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2022 (3) TMI 27 - AT - Income TaxCorrect head of income - Capital gain or business income - income from sale of land - Making huge profit from sale - Whether transaction was an adventure in the nature of trade? - HELD THAT:- We are in complete agreement with the CIT(A) that there is no reasonable basis with the A.O. for holding the transaction of sale of land as being in the nature of adventure in the course of business. On the contrary, we find that the A.O. has only referred to certain decisions of the Hon’ble Apex Court and the Hon’ble High Courts to infer that the impugned transaction was an adventure in the nature of trade, which finding, we find are not based on appropriate appreciation of the ratio laid down in the said cases. AO has made absolutely no effort to examine the facts of the case in the light of the proposition laid down by the various judicial authorities referred to by him for holding a transaction to be an adventure in the nature of trade. Though, admittedly he has gone on to interpret the said term in Para VI of his order but has failed to apply the same appropriately in the facts of the present case. Now the facts on the basis of which the A.O. has held the transaction to be an adventure in the nature of trade are merely that the asset was bought in 2006 and sold in the impugned year, that it was bought for consideration of ₹ 14 lakhs and sold for 6 crores. Merely because, the assessee earned huge profits thereon cannot alone be the criteria or basis for understanding the intention of the assessee in undertaking the transaction. If this be so, then every transaction involving transfer of capital asset where consideration is multiple times the purchase value, it would be treated as an adventure in the nature of trade. CIT(A), we find ,has noted that except for the facts as stated above, there was nothing else indicating that the transaction was undertaken by way of or with the intention of conducting it by way of a business. He has pointed out that this was the solitary transaction undertaken by the assessee, and had not frequently such transactions nor had the asset sold ever been claimed as a business asset and depreciation claimed thereon, the assessee having treated the said land as investment all throughout. We agree with the CIT(A) that there was no basis at all with the A.O. for treating the transaction as an adventure in the nature of trade. We therefore see no reason to interfere in the order of the CIT(A) allowing the assessee’s claim of treating the transaction as that of transfer of a capital asset income earned thereon being in the nature of capital gain. - Decided against revenue.
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