TMI Blog1980 (4) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... plus from the sales of lands as taxable, as, in his opinion, the whole transaction was a venture in the nature of trade or business. The AAC was also of the same view. The assessee then preferred an appeal before the ITAT who, by its order dated November 23, 1962, sent back the matter for further enquiry. The AAC, in turn, sent the matter to the ITO who made the necessary enquiry on the points raised. After the report of the ITO was received by the AAC, he came to the conclusion that the profits arising as a result of the sales of the lands made by the assessee were profits from business; that the land was treated by the assessee as stock-in-trade in business and that the sales of land by the assessee constituted acts done in what was truly a carrying on of the business of buying and selling land and, therefore, the profits realised arising out of the sales of these lands were of a taxable nature. The amounts involved in each of the assessment years are as under : Assessment Year Amounts involved Rs. 1956-57 20,157 1957-58 27,312 1958-59 25,000 1959-60 22,000 1961-62 11,600 1962-63 10,670 1963-64 3,000 1964-65 1,900 1965-66 6,600 1966-67 4,200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purpose of constructing houses there on is a point in favour of the assessee. It will, however, be observed that what the assessee has sold are these inconvenient pieces of land which are neither useful to the assessee for the purpose of carrying on any agricultural operations thereon nor has he constructed any structure or house on these pieces of land. There is yet one more significant circumstance which also must be taken into consideration and it is that the entire residual land belonging to the member of the Damle family has been purchased by the assesses. The assessee has acted as a broker for the last 13 years and as the learned departmental representative rightly argues, the assessee is conversant with every inch of the land. The sale deeds, particularly the one executed by Beni Madhav Rao, go to show that the purchase money has not been paid by the assessee to Beni Madhav Rao at the time of the sale deed itself, but that there is a specific agreement between the parties that the price will be paid to Beni Madhav Rao by the assessee only after the land is resold by the assessee to other persons. In our opinion, this recital in the sale deed executed by Beni Madhav Rao cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t may be broadly true; and so some judicial decisions apply the test of the initial intention to resell in distinguishing adventures in the nature of trade from transactions of investment. Even in the application of this test distinction will have to be made between initial intention to resell at a profit which is present but not dominant or sole; in other words, cases do often arise where the purchaser may be willing and may intend to sell the property purchased at profit, but he would also intend and be willing to hold and enjoy it if a really high price is not offered. The intention to resell may in such cases be coupled with the intention to hold the property. Cases may, however, arise where the purchase has been made solely and exclusively with the intention to resell at a profit and the purchaser has no intention of holding the property for himself or otherwise enjoying or using it. The presence of such an intention is no doubt a relevant factor and unless it is offset by the presence of other factors, it would raise strong presumption that the transaction is an adventure in the nature of trade. Even so, the presumption is not conclusive, and it is conceivable that, on consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of trade or merely an investment is a mixed question of law and fact and the legal effect of the facts found by the Tribunal as a result of which, the applicant could be treated as dealer or an investor is a question of law. The Tribunal has found several facts which in its opinion, characterised the transactions made by the assessee as an adventure in the nature of trade. We may at this stage refer to some of the guidelines indicated in Venkataswami Naidu's case [1959] 35 ITR 594. It was pointed out in the above Supreme Court case that if a person invests money in land intending to hold it and enjoys its income for some time and then sells it at a profit it would be a case of capital accretion and not profit derived from an adventure in the nature of trade. Cases of realisation of investments consisting of purchase and resale, though profitable, are clearly outside the domain of adventure in the nature of trade. In deciding the character of each transaction several factors are relevant, e.g., whether the purchaser was a trader and the purchase of the commodity and its resale were allied to his usual trade or business or incidental to it, nature and quantity of the commodity p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r potentialities. The assessee is not an agriculturist nor does it appear from the circumstances that the lands were purchased for the purpose of doing agriculture. Though it had been shown that he was doing some agriculture on a small portion of land and had recently purchased a tractor, it is clear from other circumstances that the land had not been purchased for cultivating it. The land also is not in one continuous stretch but lies in patches spread all over. Some of the lands are in occupation of the tenants and it was known that these tenants could not be easily ejected. The lands after purchase were sold to these very tenants. This would undoubtedly go to show that such lands were purchased with the sole idea of reselling them. The Tribunal found that there was no income worth the name from the lands in question. Damle's previous sales of lands were also not for agricultural purposes but mainly as building sites. The above facts would indicate that the purpose of purchasing the lands was to resell them at a profit and not to do cultivation over it. The lands have been sold in course of time under about 300 transactions. There is a continuous activity of selling of the land ..... X X X X Extracts X X X X X X X X Extracts X X X X
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