TMI Blog1980 (1) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... trade and hence the said amounts are chargeable to tax as income in the hands of the assessee-firm in the respective assessment years under reference ? " The relevant assessment years are 1964-65, 1965-66, 1966-67 and 1967-68. The relevant previous years are the corresponding previous financial years. The assessee is a partnership firm and has been assessed for these years as unregistered firm but treated as a registered firm under s. 183(b). The assessee-firm consists of two partners, namely, Purandeo Sindhwani and Lalit Mohan Sachdeva. Survey No. 12/2, area 30.02 acres, and survey No. 26, area 0.80 acres, of village Gohalpur, belonged to Baldev Prasad who was ex-malguzar of the village. By an agreement dated 6th February, 1961, Baldev Prasad and his wife, Smt. Surjanbai, agreed to sell these survey numbers in favour of Bhimsen Sachdeva, father of Lalit Mohan Sachdeva, or his nominees. The said survey numbers were sold by Baldev Prasad and his wife on 16th October, 1961, in favour of Lalit Mohan Sachdeva and Purandeo Sindhwani, the partners of the assessee-firm, for a sum of Rs. 45,000. In the sale deed the survey numbers are described as khudkasht of the vendors. Village Goh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee-firm again said that after their town planning scheme was approved they carried out survey work and laid out plots and that 89 plots, practically all in Survey No. 12/2, had been sold out. The partners of the assessee-firm were intimated by the Town Improvement Trust that the schemes Nos. 9 and 9A had been approved by the Government on 2nd May, 1968. The returns for all the relevant years were filed voluntarily by the assessee in the status of an unregistered (?) firm. In these returns, the assessee declared its income from business of purchase and sale of land as follows : Rs. 3,447 for the assessment year 1964-65 ; Rs. 10,607 for the assessment year 1965-66 ; Rs. 18,954 for the assessment year 1966-67 ; and Rs. 6,851 for the assessment year 1967-68. A partnership deed was executed on 1St April, 1965, by Purandeo Sindhwani and Lalit Mohan Sachdeva in which the name and style of the partnership business was described as " M/s. Jawahar Development Association". The preamble of this deed states that the aforesaid persons had purchased agricultural land from Smt. Surjanbai and Baldev Prasad for a sum of Rs. 45,000 and that they had been making improvements on the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of business nature but at the same time there are other circumstances which lead to the contrary conclusion and the same are more weighty in nature, we have to take the cumulative effect in view and further the burden is on the Department to prove that the receipts are of taxable nature. Besides, relying on some circumstances no reliable material has been brought on record in this connection in its favour. We, therefore, hold in the first instance, that the land is agricultural in nature and hence any income earned by the assessee on sale of some portions of it amounts merely to a return of capital investment and cannot be taxed. Further, we are also of the opinion that these transactions are not an adventure in the nature of trade. " The status of the assessee, as that of a registered firm as held by the ITO and the AAC, was not disputed by the assessee before the Tribunal. On an application made by the Dept., the Tribunal, as stated earlier, referred the questions of law which we have set out above. In holding that the income as returned by the assessee was not chargeable to income-tax, the Tribunal has laid great stress on the fact that the land was agricultural land and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evelops the area to make it more attractive and sells the land not as a single unit and as he bought it but in parcels, he is dealing with land as his stock-in-trade ; he is carrying on business and making a profit. " These principles were approved in Khan Bhadur Ahmed Alladin and Sons v. CIT [1968] 68 ITR 573 (SC) and P. A Mohammed Meerakhan v. CIT [1969] 73 ITR 735 (SC). It is also well settled that the question whether a particular transaction is a capital investment or an adventure in the nature of trade is a mixed question of law and fact: G. Venkataswami Naidu Co. v. CIT [1959] 35 ITR 594 (SC), Raja Bahadur Kamakhya Narain Singh v. CIT [1970] 77 ITR 253 (SC) and Dalmia Cement Ltd. v. CIT [1976] 105 ITR 633 (SC). We have earlier set out the various facts and circumstances which have been established in the instant case. It is true that the land purchased by the assessee was agricultural land. The partners of the assessee firm were, however, not agriculturists. Soon after the purchase of the land, they divided the whole area into building plots for developing colony styled as Sachdeva Nagar and got the scheme approved by the Town Planning Board. This is a very strong indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... khasras for the relevant years which go to show cultivation only in about 2 acres of land in 1964-65, 1965-66 and 1966-67. The khasra for the year 1967-68, is not material as it covers a period which is beyond the previous year for the year 1967-68, relevant in this case. These revenue khasras were produced for the first time before the Tribunal but the assessee did not state that the land was cultivated by it or its partners. Even assuming that the area mentioned in the khasras for the years 1964-65 to 1966-67, was cultivated by the assessee or its partners, the area covered is negligible and it does not show the intention that the land was purchased for carrying on agriculture. As stated by us, soon after the purchase of the land it was divided into plots and the scheme for dividing it into plots was got approved in April, 1962, which clearly shows that the whole idea in purchasing the land was to make profit by dividing it into plots and selling them. The learned counsel for the assessee also submitted that after December, 1966, there has been no sale of plots, even if this be so, it only shows that the assessee gave up the idea of selling the plots after December, 1966, to o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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