TMI Blog2013 (4) TMI 950X X X X Extracts X X X X X X X X Extracts X X X X ..... 317/2 6.4.93 8413 21.1.06 471100 453964 2 Vill.Harni Sr.No.1327/2 6.4.93 1369 31.3.06 76650 73862 3 Harni 1228 12.10.99 313200 31.3.06 3158158 2758003 4 Sayajipura S. No. 118/119/121 9.7.99 163859 17.4.05 260000 50648 5 Makarpura S.No. 232, 233, 248, 391, 250 21.7.99 404478 31.3.06 2200337 1374980 6 Harni S.No.1280 1.7.92 6940 16.5.05 1334040 1318555 Total 898259 7500285 6030012 As per assessee s submissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as bought and thereafter on certain operations so as to bring greater profit and sold the land. This activity is certainly a business activity, for the essence of the trade, buying and selling for profit is present in this activity. (H) Moreover, assessee's claim that prior to this transaction, he has never entered into any such transaction of purchase sale of land is patently erroneous and misleading. It is not the first instance that assessee is selling the land rather assessee is continuously involved in the activity of purchasing and selling of land. The same can be seen from the assessee's earlier year's returns. (I) The assessee has placed reliance on the decision of the Bombay High Court in the case of Commissioner Of IncomeTax Vs Dhable, Bobde Parose, Kale, Lute And Choudhari (202 ITR 98). Here the facts of the case with that of case cited by the assessee are easily distinguishable. In the case cited supra, the transaction was an isolated transaction of purchase and sale of agricultural land by the assessee. While, here, the assessee is actively engaged in the purchase of land and this is not an isolated instance. Moreover, assessee in its balance sheet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ying and selling of land is not a stray activity but a well thought out strategy to earn profits. In other words, the appellant because of his business connections and business activities is a dealer in land. It appears that the aforesaid facts were collectively not brought to the kind notice of the Hon ble ITAT for earlier years. Appreciating these facts, I am of the humble opinion that the appellant all along has the intention of selling the land and the intervening agricultural activities were merely a ruse to buy time so that the land prices escalate with time and that at appropriate moments these lands are converted to NA land and these are sold to book profits. 4.3.1. In the case of G. Venkataswami Naidu Co. Vs. CIT 35 ITR 594 (SC), it was held that when the Income-tax Act refers to an adventure in the nature of trade, it clearly suggests that the transaction in question cannot properly be regarded as trade or business. Instead, it is allied to transaction that constitutes trade or business but may not be trade or business itself. In a case where the purchases had been made solely and exclusively with the intention to resell at a profit and the purchaser had no intention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d was assessable under the head Profits and gains of business or profession by virtue of the inclusive definition of business given in section 2(13) of the Act. 4.3.5. In the decision of CIT(A)-V for A.Y. 2004-05, the aforesaid facts were not correctively brought to the knowledge of CIT(A), Similarly, the Hon'ble ITAT's decision in the case of Shri Bholabhai R Patel (HUF) is also distinguishable on facts as in that case there is no frequent buying and selling of lands. Accordingly, the AO was justified in treating the income of ₹ 66,02,026/- as business income. 4. Now the assessee is before us. Ld. Counsel for the appellant filed written submission which is reproduced as under: 1. The appellant is an agriculturist since more than 15 years. The appellant has been since then showing income from agriculture in his returns of income. The agricultural lands have been purchased primarily for purpose of carrying out agricultural activities thereon. From time to time the Agricultural lands were shown as investment in the balance sheet and also covered in the Wealth tax returns. Copy of Wealth tax return for earlier year i.e. A.Y. 2005-06 has been filed during cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bipinbbai B. Patel HUF for A.Y. 2003-04 and 2004-05 in ITA Nos. 3276 and 3287/Ahd/2008. The same being decisions of concurrent bench are binding. The light of above, the appeal of the Appellant for A.Y. 2006-07 may please be allowed. 5. At the outset, Ld. Sr. D.R. also filed written reply in this case, which is reproduced as under: (i) The assessee, an individual, is partner in many firms and deals insale and purchase of land (ii) Assessed had sold six properties during the year and declared claimed capital gain of ₹ 60,30,012 from these sales [Reference para 3(i) of assessment order]. (iii) The properties were sold to various persons (through various firms in which he is a partner, in small plots. [para 3(i) of assessment order]. (iv) Development agreement was entered into with various firms and agricultural land was converted into non agricultural land by the appropriate authority. [Page 6 para 4(i)(c) of assessment order]. (v) Assessee had purchased the land, converted it into non agricultural land, developed it and sold it in small pieces. The assessee was a well known builder carrying out this activity through its various firms or otherwise [Ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese pieces of land can only be considered as stock in trade, in the circumstances as those in assessee's case. (xii) Further perusal of assets side of balance sheet (Page 8 of paper book) shows an amount of ₹ 3,24,44,922/- on account of advance towards land. This fact shows further intention of carrying out i.e. continuing the business in land. (xiii) The Ld. CIT(A) vide his order dated 06.11.2009, has confirmed the action of A.O, i.e. held that income from transactions in land is business income. The Ld. CIT(A), in para 4.3 of his order has given detailed cogent reasons in support of his finding. Salient features of the finding are (a) assessee purchases agricultural land on a regular basis in the outskirts of the city, performs agricultural operations for few years and in due course of time land is plotted and sold, (b) This process continues year after year (c) As on 31.03.2006, there are around 87 pieces of land and 21 shops etc. indicated in balance sheet under the category of fixed asset, (d) the buying and selling of land is not a stray activity but a well thought out strategy to earn profit (e) the true facts were not brought to the kind notice of the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riculture income disclosed by the assessee. The impugned land relevant in A.Y. 04-05 was partly sold during the year. The number of plots was only one. However, during the year, the assessee has sold 12 plots after developing the area by the partnership concern to get more benefit. The case laws cited by the Revenue are squarely applicable, particularly, G. Venkataswami Naidu Co. Vs. CIT 35 ITR 594 (SC), 42 ITR 743 (SC), for intention, 25 ITR 449 (SC), for activities need not to be concerned with several individual/concerns, 105 ITR 633, single/isolated venture, are not excluded and where the initial intention is to make profit by resale, transaction is a business venture, even single transaction can be held transaction and adventure in nature of trade, CIT vs. Sutlej Cotton Mills Supply Agency Ltd. [100 ITR 706 (SC)]. The appellant had shown substantial investment in land as the investment but the nature of investment is to be decided on the basis of intention and frequency. In balance sheet, the assessee had shown advance towards the land as ₹ 3.24 crore which shows the intention of the assessee to trade the land. Therefore, we have considered view that the assessee was i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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