TMI Blog2022 (3) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... n the facts of the present case. 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 ₹ 14 lakhs and sold for 6 crores. Merely because, the assessee earned huge profits thereon cannot alone be the criteria or basis for understanding the intention of the assessee in undertaking the transaction. If this be so, then every transaction involving transfer of capital asset where consideration is multiple times the purchase value, it would be treated as an adventure in the nature of trade. CIT(A), we find ,has noted that except for the facts as stated above, there was nothing else indicating that the transaction was undertaken by way of or with the intention of conducting it by way of a business. He has pointed out that this was the solitary transaction undertaken by the assessee, and had not frequently such transactions nor had the asset sold ever been claimed as a business asset and depreciation claimed thereon, the assessee having treated the said land as investment all throughout. We agree with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 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 ₹ 5,70,31,288/-. The assessee paid taxes thereon @ 20% as applicable by law on Long Term Capital Gains. The Assessing Officer held that the transaction of sale of land was an adventure in the nature of trade and therefore subjected the surplus from the sale of land amounting to ₹ 5,84,95,350/- ,computed by deducting from the sale consideration only purchase consideration and other expenses relating to stamp duty, registration fees, to tax at the normal rate. Thus by treating the impugned transaction/business income, the assessee was denied the benefit of reducing the indexed cost of acquisition of the asset, as applicable for computing the capital gains, and also the benefit of reduced rate of tax payable on Long Term Capital Gain @ 20%. 5. Aggrieved by the same the matter was carried in appeal before the ld. CIT(A) who found no justification for treating the transaction as being in the nature of business and accordingly reversed the order of the A.O. on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 Long Term Capital Gain was denied and the sale consideration has been taxed as income from business and profession. The appellant has filed sale and purchase documents and contents therein are not in dispute. It is seen that the appellant has invested in only one plot which have been sold after 8 years. There is no frequent sale or purchase of rear estate by the appellant. The appellant has claimed it to be investment and never claimed as business asset hence not claimed any depreciation. Authorized Representative discussed ratio in the case of following case laws : a) 35 ITR 594(SC) G. Venkatswami Naidu Co. - ratio distinguished by Authorized Representative. b) 195 ITR 386(Bom) Indian Hume Pipe Co. Ltd. - ratio distinguished by Authorized Representative. c) Arjundev K. Khanna HUF - Ahmedabad ITAT ITA. No. 1308/Ahd/2008 -- ratio distingui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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/2008 rejected the plea of assessee HUF and treated the sale of land as business income instead of capital gain. In this case there was only one plot and it was sold in two part in two different years and the assessee had not taken steps for providing the streets and bifurcating the plot. No steps were taken to make the plot of land suitable for housing society. The plot was purchased in 1971 and sold in 2001. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the context of issue at hand it is important to examine the meaning of the term adventure in nature of trade' mentioned in Section 2(13) of the I T Act. It has now been defined in the Income Tax Act. As far as the dictionary meaning of the word adventure is concerned, it implies a pecuniary risk, a venture, a commercial enterprise. The word 'venture' in its turn is defined as a commercial activity in which there is a risk of loss as well as chance of gain. A 'trade' were in the context of the definition of the expression 'business' is a wider concept and once this term is associated with the term 'adventure' the scope has further enlarged. The adventure in nature of trade is allowed to transaction that constitutes a trade or business but may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 14 lakhs and sold for 6 crores. Merely because, the assessee earned huge profits thereon cannot alone be the criteria or basis for understanding the intention of the assessee in undertaking the transaction. If this be so, then every transaction involving transfer of capital asset where consideration is multiple times the purchase value, it would be treated as an adventure in the nature of trade. 10. The Ld. CIT(A), we find ,has noted that except for the facts as stated above, there was nothing else indicating that the transaction was undertaken by way of or with the intention of conducting it by way of a business. He has pointed out that this was the solitary ..... X X X X Extracts X X X X X X X X Extracts X X X X
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