TMI Blog2020 (2) TMI 1275X X X X Extracts X X X X X X X X Extracts X X X X ..... ctivity carried by the assessee in the present case is adventure in the nature of trade for the reason that from the beginning assessee s intention is to make profit out of the sale transaction and not to hold it. Assessee s intention is only to make profit out of the transaction, therefore in my opinion, ld. CIT(A) correctly decided that the activity carried by the assessee is adventure in the nature of trade , therefore find no reason to interfere with the order passed by the ld. CIT(A). So far as the development undertaken by the REHWS is concerned, it is not a material fact. The material fact in this case is only intention of the assessee, therefore, find no force in the argument of the ld.AR, therefore same is rejected. Thus, this appeal filed by the assessee is dismissed. - ITA No. 72/VIZ/2019 - - - Dated:- 26-2-2020 - Shri V. Durga Rao, Hon ble Judicial Member For the Assessee : Shri C.Subrahmanyam, FCA For the Department : Shri B.Rama Krishna, Sr.DR ORDER This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), Vijayawada, dated 26/12/2018 for the Assessment Year 2013-14. 2. Facts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee is in appeal before this Tribunal. 5. Ld.AR has submitted that the assessee has purchased the agricultural lands. As per Karnataka land laws, the assessee cannot by agricultural lands, and therefore he converted the same into non-agriculture and divided into plots and entered into agreement with the REHWS and the land is developed by the REHWS and therefore profit received out of the entire sale consideration has to be treated as income from capital gains. 6. On the other hand, ld.DR has submitted that the assessee had purchased the agricultural lands with an intention to resale for making profit and therefore assessee without doing any agricultural operations, sold the same to the REHWS after conversion into plots, therefore the amount received out of the transaction has to be considered as adventure in the nature of trade and he strongly supported the orders of the authorities below. 7. I have heard both the parties, perused the material available on record and gone through orders of the authorities below. 8. The assessee has purchased the agricultural lands on different dates and subsequently converted the same into non-agriculture. The very sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... take of the character of an adventure in the nature of trade. This statement may be true; but in its application due regard must be shown to the requirement that the single plunge must be in the waters of trade. In other words, at least some of the essential features of trade must be present in the isolated or single transaction. On the other hand, it is sometimes said that the appearance of one swallow does not make a summer. This may be true if, in the metaphor, summer represents trade; but it may not be true if summer represents an adventure in the nature of trade because, when the section refers to an adventure in the nature of trade, it is obviously referring to transactions which individually cannot themselves be described as trade or business but are essentially of such a similar character that they are treated as in the nature of trade. It was faintly argued for the appellant that it would be difficult to regard a single or an isolated transaction as one in the nature of trade because income resulting from it would inevitably lack the characteristics attributed to it by Sir George Lowndes in Commissioner of Income Tax v. Shaw Wallace and Company (1932) 59 I.A. 206 'Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or determining the character of the transaction. What is the nature of the commodity purchased and resold and in what quantity was it purchased and resold? 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 for personal use, possession or Government. Did the purchaser by any act subsequent to the purchase improve the quality of the commodity purchased and thereby made it more readily resaleable? What were the incidents associated with the purchase and resale? Were they similar to the operations usually associated with trade or business? Are the transactions of purchase and sale repeated? In regard to the purchase of the commodity and its subsequent possession by the purchaser, does the element of pride of possession come into the picture? A person may purchase a piece of art, hold it for some time and if a profitable offer is received may sell it. During the time that the purchaser had its possession he may be able to claim pride of possession and aesthetic satisfaction ; and if such a claim is upheld that would be a factor against the contention that the tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption that the transaction is an adventure in the nature of trade. Even so, the presumption is not conclusive; and it is conceivable that, on considering all the facts and circumstances in the case, the court may, despite the said initial intention, be inclined to hold that the transaction was not an adventure in the nature of trade. We thus come back to the same position and that is that the decision about the character of a transaction in the context cannot be based solely on the application of any abstract- rule, principle or test and must in every case depend upon all the relevant facts and circumstances. 22. As can be seen from the above, It was held by the Hon'ble Apex Court that if a person invests money in land intending to hold it, enjoys its income for some time and then sells it at profit, it would be a clear case of capital accretion and not profit derived from an adventure in the nature of trade and that cases of realisation of investment consisting of purchase and resale are clearly outside the domain of adventure in the nature of trade though profitable. It was also held by the Hon'ble Apex Court that where the purchase has been made solely and exclusi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learly brings out the intention of the assessee at the time of the purchase of the agricultural land itself to resell the same at a profit after converting it into nonagricultural land. Further, the inference of such an intention is strengthened by the fact that the assessee subsequently purchased adjoining agricultural lands during F.Y. 200809 and converted the said lands also into non-agricultural lands during FYs. 2010-11 2011-12 without carrying out any agricultural operations on the said lands also. The sequence of transactions carried out by the assessee and their nature leave no room for doubt that the purchases of the agricultural lands were not made by him with the intention of holding the said lands as an investment and derive income there from. The facts and circumstances unambiguously indicate that the assessee made purchases of agricultural lands with the sole and exclusive intention to resell the said lands at a profit after converting them into non-agricultural lands. In view of this, the purchases and sale of land by the assessee clearly fall under the ambit of 'adventure in the nature of trade' as per the legal principles laid down by the Hon'ble Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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