TMI Blog1978 (2) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... r Rs. 5,000. About three years later on September 2, 1967, he purchased the share of the other owner for Rs. 25,000. He then applied to the Village Panchayat for permission to convert the land into building sites. On January 24, 1968, the Village Panchayat granted him the requisite permission to convert his land into building sites. He had also named the colony as " Durganagar Colony ". Out of the total extent of 16 acres and 14 guntas, 10 acres was converted into building sites. The assessee then sold some of the plots in the relevant assessment years 1968-69 and 1969-70 for Rs. 35,222 and Rs. 1,06,273, respectively. The ITO treated the income as an income from adventure in the nature of trade. That led to the assessee preferring an appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sufficient to change its character as agricultural land. In that view, it held that the levy of capital gains tax did not arise. But, as that view by itself did not settle the question, it chose to consider the other question " whether the transaction was an adventure in the nature of trade ". The Tribunal, on the, material placed before it, held that the mere circumstance that the property was purchased in the hope that when sold later, it would leave a margin of profit would not be sufficient to disclose an intention of trade at the inception. The net result of its assessment of the evidence is that the impugned transaction cannot be treated as constituting an adventure in the nature of trade. Mr. Rama Rao, the learned counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fact whether he sought to convert the land which was originally agricultural land into building sites. We are of the opinion that he waited for 21 years only to purchase the other half share also and make a business out of it. If it was not his intention to deal in real property and he only wanted to invest his monies, he would have sold the land as purchased by him for a higher price. It is not as if he sold the land in its original form. He applied to the Panchayat for a layout and it was sanctioned by it on January 24, 1968. As may be seen from the date of the second transaction and the date of permission granted by the Panchayat to convert the land into house sites, his intention was not to sell the property without conversion. If it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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 as 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. " From the facts stated above, it is manifest that the intention of the assessee in purchasing the land in two transactions was to do business in real property. The case on hand is one identical with the case with which the Supreme Court was concerned. It is thus plain that the activity of the assessee in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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