2009 (3) TMI 126

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....ear 1993-94. 2. The facts relevant for the purpose of this appeal are as under: The respondent-assessee is a private trust and it filed a return of income on June 30, 1993, declaring an income of Rs. 88,62,897 as an income from capital gains. The return was originally processed under section 143(1A) of the Income-tax Act (hereinafter referred to as "the Act") and the assessee entered into an agreement of sale on April 6, 1989, with Mrs. Sayeeda Fathima Begum for purchase of the agriculture lands in Sy. Nos. 35 to 39 (old Sy. No.100) of B. Narayanapura in Bangalore south taluk and an advance of Rs.10,000 was paid on that day and a further advance of Rs. 90,000 was paid on August 30, 1989. The assessee, after entering into an agreement,....

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....try was rejected. The Assessing Officer found that a sum of Rs. 9 lakhs had been paid to one Sri Y.B. Krupashankar to purchase the other property at B. Narayanapura. All these facts, amongst the others, as stated in the assessment order were taken into consideration and it was concluded that the assessee was carrying on an adventure in the nature of a trade and, therefore, was liable to be taxed under the head "Income from business" and not under the head "Income from capital gains". The assessee was hence treated as an association of persons and the entire income received from the sale of property was brought to the tax under the head "Income from business" in the assessment order, dated March 28, 1994. 5. Aggrieved by the order, an app....

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....n order to derive the income from business and consequently recorded a perverse finding ? 3. Whether the appellate authorities were correct in holding that the assessee cannot be assessed as an 'association of persons' but should be assessed in the hands of the beneficiaries ?" 7. The hon'ble apex court in the decision reported in Janki Ram Bahadur Ram v. CIT [1965] 57 ITR 21 (SC), held that (headnote). "The facts that the appellant made a profitable bargain when it purchased the property and that it had a desire to sell the property if a favourable offer was forthcoming could not without other circumstances justify an inference that the appellant intended by purchasing the property to start a venture in the nature of trade." 8. So....