TMI Blog2009 (2) TMI 278X X X X Extracts X X X X X X X X Extracts X X X X ..... I 90 - MADHYA PRADESH HIGH COURT] which was almost identical on facts wherein the word 'business' defined u/s. 2(13) was considered which covered 'adventure in the nature of trade' was on sale of agriculture land and was sold after converting the land into plots for a better price that alone was the activity therefore could not come within the purview of 'adventure in the nature of trade' in business. HELD THAT:- The Supreme Court in G. Venkataswami Naidu Co.[ 1958 (11) TMI 5 - SUPREME COURT] held that in each case it is the total effect of all relevant factors and circumstances that determines the character of the transaction. A cumulative consideration of the facts of the present case unmistakably points ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal gains on sale of land owned by the assessee as capital gain but adventure in the nature of trade as considered by the AO under s. 143(3). 2. The brief facts as were considered by the AO are that the assessee had filed its return of income at Rs. 3,63,230 including 'nil' income from capital gains on having sold 2 acres and 11 Guntas of land at Chikkalasandra Village, Uttarahalli, Bangalore South Taluk, to several persons as residential sites. This was brought to tax by the AO as income from business being adventure in nature of trade as it was not a mere transfer under s. 2(47). The assessee had ventured the entire consideration invested under s. 54EC amounting to Rs. 95,00,000. The assessee appealed before the first appellate authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various expenses incurred by him in developing the said sites to be allowed as a business expenditure. He relied on the decision of Tribunal, Bangalore, Bench in Jitendra Kumar Jain vs. ITO, ITA No. 580/Bang/2007, dt. 18th Dec., 2007, wherein the Tribunal on the basis of similar nature of transaction had considered that the assessee had indulged in an 'adventure in the nature of trade' when developed sites were sold resulting in gain. A copy of the order is being furnished. He prayed that the order of the learned CIT(A) be reversed and that of the AO restored. 4. The learned counsel for the assessee fully supported the order of the learned CIT(A) who intricately considered the facts of the assessee's case especially the fact that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansfer under s. 2(47). He pointed out that the major relevant circumstance which rendered the gain was holding of the land for a lengthy period therefore would not be foreseen by the assessee to undergo taxation under the guise of 'adventure in the nature of trade' when its intention was already to hold the land as an investment and for carrying out petty agriculture operation thereon. He, therefore, concluding his arguments, fully supported the order of the learned CIT(A) by submitting that the AO relied on the Hon'ble apex Court decision in the case of G. Venkataswami Naidu Co. vs. CIT (1959) 35 ITR 594 (SC) which facts were distinguished by the learned CIT(A) as not applicable to the assessee appellant's case before him. There was no s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Several tests were laid down in this decision for deciding the character of such transactions: (a) Was the purchaser a trader and were the purchase of the commodity and its resale allied to his usual trade or business or incidental to it? The answer to this in the present case is in the negative because there is no evidence to show that the assessee at any time did any business. (b) If the commodity purchased is generally the subject-matter of trade and if it is purchased in very large quantities, it would tend to eliminate the possibility of investment. In the present case, what was purchased was agriculture land and that too in a small quantity of 2 acres and 11 Guntas. There is a strong inference to be drawn that there was no intention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only to capital gains tax and not to be considered as gains of an adventure in the nature of trade. To repeat, in coming to this conclusion we have duly taken note of the following facts: (a) The assessee was an agriculturist and did not carry on any business at any time. (b) The agricultural land was purchased in 1961 and the assessee did carry on agricultural operations thereon. (c) The land was held by the assessee for more than 40 years. (d) The assessee obtained the permission of the concerned authorities for conversion of the land into residential plots only because of the relevant laws requiring him to do so. (e) The assessee in these 40 years did not make any further purchase or sale of any land. (f) Though it may not b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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