TaxTMI 
TaxTMI 
1982 (6) TMI 34
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....n enabled the company to acquire by purchase, hire, lease, exchange or otherwise, lands, buildings and hereditaments of any tenure or description and any estates or interest therein or any right over or connected with land and either to retain the same for the purpose of the company's business or to turn the same to account by selling, conveying, assigning or letting on lease. The assessee purchased on September 29, 1950, a plot of land measuring 198 grounds, equivalent to 10 acres and 89 cents, situate in the villages of Virugambakkam and Saligramam, for a sum of Rs. 1,00,000 from one Sanjeevi Naidu. At the time of the purchase of the said land, there was a built-up studio along with machinery, which was known as Shirdi Studios, on that la....
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.... been sold. The assessee claimed that the sale of vacant sites during that year was in the course of its business or an adventure in the nature of trade. The ITO took the view that the surplus of the sale proceeds of the land, that is, sale proceeds less the cost price, represented capital gains and brought to tax a sum of Rs. 28,608 as long-term capital gains. The assessee appealed to the AAC who took the view that though originally the land formed part of the capital assets, the assessee converted the capital asset into stock-in-trade and that, therefore, it was assessable as income from an adventure in the nature of trade and not as capital gains. The Revenue took the matter in appeal to the Tribunal. Before the Tribunal, the Revenue con....
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.... is an adventure in the nature of a trade or not, ultimately answered the question in favour of the Revenue holding that the assessee, which was carrying on the business of Mm production, had purchased the land containing the studio fully equipped, that thereafter the film production was carried on in the studio right from 1950, the year of purchase; that there was no intention at any time, after the purchase, to treat the land as a stock-in-trade and to sell the same; that in the year 1963, the assessee had applied for the approval of a layout and got the approval of the authority and that when the company was involved in debts, it chose to sell the land for discharging those debts. The Tribunal also stated that in the agreement entered in....
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.... selling the lands as laidout plots through the City Lands Corporation for the purpose of discharging the debts and that after getting permission from the town planning authority for a layout and after developing the land into laid-out plots, the assessee sold the land through the City Lands Corporation. In this case it cannot de disputed, and it has not been disputed by the counsel for the petitioner-assessee that the land originally formed a capital asset, which was being used for the production of films and that the normal sale of such an asset can be treated only as a sale of capital asset or as a realisation of an investment. However, Mr. K. Srinivasan, learned counsel for the assessee, would contend that the land in question did not c....