TMI Blog1985 (11) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... ess profits for the assessment year ? " I. T. R. C. No. 63 of 1976 pertains to the assessment year 1964-65 and I. T. R. C. No. 64 of 1976 relates to the assessment year 1965-66. The Income-tax Appellate Tribunal (" the Tribunal ") has disposed of the matter by a common order dated June 26, 1971, and the facts that we could gather from the statement of the case are these : Chikkaveerayya Lingaiah, the assessee, obtained a permanent lease in respect of two adjacent lands, Survey No. 70/1/A measuring 11 acres 02 quntas and Survey No.73/A/1 measuring 19 acres 05 quntas. Survey No. 70/1/A was taken on lease on April 3, 1947, and Survey No. 73/A/1 was secured on July 19, 1948. On February 2, 1949, the assessee entered into an agreement with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e's contention and he computed income from the sale of sites treating the assessee's transaction as an adventure in the nature of trade. Aggrieved by the order of the Income-tax Officer, the assessee went in appeal before the Appellate Assistant Commissioner who agreed with the income-tax Officer in bringing to tax the sale proceeds as business profits on the ground that the assessee's intention at the time of acquisition of the leasehold rights was to sell them and make profit. However, for the assessment year 1964-65, the Appellate Assistant Commissioner directed the Income-tax Officer to reduce the business profit on sale of sites by an amount equal to stamp duty i.e., Rs 1,597, and registration fees of Rs. 200. Aggrieved by the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hold rights or thereafter. We have to decide the nature of the transaction by which the assessee acquired the permanent leasehold rights of the lands, whether it was an adventure in the nature of trade or not. The leading case of the Supreme Court in point is Venkataswami Naidu (G). Co. v. CIT [1959] 35 ITR 594, in which Gajendragadkar J., as he then was, said at page 609: " It is impossible to evolve any formula which can be applied in determining the character of isolated transactions which come before the courts in tax proceedings. It would besides be inexpedient to make any attempt to evolve such a rule or formula. Generally speaking, it would not be difficult to decide whether a given transaction is an adventure in the nature of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e manner of disposal may be such that the transaction may be stamped with the character of a trading venture." This court has had occasion to apply the aforesaid principles to cases of sale of lands in (i) CIT v. Ramaiah [1984] 146 ITR 39, (ii) CIT v. B. Narasimhareddy [1984] 150 ITR 347 and (iii) P. Kannan v. CIT [1985] 154 ITR 441. In all these cases, this court held that if an assessee purchased land, converted the same into house sites and sold the same for attractive prices, then his transaction may be stamped with the character of trading venture. The case on hand appears to be no exception to the above rule. One need not delve deep into the matter to find out the real intention of the assessee at the time of acquiring the leaseho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... int of time devoted for any purpose, use or profession nor did I ever intend to so use them. It is only when I intend to use any of these vacant sites for letting for any trade, profession or business either by myself or through any other person apply for such permission or licence to carry on the particular trade or profession on the site that the provisions of law can be attracted to it with respect to imposition of property tax and not otherwise. " The Tribunal though it noticed these admissions of the assessee did not, however, place any reliance on the ground that the assessee made those statements in the context of imposition of property tax. It is true that any admission made by the assessee in any proceedings can be properly expla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 47 and kept the land vacant and uncultivated for over a decade. He was trying to get permission for conversion of the land into non-agricultural purposes within a couple of years of acquiring the leasehold rights. He first applied for such permission in 1947. Again he renewed it in 1957 and obtained the permission in 1961. In the interregnum, he did not cultivate the land. He, on the contrary, entered into an agreement with Jagadeva Business Corporation for construction of a building by leasing a portion thereof. The fact that the assessee did not cultivate the land for a decade clearly indicates that he wanted to preserve the land for the specific object and purpose of selling it as building sites. That was also his case as set out in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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