TaxTMI 
TaxTMI 
2021 (1) TMI 1038
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....manufactured by KMF, Karnataka. 4. On verification of the computation of Capital gain submitted by the assessee, the AO found that the assessee has sold i.e one Plot for Rs. 16,10,000/- and computed the long term capital gains of Rs. 25,455. The AO noticed that assessee had sold one more plot during Assessment Year 2012-13 and computed capital gain of Rs. 2,53,450/- and claimed exemption under section 54F of the Act. The AO, therefore, verified the details of sites sold by the assessee and he found that the assessee had purchased one vacant residential purpose converted land of 32 guntas in Assessment Year 2008-09 vide registered sale deed dated 07.09.2007 for Rs. 17 lakhs. The total cost of purchase of the land including stamp duty was Rs. 18,82,190/-. The assessee paid a sum of Rs. 5,79,800/- for approval to convert the larger extent into residential plots of different sizes, besides incurring expenditure of Rs. 23,500. The total cost of acquisition of the larger extent of land and its conversion to approved sites was Rs. 24,85,515 (Rs. 1882190 + Rs. 5,79,800 + 23,500). The Mysore Development Authority vide letter 21.05.2010 granted permission to convert the 32 guntas of land in....
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.... Narendra J.Bhimani ITA No.411/Rjt/2012 dated 31.1.2018. The learned DR relied on the decision of the Hon'ble Supreme Court in the case of Raja J.Rameshwar Rao Vs. CIT 42 ITR 179 (SC) wherein it was held that when a person acquires land with a view to selling it later after developing it, he is carrying on an activity resulting in profit, and the activity can only be described as a business venture. Where the person goes further and divides the land into plots, develops the area to make it more attractive and sells the land not as a single unit and as he bought it but in parcles, he is dealing as his stock-in-trade; he is carrying on business and making a profit. He also relied on the decision of the Hon'ble Karnataka High Court in the case of CIT Vs. B.Narasimha Reddy 150 ITR 347 (Karn.). 9. We have carefully considered the rival contentions. The Assessee purchased 32 Guntas of land on 7.9.2007. The land was originally agricultural land but was converted to non-agricultural use by order of Deputy Commissioner, Mysore District, Mysore dated 22.6.2006. Even prior to purchase the land use became non-agricultural. The Assessee applied for obtained permission for division of 32 guntus....
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.... the character of isolated transaction 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 data for determining the character of the transaction. What is the nature of the commodity purchased and resold and in what quantity was it purchased and resol....
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.... 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 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 ....