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TMI Blog1985 (3) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... atter at length in paragraphs 2 to 21 of his order. He duly recorded the necessary facts and the arguments made before him by the learned authorised counsel of the assessee and then came to the conclusion that the Sikandrabad property having been acquired in realisation of a trade debt was a business asset and that when that property was sold by the assessee, it resulted into profits and gains of business. As far as the quantum of surplus realised is concerned, he reduced it to Rs. 3,71,832, i.e., to the same figure which had been shown by the assessee as capital gains in the return of income filed. 3. It is against the abovementioned findings of the Commissioner (Appeals) that the assessee is in appeal raising ground Nos. 1 to 6 of the petition of appeal. Mr. C.S. Aggarwal, the learned authorised counsel of the assessee, has vehemently objected to the findings of the Commissioner (Appeals). He has also taken us through the relevant facts and the paper book submitted on behalf of the assessee. Before we take up the contentions raised by the learned counsel, we may briefly state the relevant facts. As is evident from the copies of accounts of Jugal Kishor Mukat Lal & Sons (P.) Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rading transactions, the settlement subsequently made with MLML under which the Sikandrabad property was acquired did not result in acquiring of any trading asset. In any case when the Sikandrabad property was acquired, the intention of the assessee was to treat it as an investment. Referring to the balance sheets of the assessee-company for the calendar year 1975-76, the learned counsel submits that the property at Sikandrabad had been clearly shown as a part of the investment under Schedule B of the balance sheets. In these circumstances, when the Sikandrabad property had right from the very beginning been shown as an investment, the realisation thereof for a higher price resulted only in realisation of a capital surplus and not in business profit. It has been further contended by the learned counsel that just because the property was parcelled out in smaller plots, it could not be said that the assessee had entered into the waters of trade or into an adventure in the nature of trade. Shri Aggarwal has also argued that the burden of proof for showing that the realisation of the Sikandrabad property was a trading profit lay heavily upon the shoulders of the department and since th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f which have been placed by the learned counsel of the assessee at pages 75 to 82 of the paper book, are clearly indicative of the large-scale business transactions between the assessee and JKML. The transactions as extracted by the Commissioner (Appeals) at the end of paragraph 10 of his order also clearly indicate that the assessee-company and JKML were trading with each other. While we would agree with the finding of the Commissioner (Appeals) that the property at Sikandrabad had ultimately come into the possession of the assessee as a result of partial realisation of the trading debts that JKML owed to the assessee-company, we would not be able to agree with the further finding given by the Commissioner (Appeals) that the property remains a stock-in trade or trading asset of the assessee, sale of which resulted in revenue profits. According to us, an immovable property is not normally stock-in-trade of a business unless the assessee concerned also carried on the business of buying and selling of properties. The nature of the immovable property could not change just because it had been acquired in satisfaction of trading debts. Since in the present case the assessee is not shown ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue gain. After keeping in our mind the above principles, it appears to us that when the Sikandrabad property was acquired in satisfaction of a pronote and as an aftermath of a decree of the Hon'ble Delhi High Court, the assessee had right from the year 1970 shown the property as a part of its investment. As mentioned in an earlier portion of this order, some of the balance sheets of the assessee which have been made a part of the paper book clearly show that the Sikandrabad property had been shown as a part of its investment in Schedule ' B ' of the balance sheets. The other significant fact which we noticed is that right from the time the assessee came into the possession of the Sikandrabad property, it was deriving income from property year after year till the property was sold in the accounting year of the assessment year 1977-78. There is total absence of any indication as would show that at the time when the assessee acquired property in satisfaction of a pronote, it acquired it with a view to deal with it. Although the initial intention at the time of purchase or acquisition of property is not determinative of whether the transaction of sales subsequently made were transa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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