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TMI Blog1962 (1) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... nture in the nature of trade? and (2) If it was an adventure in the nature of trade, whether, on the facts and in the circumstances of the case, the Tribunal's decision holding that the profit on account of sales in the year of account alone would be assessable this year and was according to law?" We have perused the decision of the Appellate Tribunal and find that it was not held that the sale of land was not an adventure in the nature of trade. Consequently, the first question does not arise for decision on the admitted facts of the case. The main question that arises for decision is question No. 2. It is necessary to set out a few facts for the purpose of appreciating the second question. The assessee is an unregistered firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ires land with a view to selling in later after developing it, he is carrying on an activity resulting in profit, and the activity can only be described as a business venture. It was further observed that where the person goes further and divides the land into plots, develops the area to make it more attractive and sells the land not as a single unit as he bought it, but in parcels, he is dealing with the land as his stock-intrade, and that he is carrying on business and making a profit. Section 3 of the Act enacts that where any central Act enacts that income-tax shall be charged for any year at any rate or rates, tax at that rate or those rates, shall be charged for that year in accordance with and subject to the provisions of this Act in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nswer it. The reason is, that proceeding on the footing that this is an adventure in the nature of trade, the profits can be ascertained normally when the adventure comes to an end. The figures mentioned in the order of the Assistant Commissioner clearly disclose that he has taken ₹ 68 per acre for the non-developed area as a hypothetical figure. The cases to which our attention has been drawn show that when there is a single venture, i.e., a single transaction which is treated as having been entered into in the nature of trade, the question of assessing the profits arose when the venture came to an end, i.e., when the goods purchased were all sold. It is admitted here that about three-fourths of the area originally purchased is still ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the loss to be set off. Reference was no doubt made to the decision, K.H. Mody, In re [1940] 8 I.T.R. 179, in support of the proposition that no assessment can be made until the whole transaction was completed. We are inclined to take the view that there is no warrant for the proposition that until the whole transaction is completed, the liability to assessment does not arise if profits had accrued in respect of the entire transaction during the years previous to the year of assessment. This view is correctly expressed by the learned authors, Kanga and Palkhivala, in their Commentary on the Indian Income-tax Act, at page 162 (volume I, fourth edition). They state that "if the entire cost is recouped earlier, the profits may be assessed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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