-09 06/10/2008 141/3 Ac. 1.15.8 guntas 2008-09 21/07/2008 141/15 Ac. 0.05 guntas Total Ac. 10.05 Guntas Subsequently, the assessee has converted the above agricultural land into non-agricultural land by obtaining necessary approvals from the Revenue authorities on the following dates: Survey No. Date of approval for conversion F.Y. 150/1 01/01/2008 2007-08 141/3 01/08/2011 2011-12 141/15 19/04/2012 2012-13 The assessee subsequently divided the entire land into plots and sold the same to M/s. Reserve Bank Employees' Housing Welfare Society (REHWS) for a consideration of Rs. 380/- per sq.ft. through regd. agreement bearing document No.1992/2012-13, dated 13/08/2012. The assessee has shown the profit arising out of the sale of the plots as income from the capital gains, however, the Assessing Officer has not accepted the explanation of the assessee on the ground that assessee has purchased the lands with an intention to make a profit and therefore treated the same as income from business and accordingly assessment is completed. 3. On appeal, ld. CIT(A) confirmed the order of the Assessing Officer. 4. Bein....
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.... judgment, in my opinion, he came to a correct conclusion that the activity carried by the assessee in the present case is 'adventure in the nature of trade' for the reason that from the beginning assessee's intention is to make profit out of the sale transaction and not to hold it. The relevant portion of the order of the ld.CIT(A) is extracted as under:- "This question has been the subject-matter of several judicial decisions; and in dealing with it all the judges appear to be agreed that no principle can be evolved which would govern the decision of all cases in which the character of the impugned transaction falls to be considered. When s. 2, sub-s. (4), refers to an adventure in the nature of trade it clearly suggests that the transaction cannot properly be regarded as trade or business. It is allied to transactions that constitute trade or business but may not be trade or business itself. It is characterised by some of the essential features that make up trade or business but not by all of them; and so, even an isolated transaction can satisfy the description of an adventure in the nature of trade. Sometimes it is said that a single plunge in the waters of trade may ....
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....an unnecessary element of confusion or doubt. As we have already observed it is impossible to evolve any formula which can be applied in determining the character of isolated transactions which come before the courts in tax proceedings. It would besides be inexpedient to make any attempt to evolve such a rule or formula. Generally speaking, it would not be difficult to decide whether a given transaction is an adventure in the nature of trade or not. It is the cases on the border line that cause difficulty. If a person invests money in land intending to hold it, enjoys its income for some time, and then sells it at a profit, it would be a clear case of capital accretion and not profit derived from an adventure in the nature of trade. Cases of realisation of investments consisting Of purchase and resale, though 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. 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 d....
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....d by resale can either be an investment or an adventure in the nature of trade. There is no middle course and no half-way house. This statement may be broadly true; and so some judicial decisions apply the test of the initial intention to resell in distinguishing adventures in the nature of trade from transactions of investment. Even in the application of this test distinction will have to be made between initial intention to resell at a profit which is present but not dominant or sole; in other words, cases do often arise 'Where the purchaser may be willing and may intend to sell the property purchased at profit, but he would also intend and be willing to hold and enjoy it if a really high price is not offered. The intention to resell may in such cases be coupled with the intention to hold the property. Cases 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 is no doubt a relevant factor and unless it is offset by the presence of other factors it would raise a stro....
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.... 21.07. 2008 and agricultural land of Ac.1.15.8 guntas in survey no. 141/3 of Tavarkere Village vide sale deed dated 06.10.2008. These additional purchases of agricultural land made during F.Y. 2008-09 represented the land which is situated adjacent to the earlier land of Ac. 8.20 Guntas purchased in survey no.150/1. These additional lands purchased during F.Y.2008-09 were also converted into non-agricultural lands by the assessee during the F.Ys. 2011-12 & 2012-13 by obtaining necessary approval for such conversion from the revenue authorities on 01.08.2011 and 19.04.2012 respectively. 24. It is therefore seen that though the assessee purchased agricultural lands during the FXs. 2006-07 & 2008-09, no agricultural operations were carried out by him on the said lands and no agricultural income was derived by him from the said lands. The agricultural land of Ac.8.20 Guntas purchased during F.Y.2006-07 was immediately converted by the assessee into non-agricultural land during F.Y. 2007-08 itself. The fact that the agricultural land purchased by him was converted into non-agricultural land in the following year without carrying out any agricultural operations during the inter....