TMI Blog2007 (1) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... pute later on was cleared in favour of the respondent. The respondent thereafter took steps for getting this agricultural land received in gift to be diverted for non-agricultural purposes. This effort was started in 1982 and diversion order was received in 1986. Thereafter the land was converted into the plots. As many as 40 plots were carved out in the name of Goyal Colony. The Assessing Officer noted that apart from the approval of map, deposit of tax and other activities for developing them into the plots like making of roads etc. was also taken up and in two out of three assessment years, expenditure has been claimed for such developmental activity. It was also claimed before the AO that in the same area the respondent had reserved part of land for his own use and it could be said that the activity of selling these plots in different numbers in the different assessment years were an activity which could be taken to the category of 'adventure in the nature of trade' and A.O. concluded the matter against assessee. The CIT(A) considering the location of the land, its diversion from agricultural to non-agricultural use and the improvement of the whole town of Guna and the Industr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of the land, construction of roads and drainage system etc. etc. 7. Shri R.D. Jain, Senior Advocate, appearing for the Revenue in support of his contention placed reliance on decisions of the Patna High Court reported in 170 ITR 84 and of the Hon'ble Supreme Court reported in 42 ITR 392 = AIR 1963 SC 352,in which Supreme Court held that purchase of land with a view to sell it after developing and dividing it into plots, it is a business adventure, even if it is a single ct. 8. In reply, the learned counsel for the respondent placed reliance on a decision of the Delhi Bench, ITAT in the case of the brother of the appellant, Shri Ashok Kumar Kiledar in ITA No.5452/Del/94. He also placed reliance on the decision of the Jabalpur Bench of ITAT in the case of ITO v. Saraswati Bai Jaiswal, in ITA No.292/Jab/93 and also placed reliance on the following decisions :- 1) CIT v. A. Mohd. Mohideen, [1989] 176 ITR 393 (Mad) [1998] 74 CTR 129;(Mad) 2) CIT v. Shashi Kumar Agrawal, [1992] 195 ITR 767;(All) 3) Bhagirath Prasad v. CIT, [1983] 139 ITR 916 (MP) 9. He also placed reliance on the decision of Bombay High Court in the case of Indian Hume Pipe Co. v. CIT, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s) v. J.P. Harrison ( Watford ) Ltd. (1965) 58 ITR 328 (PC), in which observations were made by Lord Denning. (Judgment delivered by Justice S. Ratnavel Pandian, Offg. C.J. as he then was). 12. In the case of Indian Hume Pipe Co. Ltd. V. Commissioner of Income Tax (1992) 107 CTR (Bom) 95, Shri B.N. Shrikrishna,J as he then was held :- "Assessee, not engaged in real estate business, having purchased several pieces of land sporadically and sold them mainly in driblets in different years without developing or making any improvement on them, surplus could not be assessable as business income." 13. Again, in the case of B. Narasimha Reddy v. Income Tax Officer (1994) 48 TTJ (Hyd) 329, the Division Bench of I.T.A.T. Hyderabad 'A' Bench has held that :- "Assessee plotting out his ancestral agricultural land and selling them at the rate of per square yard after getting approval for the lay out from gram Panchayat. It was held that assessee never dealt in purchase and sale of real estate. Land was capital asset within the meaning of s. 2 (14) r/w s. 2 (1A) being situated within 8 kms. of municipal limit. Transaction was, therefore, to realise the maximum from out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it diverted from agricultural to non-agricultural and thereafter developed as many as 40 plots in the name of Goyal Colony and after developing the plots like making roads, providing pipe lines for water drainage system etc., the learned Tribunal has held that the activity is not in the nature of adventure in trade and commerce and set aside the order of AO as well as CIT(A).(Appeals). 17. Considering the aforesaid facts and circumstances of the case, we are also of the view that the selling of own land after plotting it out in order to secure better price, is not an adventure in the nature of trade or business. The word "business" has been defined under Section 2 (13) of the Income Tax Act, 1961, which includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. An isolated transaction or activity cannot be part of business. To consider the question of business, there must be regular activity of purchasing and selling. In this case, there is nothing on record to show that the land was purchased for the purpose of selling into plots. Basically, it is a gifted land and the land was developed and was sold after convertin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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