ACIT, Patiala V. M/s Shree Estates, Ambala City

ITA 102/CHANDI/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9075 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 17-02-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 06-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSHIL KUMARCITD R
• Assessee Lawyers: SUDHIR SEHGALADV
• Keywords: Capital asset; Business income; Rule of consistency
• Section: 143(3); 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER ITA NO. 102/CHD/2013 ASSESSMENT YEAR: 2008-09 THE ACIT, VS M/S SHREE ESTATES. CENTRAL CIRCLE, NEAR AMAR PALACE, PATIALA. AGGARSAIN CHOWK, AMBALA CITY. PAN: AAOFM3576F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUSHIL KUMAR,C IT-DR RESPONDENT BY : SHRI SUDHIR SEHGAL,ADV. & SHRI ASHOK GOYAL, CA DATE OF HEARING : 15.09.2016 DATE OF PRONOUNCEMENT : 03.10.2016 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY REVENUE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-I LUDHIANA DATED 22.11.2012 FOR ASSESSMENT YEAR 2008-09 CHALLENGING THE ORDER OF LD. CIT(APPEALS) IN DELETING THE ADDITION OF RS. 3,56,90,328/- MADE BY ASSESSING OFFICER ON ACCOUNT OF SHORT TERM CAPITAL GAIN HOLDING THAT NATURE OF BUSI NESS IS CLEARLY MENTIONED IN THE PARTNERSHIP DEED AND TH E PROFIT ARISING FROM THE TRANSACTION OF PURCHASE/SAL ES ARE 2 CLEARLY ASSESSABLE UNDER THE HEAD 'INCOME FROM BUSI NESS & PROFESSION' . 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECOR D. 3. THE ASSESSEE FILED APPEAL BEFORE LD. CIT(APPEALS ) ON BEING AGGRIEVED AGAINST THE ORDER OF THE ASSESSI NG OFFICER ON THE GROUND THAT AMOUNT RECEIVED AS SALE CONSIDERATION ON ACCOUNT OF SALES OF FIRMS PROPERT Y HAS BEEN ASSESSED AS SHORT TERM CAPITAL GAIN RATHER THA N UNDER THE HEAD 'INCOME FROM BUSINESS & PROFESSION'. THE ASSESSING OFFICER IN THIS REGARD HAS OBSERVED T HAT THE ASSESSEE HAD SOLD LAND ON 31.12.2007 TO M/S GMR HIGHWAYS (P) LTD, FOR A CONSIDERATION OF RS.7,14,37,500/- AND THE SAME HAD BEEN PURCHASED FO R RS.60,53,542/- IN THE EARLIER YEARS. THE ASSESSEE H AD CLAIMED A DEBIT OF RS.3,50,00,000/- AGAINST THE SAL E CONSIDERATION ON ACCOUNT OF LOSS SUFFERED BY IT DUE TO FORFEITURE OF AMOUNTS ADVANCED FOR PURCHASE OF OTHE R PROPERTIES. THE ASSESSING OFFICER CONFRONTED THE ASSESSEE WITH THE PURPOSED TREATMENT OF SALE CONSIDERATION UNDER THE HEAD INCOME FROM CAPITAL GAINS RATHER THAN UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION, THE ASSESSEE SUBMITTED BEF ORE THE ASSESSING OFFICER THAT THE FIRM HAD BEEN CONSTITUTED BY A DEED OF PARTNERSHIP DATED 27.07.20 05 WHEREIN THE PRIMARY OBJECTIVE WAS TO CARRY ON THE BUSINESS OF SALE, PURCHASE OF PROPERTY, LAND DEVELO PING 3 AND CONSTRUCTION OF HOUSE, COMMERCIAL BUILDINGS ETC AND THE CONSEQUENT PURCHASE OF LAND HAD BEEN SHOWN IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE FIRM AS BUSINESS ASSETS. IT WAS CONTENDED THAT THE SALES TH EREOF AND THE SUBSEQUENT DEPLOYMENT OF SAME IN PURCHASE O F OTHER PROPERTIES WAS PART OF THE BUSINESS OF THE FI RM AND THEREFORE, SAME HAD TO BE ASSESSED UNDER THE HE AD INCOME FROM BUSINESS AND PROFESSION. THE ASSESSING OFFICER HOWEVER OPINED THAT ANY PROFITS AND GAINS ARISING FROM THE TRANSFER OF THE CAPITAL ASSET WAS