1984 (12) TMI 62

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....ding that the title in lands vested in the assessee and the sales effected by the assessee were not void ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the true profit earned by the assessee from the sale of plots during the year ending March 31, 1970, can be ascertained and are liable to tax ? " The facts that we could gather from the statement of the case are these : The assessee is a building contractor. The assessment year concerned is 1970-71. On March 15, 1968, he purchased a land measuring 20,131 sq. yds. in the heart of the city of Mysore from H.H. Maharaja of Mysore, for a consideration of Rs. 2 lakhs. The assessee divided this land into plots and sold the same d....

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....for building a cinema theatre and a hotel; and (4) That the profit or loss could be assessed only when the transaction of sale was completed. The Tribunal considered and rejected all these contentions. The Tribunal reached the conclusion that the assessee had no intention at the time of purchasing the land to build a cinema theatre or a hotel and his only intention was to divide the same into house sites and to sell the same on profit. The Tribunal also held that the profits made from the transaction is liable to assessment irrespective of the fact whether the assessee had title or not. As regards the covenant to indemnify the purchasers by the assessee, the Tribunal observed that it was a common covenant to be found in all sale deeds....

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....row from the bank indicates that he had no intention to build a hotel or a cinema theatre. So ran the conclusion reached by the Tribunal. A similar case came up before this court in CIT v. Ramaiah [1984] 146 ITR 39 (Kar) and CIT v. Narasimha Reddy [1984] 150 ITR 347 (Kar). This court after applying the principles enunciated by the Supreme Court in Venkataswami Naidu & Co. v. CIT [1959] 35 ITR 594 (SC), Raja J. Rameshwar Rao v. CIT [1961] 42 ITR 179 (SC) and Janki Ram Bahadur Ram v. CIT [1965] 57 ITR 21, has held that if the assessee purchased land, converted the same into house sites and disposed of the same for attractive prices, then his transactions may be stamped with the character of an adventure in the nature of trade. The cumul....