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TMI Blog2022 (3) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... of Hon'ble Supreme Court's judgment in the case of G Venkatswami Naidu & Co which holds that even an isolated and single transaction may be of an adventure in nature of trade. (3) On the facts and circumstances of the case, Id. CIT(A) ought to have upheld the order of the Assessing Officer. (4) It is, therefore, prayed that the order of Id. CIT(A) may be set aside and that of the Assessing Officer be restored. 3. As is evident from the above, the solitary grievance of the Revenue is against the allowance by the Ld.CIT(A) of the claim of the assessee to the transaction of sale of land as being in the nature of transfer of an asset earning capital gain thereon, as opposed to the Assessing Officer treating the same as business income . 4. The facts relating to the issue are that the assessee had during the impugned year sold for consideration of Rs. 6 Crores which was purchased in 2006 for consideration of Rs. 14 lakhs. The profits thereon were returned to tax as Long Term Capital Gain by the assessee (HUF) which was computed after indexing the cost of acquisition, resulting in capital gain being computed at Rs. 5,70,31,288/-. The assessee paid taxes thereon @ 20% as app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he plot in the residential scheme known as Divine Highland Co-op. Hsg. Service Society Ltd. The plot was purchased in 2006 and thereafter, the assessee has not done any activity with regard to the said plot to improve it, and it was sold as it is in the same status after 8 years. The intension right from the time of purchase is for investment purpose only and the said plot is never shown as a business asset or stock in trade of the appellant. The appellant has never even included this plot in the business balance sheet, nor claimed any depreciation in the past and has treated it as a personal asset only. Moreover, the appellant has never traded in immovable property nor done any business in real estate in the past or in subsequent years. This is the solitary transaction of purchase and sale of immovable property, and that too after holding it for 8 years." The AO has mentioned that the HUF has been created in 1995 and doing business of selling gold and silver ornament in the name & style of Abhishek Palace. The AO has given show cause as to why not the sale of plot is considered as business transaction. The explanation given by the appellant was not acceptable and the claim for L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of mixed law and fact and held it in favour of Department. The Hon'ble Supreme Court also mentioned that isolated and single transaction may be of an adventure in nature of trade if some essential features of trade are present in such transaction, here the assessee had purchased said land on 18-12-2006 as is evident from the working of Long Term Capital Gain furnished with Return of Income filed by the assessee HUF. The said land is sold at the value many times higher than it was bought for this itself shows profit earning motive behind such investment in plot of land. Another decision of High Court of Bombay in case of Indian Hume Pipe Co Ltd vide 195 ITR 386 ,it discussed that the assessee was not a dealer in real estate or a developer of land as its line of business was entirely different. It was also not disputed that the bulk of land was purchased in 1941-42 from B and represented an isolated transaction of purchase of land. Here in this case also though it is an isolated transaction but it do not take away the sense of business in it. The Hon'ble I.T.A.T. Ahmedabad in case of Arjundev K Khanna HUF vs I.T.O. Ward 10(2), Ahmedabad vide its order ITA No 1308/Ahd/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o effort to examine the facts of the case in the light of the proposition laid down by the various judicial authorities referred to by him for holding a transaction to be an adventure in the nature of trade. Though, admittedly he has gone on to interpret the said term in Para VI of his order but has failed to apply the same appropriately in the facts of the present case. His interpretation of the term adventure in the nature of trade at para 6 of the order is reproduced hereunder for ready reference: VI. After considering the facts of the case, the reply furnished during assessment proceedings, and the above referred cases which supports the reasons to treat the earning from sale of plot of land as business income and not as capital gain. Moreover the plot in question has never been an investment and the assessee has not earned any income from the said investment which would entitle the assessee to claim that the sale of property involve transaction in nature of capital gain. Investment in land made by the assessee way back in 2006 did not yield any return and thereby the assessee sold the plot of land thereby earning income which is "an adventure in the nature of trade". In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hase Consideration Rs. 14,00,000/- Rs. 15,04,650/- Stamp Duty Rs. 83,300/- Registration fees Rs. 21,350/- Profit on Sale of Plot of Land Rs. 5,84,95,350/- Penalty proceedings u/s 271(1)(c ) of the I T Act, 1961 for furnishing inaccurate particulars of its income by treating it as long term capital gain instead of Business income are initiated. 9. As per the A.O. himself an adventure in the nature of trade refers to a transaction though isolated but which has the ingredients of trade or business in it. It has to be in the nature of a commercial transaction. Meaning thereby, that an adventure in the nature of trade, refers to transaction/s undertaken primarily with the commercial motives to earn profits. This is the proposition which has been laid down in the decisions referred to by the A.O. also. Now the facts on the basis of which the A.O. has held the transaction to be an adventure in the nature of trade are merely that the asset was bought in 2006 and sold in the impugned year, that it was bought for consideration of Rs. 14 lakhs and sold for 6 crores. Merely because, the assessee earned huge profits thereon cannot alone be the criteria or basis for understandin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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