TaxTMI 
TaxTMI 
1981 (3) TMI 61
X X X X Extracts X X X X
X X X X Extracts X X X X
....r the purchase, he developed the said land into plots and started selling them in the year 1964, the first sale having been made on March 2, 1964. During the assessment year 1970-71, the subject-matter of I.T.R. No. 87 of 1976, the assessee sold two plots measuring 266,6 square yards each and one plot of 600 square yards for an amount of Rs. 18,733 and earned a profit of Rs. 13,939 thereon. Similarly, in the assessment years 1971-72 and 1972-73, the subject-matter of I.T. References Nos. 56 and 57 of 1978, he sold 3,474.5 square yards for Rs. 55,730 and 1,807 square yards for Rs. 33,270, respectively. The profits from the sales were shown by the assessee in the returns as capital gains but the ITO being of the view that the assessee was ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of 1976, the learned counsel for the assessee concedes that the 2nd question has no independent existence and it would be covered by the answer on question No. 1. So, the sole question involved in all the three references is as to whether the profit earned by the sale of the agricultural land during the concerned accounting years constitute business income of the assessee or is in the nature of capital gains. The criteria to determine as to when a receipt by sale of land would be a revenue receipt or capital receipt was laid down by the Supreme Court in G. Venkataswami Naidu & Co.v. CIT [1959] 35 ITR 594, in the following terms (headnote): " If a person invests money in land intending to hold it, enjoys its income for some time, and t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....merely counting the number of facts and circumstances pro and con; what is important to consider is their distinctive character. In each case, it is the total effect of all relevant factors and circumstances that determines the character of the transaction. In cases 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 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 th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....CIT [1977] 107 ITR 716 (All), Michael A. Kallivayalil v. CIT [1976] 102 ITR 202 (Ker), Janab Abubucker Sait v. CIT [1962] 45 ITR 37 (Mad) and CIT v. Jalannagar Tea Estate (P.) Ltd. [1962] 45 ITR 626 (Assam). However, the conclusion arrived at in all these cases are based on their peculiar facts and these decisions, therefore, have no bearing on the facts of the present case. In Deep Chandra and Co.'s case [1977] 107 ITR 716 (All) an agreement to purchase land was entered into some time long before the year 1943 because the suit to enforce this agreement was dismissed in April, 1943. It was only in the year 1956 that the assessee obtained permission from the town planner, parcelled out the land and sold several, plots thereafter in the years....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e." In Jalannagar Tea Estate's case [1962] 45 ITR 626 (Assam) the assessee-company purchased in the year l944 lands measuring 5,308 bighas and in the year 1952 entered into an agreement with a development company to sell 1,669 bighas out of the said land for the purpose of developing a residential colony. The profits received by the said sale were held to represent a capital receipt by the Tribunal as well as by the High Court on the ground that when the assessee acquired the property in the year 1944, it had no intention of selling it or to develop it into plots and dispose of them on profit. In Janab Abubucker Sait's case [1962] 45 ITR 37 (Mad) the assessee purchased 9 acres of land on August 9, 1945, and sold it on April 30, 1947, ....