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2007 (4) TMI 387 - AT - Income TaxSale of land - Nature of land at the time of transfer - income from agriculture, rent, interest from bank etc. - ‘Capital gain’ Or ‘Income from business’ - expression "in the nature of trade" - agricultural lands converted into non- agricultural lands - sold by cutting it into smaller pieces of plots - HELD THAT:- In this case, undisputedly, the assessee acquired the land by way of inheritance in 1980 and not even by way of purchase. Thereafter, the assessee continued to hold the land as agricultural land and deriving income therefrom as such. Notably, there was no intention manifested in assessee to acquire and hold the land so as to realize profits or for an adventure in the nature of trade. It is not uncommon to find that due to rapid growth of urban areas, more and more rural agricultural lands are being converted into cities. The holder of such agricultural lands ostensibly does not have a control over the process of urbanization. The only intention of the holder of such agricultural land under the circumstance is to maximize his realization from sale of such land. All along the holder of such lands looks upon the gain only as a capital accretion. The intention at the time of acquiring the land (i.e., inheritance) and holding it thereafter is not to deal in real estate. In any case, the subsequent sale cannot represent adventure in the nature of trade. In the instant case, clearly, it cannot be said that when the assessee inherited the land in 1980, it had intention to undertake adventure in the nature of trade by becoming a dealer in lands. Similarly, at the time of getting the lands converted into non-agricultural lands also the only intention of the assessee to maximize his realization from disposal of a capital asset. To reiterate, the character of land firstly is ancestral and secondly there is no material to hold that prior to such sale transaction undertaken the assessee had undertaken any such dealing in sale and purchase of land. Therefore, there is nothing to infer that the assessee ever acquired the land to deal in the same as a businessman. Thus, in our view, the revenue has not discharged its onus to categorically prove that the dominant intention of the assessee was to embark on adventure in the nature of trade when the assessee sold the lands in question and earned surplus. We conclude by noticing that in view of the discussion, the impugned transactions have to be accepted as resulting in gain assessable under the head ‘Capital gain’.
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