9911796707
TMI Blog1998 (2) TMI 159X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. P. 14th Nov., 1962 2,700.00 9th Nov., 1966 900.00 1st Aug., 1968 2,400.00 31st Dec., 1968 1,200.00 15th Jan., 1971 2,000.00 15th Jan., 1971 25.00 9th Dec., 1978 3,500.00 21st Dec., 1978 10,639.50 4th May, 1982 1,000.00 4th May, 1982 9,000.00 1st June, 1982 7,456.35 Total : 40,820.85 3.1 The possession of the said plot was received in the year 1982. The assessee thereafter started construction of a residential house on the said plot and incurred a cost of Rs. 3,05,000 during the year 1982 to 1985. The assessee claimed cost of acquisition of the aforesaid property as well as the index cost as per details mentioned below: F.Y. . Cost Index Cost 1981-82 Plot 41,000 91,430 1981-82 Construction 1,25,000 2,78,750 1982-83 Construction 90,000 1,84,128 1983-84 Construction 75,000 1,44,181 1984-85 Construction 15,000 26,760 . . 3,46,000 7,25,249 3.2 Since the construction of the house could not be completed, the assessee entered into an agreement with a builder, namely, B.K. Uppal vide agreement dt.30th Oct., 1991. According to the said agreement, the appellant became entitled to receive a sum of Rs. 13 lakhs from the said builder as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee during his entire lifetime. The assessee is a journalist. He never carried on any business. The sale of property cannot be regarded as a business activity on the facts and circumstances of the assessee's case. He submitted that the crucial test for determining as to whether a transaction amounts to an adventure in the nature of trade, will depend on the intention with which the plot was acquired by the assessee. The assessee did not own any residential house. He, therefore, booked a plot in the year 1962. The purchase price of the plot was paid in instalments over a period of 10 years from 1962 to 1982. There is no material to show that the plot was purchased by the assessee with a view to carry on business of purchase and sale of land/buildings. The assessee started construction of the residential house property, which continued during the year 1982 to 1985. Since the assessee could not complete the construction of the residential house property, he decided to sell the said property. The agreement with the builder was executed with a view to fetch a maximum sale value, so that the assessee could purchase a small residential flat and could save the surplus amount for meeting his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lmost similar to the facts of the aforesaid judgment. He submitted that intention to make profit by selling the property after developing it in joint venture with a builder clearly amounts to a business activity. He submitted that a careful reading of the agreement executed by the builders indicates that profit on the sale of aforesaid property was derived by the assessee as a business activity. He strongly supported the order of the CIT(A). 8. We have carefully considered the submissions made by the learned representatives of the parties and have perused the order of the learned Departmental authorities as well as all other documents submitted in the compilation to which our attention was drawn during the course of hearing. We have also gone into various judgments cited by the learned representatives of both sides. 8.1 The Hon'ble Supreme Court in the case of G. Venkataswami Naidu & Co. vs. CIT has, inter alia, held as under: "In cases where the purchase has been made solely and exclusively with the intention to resell at a profit and the purchase has no intention of holding the property for himself or otherwise enjoying or using it, the presence of such an intention is a relev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrelevant consideration for every honest and prudent purchaser but will not in every case make the purchase a venture in the nature of trade. To bring a transaction within this category it has to be shown that the sole intention at the time of purchase was to sell the property purchased later on at a profit. The burden is upon the Department to show that a transaction effected by the assessee is an adventure in the nature of trade." 8.3 The aforesaid judgments of the Hon'ble Supreme Court and Hon'ble Delhi High Court clearly indicate that the intention at the time of purchase of the property is an important and relevant factor for deciding the point in issue. It is true that various other factors may also be relevant for arriving at a conclusion as to whether a particular activity amounts to an adventure in the nature of trade. The facts of the present case clearly indicate that the assessee had booked the said plot in the year 1962. At the time of the purchase of the said plot, the assessee had every intention to hold the property for himself and to use the same for construction of a residential house. There is no material on record to indicate that the assessee had purchased the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o resell the said plots at the time when the plots were purchased. Such an intention was apparent from the fact that soon after the purchase, the assessee carved out the land into plots and sold them within a few months thereafter. 8.6 The facts of the present case are clearly distinguishable from the facts of the aforesaid judgment. In the present case, the assessee booked a plot in the year 1962. The purchase price of the said plot was paid over a period of 10 years during the year 1962 to 1982. The assessee had a genuine desire and honest intention to construct a residential house thereon. The plot was held by the assessee for a period more than 10 years after booking the same in the year 1962. Such an intention to hold the said plot as an investment and for using the same for construction of a residential house, is further supported by the fact that the assessee had started construction thereon during the years 1982 to 1985. Thereafter the assessee sold the property by executing an agreement with the builder. Such a sale of property by executing an agreement with the builder was considered by the assessee as the most beneficial mode of realisation of investment in the property ..... X X X X Extracts X X X X X X X X Extracts X X X X
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