TMI Blog1987 (3) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... lessee, by which the assessee-company were to take on further sub-lease 80 acres of khari land on payment of a premium at Rs. 1,250 per acre of land and lease rent at Rs. 10 per acre per year. For some reason with which we are not concerned in this reference, the sub-lease deed was not registered, though the assessee-company was put in possession. On May 7, 1963, the assessee-company entered into in agreement with one of its sister concerns, Particle Boards India Ltd., for giving on sub-lease 19,444 square yards of land out of the said 80 acres of khari land. In consideration, Particle Boards India Ltd. were to pay to the assessee-company a premium at the rate of Rs. 12 per square yard and ground rent of Rs. 10 per acre per annum. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax in the assessment year 1964-65 on a different amount computed by him in the order of assessment. The Appellate Assistant Commissioner confirmed the orders of the Income-tax Officer. The Income-tax Appellate Tribunal, on the other hand, accepted the assessee's claim that the assessee-company was not a dealer in lands and the two transactions of sub-leasing did not also amount to an adventure in the nature of trade. It was held that the surplus arising from the two transactions was not taxable as the assessee's business income. It is pertinent to mention that the Tribunal also observed in paragraph 17 of its order that the surplus arising from the two transactions was not taxable even as capital gains. It is, however, evident from the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce was placed on the Andhra Pradesh High Court decision in CIT v. M. Krishna Rao [1979] 120 ITR 101. The Andhra Pradesh High Court decision relied on by Shri Jetly is not applicable in this case. In that case, the assessee had, after purchasing the land, applied for permission of the Gram panchayat to convert the land into building sites. On getting the necessary permission, the assessee converted the major part of the land into building sites. The facts of the present case are materially different. The Tribunal found that the assessee-company's business was not to buy and sell land. One of its business activities was to promote companies. The assessee-company acquired certain rights over 80 acres of land in terms of the agreement dated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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