TMI Blog1980 (12) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... e out of either trade or at least an adventure in the nature of trade and was, therefore, rightly assessed to tax ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee could deal in agricultural lands as much as any other commodity in spite of the provisions of the M.P. Land Revenue Code restricting the transfer of lands? 3. Whether, on the facts and in the circumstances of the case, the surplus could be taxed as it retained the character of agricultural income and was hence exempt under the Income-tax Act ? " The material facts giving rise to this reference briefly are as follows: The assessee-firm was at the material time carrying on business of contractor and of develop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 21 (SC), CIT v. P. K. N. Co. Ltd. [1966] 60 ITR 65 (SC), Bhogilal H. Patel v. CIT [1969] 74 ITR 692 (Bom), Raja Bahadur Kamakhya Narain Singh v. CIT [1970] 77 ITR 253 (SC), Michael A. Kallivayalil v. CIT [1976] 102 ITR 202, (Ker), CIT v. Mlm. Mahalingam Chettiar [1977] 107 ITR 236 (Mad) and Addl. CIT v. Bhagwati Prasad [1978] 114 ITR 682 (All). The real question for consideration is whether the profit realised from the transaction in question can be held to be income arising out of an adventure in the nature of trade, i. e., whether there are certain elements in the adventure which in law would invest it with the character of trade or business. The onus to prove the existence of these elements is undoubtedly on the department. We, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for cultivation after 1961. The Tribunal also found that the assessee had taken steps for developing the land into a colony known as Vidyanagar Colony. The assessee, had made an application to the Executive Engineer, Public Health Dept., on 25th May, 1961, soon after the purchase of the land for obtaining a no objection certificate for development of the entire land in dispute. No objection certificate was issued to the assessee on 27th September, 1961. The assessee then submitted the layout plan of the proposed colony and by letter dated 21st February, 1964, the assessee requested for issuance of a final sanction to the scheme for development of the colony. Thus, the Tribunal found that the assessee had taken vigorous and persistent steps ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxation as it was agricultural income. Reliance was placed on the decisions reported in Nawabzadi Mehar Banu Khanum v. Secy. of State, AIR 1925 Cal 929 [FB] and Maharajadhiraj of Darbhanga v. CIT, AIR 1928 Pat 468. Now, cl. (a) of s. 2(1) of the Act requires three conditions to be satisfied before the income can be called agricultural income. The three conditions are (i) the rent or revenue should be derived from land, (ii) the land should be situated in India, and (iii) the land should be used for agricultural purposes. By no stretch of imagination it could be held that the aforesaid conditions are satisfied in the case of income resulting from sale of land. Our answer to the third question referred to us is that the surplus in question ..... X X X X Extracts X X X X X X X X Extracts X X X X
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