TMI Blog1980 (9) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... eived by the assessee by way of damages on account of the breach of the agreement committed by the sellers, Mody Kalidas Hargovandas and another, could not be treated as the assessee's income ? " The facts leading to this case are as follows: We are concerned with assessment year 1969-70, the previous year being calendar year 1968. The assessee is an individual and he has no personal books of account. The assessee filed return of income on June 30, 1969, in respect of the assessment year 1969-70, declaring a total income of Rs. 39,285. The assessee had entered into an agreement with one Modi Kalidas Hargovandas and another for the purchase of an immovable property situate on Gandhi Road, Ahmedabad, for a sum of rupees two lakhs. The agreement was entered into in 1956, and under the terms of the agreement, the sellers had to execute the deed of conveyance within a period of three years. At the time of the agreement, the assessee paid an amount of Rs. 50,000 as earnest money and the balance of Rs. 1,50,000 was to be paid at the time of the execution of the deed of conveyance. The vendors failed to execute the deed of conveyance as stipulated and the agreement executed in 1956 was c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground that it was receipt of capital nature. The ITO, however, held that the amount was taxable as income from " other sources ". Being aggrieved by the order of the ITO, the assessee carried the matter in appeal before the AAC. The AAC by his order held that the amount of Rs. 8,000 could not be taxed as it was merely a reduction in the purchase price of a capital asset. He observed that the assessee was not a dealer in property and that the ITO himself had taxed the amount of Rs. 8,000 not as business income but as income from " other sources ". He was of the view that the addition of the amount of Rs. 8,000 made in the assessment year 1965-66 should be deleted. As, regards the amount of Rs. 8,000, which was referred to in the agreement of July 8, 1965, the assessee showed that amount in his return but contended that this amount was not liable to be taxed and this contention of the assessee was accepted by the ITO because the ITO did not bring that amount of Rs. 8,000 to tax so far as the assessment year 1966-67 was concerned. As regards the assessment year under consideration, the ITO held that the assessee was a dealer in property. He held that the amount of Rs. 8,000 plus R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he question of burden of proof in cases of this nature has been dealt with in several decisions of the Supreme Court and of this court also. In CIT v. Premji Gopalbhai [1978] 113 ITR 785 (Guj), it was held that the burden of proving that a particular transaction was an adventure, in the nature of trade was on the revenue. That burden could be discharged by pointing to circumstances which lead to the conclusion that the transaction was an adventure in the nature of trade. However, even if land which was not a commercial commodity was purchased and it could be shown that the purchase of the land was made solely and exclusively with an intention to resell it at a profit, it would be a strong factor that the transaction would be an adventure in the nature of trade. To the same effect are the observations in CIT v. Gordhandas Trikambhai Patel [1979] 118 ITR 81 (Guj). All the earlier decisions were considered in Gordhandas Trikambhai Patel's case and the question that, was posed in the light of those decisions was: " Does the revenue burden being on the revenue, establish that the manner of dealing with the lands in question in the instant case by the two assessees stamped the transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the Tribunal on the materials placed before it was right in coming to the conclusion that the assessee was not dealer in immovable property. Mr. Raval for the revenue drew our attention to the fact that between November, 1958, and February, 1963, the assessee had entered into about fifteen transactions of sale or purchase of immovable property. Out of fourteen properties purchased by the assessee, he had sold eight properties. Six of the properties purchased were not sold. Out of the properties sold by him, the assessee had not made any profit in five transactions. In one transaction of resale he had suffered a loss of Rs. 500 and there was only profit in three transactions of resale, Rs. 1,000 by sale of property on November 7, 1963, Rs. 3,000 on sale of property on July 20, 1960 and Rs. 775 during the year of account relevant to the assessment year under appeal. (This is in reference to the land acquisition proceedings for land at Motera). The Tribunal held that considering all the circumstances and evidence on record the assessee was not proved to be a dealer in immovable property. In our opinion, the Tribunal has applied correct legal tests for the purpose of arriving at ..... X X X X Extracts X X X X X X X X Extracts X X X X
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