TMI Blog1983 (11) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... his is the common question that arises for consideration in all these references In I.T.R.C. No. 66/80, Sri R. Ramaiah is the assesse In 1957 he purchased 3 acres, 5 guntas, of agricultural land. In 1967 he converted the land for non-agricultural purposes. In 1975 he formed a layout and started selling the sites as building sites. He sold some sites for a total sum of Rs. 65,000. For the assessment year 1975-76, he included in his return a sum of Rs. 31,466 as capital gains. But the ITO brought that income to tax as income from business. On appeal, the AAC held that the income derived by the assesse was only in the nature of capital gains. So be allowed the appeal. That view was also affirmed by the Appellate Tribunal. I.T.R.C . No. 67/80 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In 1962 he purchased agricultural land measuring 2 acres, 28 guntas, for Rs. 25,500. In 1967 he converted that land for non-agricultural purposes. In 1974 ,he formed a layout with building sites. In the year 1974-75 he sold some site and received Rs. 40,000. In the return filed before the ITO he declared a sum of Rs. 21,645 as capital gains. The ITO treated the said income Ls business income. But the assessee got the relief before the AAC and also before the, Tribunal. ITRC No. 77/80: M. R. Sampangiramaiah is also the assessee herein. In the year 1975-76 he converted the land purchased by him in 1962 into sites and realised a sum of Rs. 85,760. He declared the said income, in his return as capital gains. But the ITO treated the income a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of the definition of business in the Act is to treat the receipts from an adventure also to tax just as the receipts from trade profit are brought to tax. The cases of realisation of investments consisting of purchase and sale of lands sometimes present difficulty. In each case, however, one has to determine the nature of the transaction, its volume, frequency, continuity and regularity. There is hardly any abstract rule, principle or test for application. In G. Venkataswami Naidu Co. v. CIT [1959] 35 ITR 594, the Supreme Court observed at p. 609: " Generally speaking, it would not be difficult to decide whether given transaction is an adventure in the nature of trade or not. It is the cases on the border line that cause difficulty. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) : " Even a single venture may be regarded as in the nature of trade or business. When a person acquires land with a view to selling it later after developing it, he is carrying on an activity resulting in profit, and the activity can only be described as a business venture. Where the person goes further and divides the land into plots, develops the area to make it more attractive and sells the land not as a single unit and LS he bought it, but in parcels, he is dealing with land as his stock-in-trade ; he is carrying on business and making a profit." In Janki Ram Bahadur Ram v. CIT [1965] 57 ITR 21, the Supreme, Court again observed that a transaction of purchase of land cannot be assumed without more to be a venture in the nature of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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