TMI Blog1982 (6) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... nd was partly sold on12-3-1975. Further, sale to the tune of Rs. 2,09,875 was effected during the year under consideration. The ITO after careful consideration of the land transaction was of the view that the same was an adventure in the nature of trade. He, accordingly, treated the same as assessees' business income and equally assessed the profits at one-third of the sale proceeds after allowing the proportionate cost of land. On appeal before the Commissioner (Appeals), it was claimed that the sale of land was assessable as a capital gain as declared by the assessees. The Commissioner (Appeals), however, confirmed the order of the ITO assessing the profit from the sale of land as a business profit. The computation of the profit as worked ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etc. Admittedly, none of the firms are having any dealing in land. On21-9-1970they purchased a sandy plot of land at Bhatinda, measuring 21,057 sq. yds., in equal shares for a consideration of Rs. 1,08,000 from Modi Charitable Trust. Their respective capital accounts in the firms were adjusted for the purpose. It was claimed before the ITO that the land was purchased with the intention to set up an industry or construction of a storage godown. The assessees, however, stated that the plan was abandoned in view of the Indo-Pak war in 1971. The entire plot of land was carved out into different plots of various measurements. Certain portions were also set apart for roads, parks and open space. Out of 21,057 sq. yds. a total area of 15,793 sq. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee which is squarely covered by the decision of the Supreme Court in Janki Ram Bahadur Ram v. CIT [1965] 57 ITR 21 and that of the Allahabad High Court in the case of Deep Chandra Co. v. CIT [1977] 107 ITR 716 and that of the Madras High Court in the case of CIT v. S.S. Thiagarajan [1981] 129 ITR 115. On the other hand, Shri Kulwant Singh, the learned departmental representative, relied on the orders of the Commissioner (Appeals). According to him the purchase was made by the assessees with the intention to re-sell later at a profit. The assessees could not make out any case in support of the claim made by them and as such, the orders of the Commissioner (Appeals) as supported by the case-laws cited by him are liable to be upheld. 6. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion was within the taxing provisions. The nature of the transaction should be determined by a consideration of all the facts and circumstances which were brought on the record of the income-tax authorities. But a transaction of purchase of land cannot be assumed without more to be a venture in the nature of trade. The profit motive in entering a transaction is not decisive, for an accretion to capital does not become taxable income merely because an asset was acquired in the expectation that it may be sold at a profit. Similarly the Allahabad High Court in the case of Deep Chandra held that land was not a commercial commodity. Land alone was also not a trade in itself. An investment in purchasing a property was also made with a view to earn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show that they started dealing in land, except disposal of this particular plot of land already purchased. The mere fact that the land was parcelled out into suitable residential plots and demarcation of areas for roads, lanes and parks would not in itself amount to development of the land. No other land was purchased either singly or jointly by the assessee afterwards. Considering all these facts and the cumulative effect, we are of the view that the said transaction cannot be said to be an adventure in the nature of trade. The orders of the lower authorities are, accordingly, reversed and the appeals of the assessees on this point are allowed. 8. The decision of the Supreme Court in the case of Raja Jai Rameshwar Rao relied upon by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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