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2006 (1) TMI 166 - AT - Income TaxCapital Gains - residential house - purchase and sale of agricultural lands, plots - deduction u/s 48 - Sale of plots out of the land inherited - transaction was an adventure in the nature of trade or not - HELD THAT:- As regards the residential house at Amritsar, the contention of the assessee that the same was purchased for the purpose of his own residence and later the same was sold after a gap of 10 years because of terrorist activities at Amritsar, the same appears to be correct. The Revenue has not placed any material on record that after the purchase of this house, the assessee took some further steps for use of this property for commercial purposes and not for residence. Coupled with this is a fact of holding of this property for a longer period of 10 years which would show that the property was. purchased not with an intention to earn profit rather for investment. Therefore, the CIT(A) has rightly treated the resultant surplus as liable to capital gains because the same represented investment only. As regards the shops, it is not in doubt that the shops were given on rent and such rental income was disclosed in the returns as income from property in the earlier assessment years. This shows that the intention of the assessee was to earn rental income. This intention is further strengthened from the fact that the shops were held for a period of 10 years. In the case of G. Venkataswami Naidu & Co. vs. CIT [1958 (11) TMI 5 - SUPREME COURT], the Hon'ble Supreme Court has held that if a person invested money in land intending to hold it, enjoys its income for some time, and then sells it at a profit, it would be a clear case of capital accretion and not profit derived from adventure in the nature of trade. Even if the assessee was extensively dealing in purchase and sale of land yet it does not mean that it could not hold certain properties for the purpose of investment. Thus, we do not find any fault with the order of the CIT(A). The same is upheld and this ground of appeal is rejected. Sale of plots out of the land inherited by the assessee through the Will of late Sh. Kashmiri Lal - It is obvious that Late Sh. Kashmiri Lal had executed the Will on 15th Sept., 1981 and the same was registered with sub-Registrar, Ludhiana on 16th Jan., 1989. Late Sh. Kashmiri Lal expired in the year 1985. There is no evidence or material placed on record to show that the land owned by Sh. Kashmiri Lal was held as Benamidar of the assessee. Therefore, in the absence of any documentary evidence, we agree with the findings of the CIT(A) that the genuineness of the Will could not be doubted. In the case of CIT vs. Smt. Sushila Devi Jain [2002 (11) TMI 86 - PUNJAB AND HARYANA HIGH COURT], held that for the purpose of deciding whether a particular transaction was an adventure in the nature of trade or not, one has to see the intention of the assessee at the time of purchase of the land. Since the land was not purchased by the assessee, it could not be said that the intention was right from the beginning to earn profit. In the present case also, the land was not purchased by the assessee himself and he inherited by virtue of Will. Therefore, it could not be said that the intention of the assessee was right at the time of purchase to earn profit from the same. Subsequently, when the assessee became owner, the resultant surplus on the date when he converted into stock-in-trade by taking the fair market value was shown as capital gain and further surplus was shown as business profit. Such course of action was in conformity with the provisions of the Act. Thus, we do not find any justification to interfere with the orders of the CIT(A) and the same are upheld and respective grounds of appeals of the Revenue are dismissed. In the result, all the appeals filed by the Revenue are dismissed.
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