TaxTMI 
TaxTMI 
2025 (8) TMI 1025
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....he assessment findings to this effect reading as under: "7. Coming to the addition itself, the received information that industrial land measuring 10490 sq. mtrs. situated at village Lakeshwari, Bhagwanpur, Roorkee was sold by the assessee Sh. Mohd. Akram along with two co-owners namely Sh. Ramesh Chand & Sh. Rao Farmood for a consideration of Rs. 2,30,62,500/- on 27.08.2008 to M/s Trading Engineers International Ltd., New Delhi in which the share of the assessee was 1/4th (i.e. 2622.5 sq. mtrs.). The AO was also informed that this land was declared as part of notified industrial area by the Central Excise vide notification no. 50 dated 10-06-2003. He therefore issued notice u/s 148 of the Act on 22.03.2016 which is stated to be duly served upon the assessee. Howerver the assessee did not respond to this notice. The AO thereafter issued a notice u/s 142(1), pointing out this fact and asking the assessee to show cause as to why the same should not be assessed as income from business. The assessee did not respond to this notice also. Therefore, the AO after noting that even in the sale deed dated 30.08.2008, it had been mentioned that land had been declared as industrial lan....
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....t times, this was done individually and at time this was done in association with other persons. It is important to state this because in deciding whether the assessee was engaged in an adventure in the nature of trade, regularity of transactions is one of the tests that has been prescribed by the Hon'ble Supreme Court in the case of G. Venkataswami Naidu vs CIT(1959 AIR 359). The narration in the purchase and sale deed that the land was a part of area which had notified for the purpose of setting up industrial zone and the classification of the land in the said sale deed is of relevance because it reveals that when purchasing the land, the assessee was well aware of the fact that he was purchasing a land in an area which had been demarcated as an industrial zone and considering that he was regularly indulged in such transaction of purchase and sale of land in this zone, Is reflective of his intent to trade in the purchase and sale of land. The Hon'ble Supreme Court in the case of G. Venkataswami Naidu vs. CIT (Supra) has pointed out that the intention with which the land is purchased is an important consideration to determine whether the profits gained on subsequent sale o....
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....when the land was purchased by the assessee, it was an agricultural land as per the revenue records. Furthermore, when the lands were sold by the assessee they continue to remain agricultural lands as per the revenue records. However, in the meanwhile the state govt, had issued a notification whereby the village in which these lands were located was notified as an industrial area/estate. Perusal of the notification reveals that it has been mentioned in the same that before using the land for industrial purposes, the land use conversion would have to be done and the plans for the industrial plants to be setup on these lands would have to be approved by the Competent Authority. Thus, from a plain reading of the notification it is clear that the notification in itself does not convert agricultural land into industrial land. What it does, is to give permission for conversion of the notified land into an industrial estate after changing the land use pattern. The land use pattern in both these cases from agricultural to industrial was applied for by the purchaser of the lands after the assessee had sold these lands to the industries namely M/s Fena Pvt. Ltd., New Delhi and M/s Hunung Toy....
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....was outside the outer municipal limit of Hyderabad. The land transferred could not be considered a capital asset under the provision of section 2(14) (iii) of the I.T. Act. From the ratio of these judgments. It is quite clear that mere notification of the area In which the assessee's land was situated as an industrial zone would not alter the character of the land and render into a capital asset. The land continued to remain an agricultural land until its sale. Accordingly the assessee was not liable to pay capital gains, Thus it was not a capital asset which could be brought to tax under the head capital gains tax. However, in the instant case the A.O. has also not brought the same to tax under this head. Rather he has held that because the land was purchased with the intention of selling it at a profit, it was a adventure in the nature of trade. The only question is whether there can be an adventure in the nature of trade in respect of purchase and sale of agricultural land. The AO's arguments revolve around the thesis that the purchase of the land just before the notification of the same into Industrial estates and the sale of the land after such notification to industri....
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.... the reliance placed on the provisions of Section 2(14)(iii)(a) and (b) is of no assistance to the assesses. If the lands, in question, were not purchased for the purpose of agriculture, with an intention to hold them as a "capital asset", we do not find any merit in the contention of the assesses, that the said agricultural lands were excluded from the definition of "capital asset" and, as such, the income from the sale thereof not liable to be taxed. In the result, we reject the contention of the assesses in this respect. 12. Thus it is quite clear that even if an asset is an agricultural land, if it is purchased not with a view of using it as an agricultural land but with a view of selling It to make a huge profit, then the profits from such land can be brought to tax as business income as the same could be an adventure in the nature of trade. In the instant case it appears that this was done. The land was purchased and sold off after short intervals. In one instance this interval was as short as three months. It was purchased just on the eve of state govt., notification of industrial area and inclusion of these lands in the identified area. The land which were agricult....