TMI Blog1977 (8) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... ment year 1969-70, and the relevant previous year is the financial year 1968-69. The assessee, who is an individual, owned agricultural land bearing Survey No. 335 on the outskirts of Rajkot City. This plot was admeasuring 7,500 square yards. This land was inherited by him from his ancestors and in 1957-58 he converted this survey number into non-agricultural land. He divided the land into plots and sold the plots as and when a purchaser was available. Prior to assessment year 1969-70, whenever a plot of land or plots of land were sold, the profit realised by the assessee on such sales had been assessed as capital gains and at no time the assessee was treated as a dealer in land. Out of the different plots in Survey No. 335, the assessee so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reinabove has been referred to us for our opinion at the instance of the revenue. Mr. Desai for the revenue drew our attention to the fact that, as pointed out by the Income-tax Officer himself, in the year under reference, apart from the sale of these plots of land, the assessee had sold another plot of land together with the building standing thereon. This seems to be another plot of 87 square yards, not forming part of original Survey No. 335. This was purchased by the assessee on February 13, 1965, for Rs. 3,250. Thereafter, the assessee constructed a superstructure on that plot and the assessee sold in the relevant previous year, that is, during the financial year 1968-69, this plot to one Chimanlal M. Khara for the aggregate amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances, we declined to look at the chart because, in our opinion, it is not open to us to look at the documents which do not form part of the reference unless by consent of the parties an additional annexure of the exhibit is brought on the record of the reference at the High Court stage. Since that consent from the assessee's side was not forthcoming, we declined to look at the chart. Mr. Desai for the revenue relied upon the following circumstances for the purpose of convincing us that the repurchase of the land in 1964 and selling these two plots of land in 1968 and 1969 were an adventure in the nature of trade or business in land and, therefore, the profit accruing from this activity was rightly treated by the Income-tax Officer as inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted as conclusive in the light of the legal position as explained by a Division Bench of this court in D. S. Virani v. Commissioner of Income-tax [1973] 90 ITR 255. Bhagwati C.J., speaking for the Division Bench, observed at pages 259, 260 of the report : "It is now well settled that the burden lies on the revenue to establish that the profit earned in a transaction is within the taxing provision and it would, therefore, be for the revenue to show that the transaction is an adventure in the nature of trade ......... There are numerous cases where this question has been considered and decided in the context of the particular facts and circumstances prevailing in those cases but it is not possible to glean from these decided cases any gene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factor indicating that the transaction is an adventure in the nature of trade." It is, therefore, clear that the burden of proving that the particular transaction was an adventure in the nature of trade is on the revenue. Of course, that burden can be discharged by pointing to circumstances which lead to the conclusion that the transaction is an adventure in the nature of trade. However, even if land which is not a commercial commodity is purchased and it can be shown that the purchase of the land was made solely and exclusively with an intention to resell it at a profit, it would be a strong factor that the transaction would be an adventure in the nature of trade. In the instant case no such strong factor emerges from the facts of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actor that the assessee was not a dealer in the past and was only disposing of his capital asset in the land and apart from this solitary instance of purchase and sale no other repurchase had been made by the assessee. The land was repurchased, according to the assessee, because it was adjacent to the land in which the existing building of the assessee stood. In any event, it seems to us that the revenue has not discharged the burden of establishing that the repurchase and sale of these two plots out of Survey No. 335 was an adventure in the nature of trade ; it cannot be said in view of the totality of the circumstances of the case that this was the sole intention of the assessee at the time when he repurchased the land in 1964 to sell t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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