TMI Blog1998 (2) TMI 159X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as business income. He, therefore, treated the sale proceeds of Rs 32 lakhs as a business receipt. After deducting the cost of plot and construction amounting to Rs. 3,46,000, the balance amount of Rs. 28,54,000 was taxed as income from business. 5. The CIT(A) confirmed the view taken by the AO and dismissed the assessee s appeal. 6. The learned counsel for the assessee submitted that this was an isolated transaction carried out by the assessee 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or a consideration of Rs. 10,620 and shortly after purchase, they carved it into four plots and sold them individually. On these facts, the Hon ble Supreme Court held that the income derived by the said ladies was assessable as business income. He submitted that in the present case, the assessee entered into an agreement with the builder, got three flats constructed and those three flats were sold individually vide three separate sale deeds. The facts are almost 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant time, committed to acquire shares worth Rs. 25 lakhs in a company and it was this pressing necessity which forced it to drop the original idea of constructing buildings over these two plots and sell them. Held , on the facts found by the Tribunal, that the sale by the assessee was not an adventure in the nature of trade and the excess realised by the sale of the two plots did not constitute income from business. Profit-making would normally not be an irrelevant 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 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, the assessee carved out the land into plots and sold them within a few months, coupled with the other circumstances of the case, is consistent more with the theory of adventure in the nature of trade than with the other theory accepted by the Tribunal." 8.5 It is clear from the aforesaid judgment that the Hon ble Supreme Court had confirmed the view of the Hon ble High Court in the aforesaid judgment by holding that the assessee in those cases had the intention to 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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