CHARGEABLE AS INCOME UNDER THE HEAD CAPITAL GAINS. SINCE THE ASSESSEE HAD ONLY DONE TWO TRANSACTIONS O NE FOR THE PURCHASE OF PROPERTY AND THE SALES THEREOF, THEREFORE IT CANNOT BE DESCRIBED AS BUSINESS BUT FA LLS IN THE CATEGORY OF INVESTMENTS. THE ASSESSING OFFICER LISTED THE FOLLOWING CONDITIONS TO BE FULFILLED FOR THE PURPOSES OF A TRANSACTION TO QUALIFY IN THE NATURE OF BUSINESS. A) SUBJECT MATTER OF REALIZATION: COMMODITIES OR MANUFACTURED ARTICLES ARE VERY EXCEPTIONALLY THE SUBJECT OF INVESTMENT. PROPERTY HOWEVER, CAN BE A MATTER OF INVESTMENT OR TRADE. B) LENGTH OF THE PERIOD OF OWNERSHIP: GENERALLY SPEAKING PROPERTY TO BE DEALT IN BUSINESS IS REALIZ ED WITHIN A SHORT TIME AFTER ACQUISITION. C) FREQUENCY OR NUMBER OF SIMILAR TRANSACTIONS BY THE SAME PERSON : IF REALIZATION OF THE SAME SORT OF PROPERTY OCCURRED IN SUCCESSION OVER A PERIOD OF 4 YEARS OR THERE ARE SEVERAL SUCH REALIZATIONS AT ABO UT THE SAME DATE, A PRESUMPTION ARISES THAT THERE HAS BEEN A DEALING IN RESPECT OF EACH. D) SUPPLEMENTARY WORK ON OR IN CONNECTION WITH THE PROPERTY REALIZED; IF THE PROPERTY IS WORKED UP IN ANY WAY DURING THE PERIOD OF OWNERSHIP SO AS TO BRING IT INTO MORE MARKETABLE CONDITION OR IF ANY SPECIAL EXERTION ARE MADE TO FIND OR ATTRACT PURCHASERS SUCH AS LARGE SCALE ADVERTISING ETC., TH ERE IS SOME EVIDENCE OF DEALING. BUT IF NOTHING AT ALL IS CLONE, THE SUGGESTION TENDS THE OTHER WAY. 4. THE ASSESSING OFFICER, THEREFORE, CONCLUDED THAT ASSESSEE HAD ONLY ONE TRANSACTION IN FIVE YEARS AND THEREFORE THE SAME COULD NOT BE TREATED AS BUSINESS . IT WAS FURTHER HELD BY THE ASSESSING OFFICER THAT THE FORFEITED AMOUNTS CLAIMED AS EXPENDITURE/LOSS WAS N OT ALLOWABLE AS IT WAS MERE APPLICATION OF INCOME WHIC H HAD GONE BAD. 5. DURING APPELLATE PROCEEDINGS, THE ASSESSEE SUBMITTED HIS ARGUMENTS ON THIS ISSUE WHICH HAVE BE EN REPRODUCED IN THE IMPUGNED ORDER AS UNDER : ' STARTING AND GROWING A BUSINESS IS DIFFICULT FOR AN YONE BUT ONE CAN COVER MORE GROUND AND IMPROVE HIS CHANCES OF SUCCESS BY J OINING UP WITH RIGHT PERSONS AND OPERATING AS A PARTNERSHIP. THE REASONS TO GO FOR A PARTNERSHIP INCLUDE SEPARATION OF WORK, MOTIVATION, BETTER IDEA S, AND LACK OF MONEY AT INDIVIDUAL LEVEL BUT IF THE MONEY OF EACH INDIVIDUA L IS TAKEN TO THE COMMON POOL OF PARTNERSHIP THEN THE BUSINESS WITH A GOOD I NVESTMENT CAN BE RUN IN A BETTER WAY. THE LAST REASON IS VERY EFFECTIVE IN TH E CASE OF REAL ESTATE BUSINESS WHERE AN INDIVIDUAL WITH A SMALL INVESTMEN T IS NOT ABLE TO DO MUCH DUE TO SO MUCH INCREASED PRICES OF THE IMMOVABLE PR OPERTIES, BUT IF A GROUP 5 OF PEOPLE COME TOGETHER WITH THEIR INDIVIDUAL SNARE S THEN THEY CAN DO A LOT BY PURCHASING HIGH PRICED PROPERTIES AT POSH AREAS, DEVELOP THEM AND FURTHER CAN HAVE GOOD AND INCREASED PROFIT MARGINS. THE SAME IS THE INTENTION OF THE PARTNERS OF THE AS SESSEE FIRM IN OUR CASE BUT TO FULFILL THE INTENTION THERE MUST BE A CONTRA CT BETWEEN THE ALL TO AVOID ANY MISUNDERSTANDINGS LATER ON. TO AV OID THE MISUNDERSTANDINGS, THERE ARE CLAUSES RELATING TO NAME OF PARTNERSHIP F IRM, PROFIT SHARING RATIOS OF THE PARTNERS, REMUNERATION CLAUSE, P OWERS RELATING TO EACH PARTNER, DISSOLUTION CLAUSE AND THE MOST IMPORTA NT OF ALL - OBJECT CLAUSE, I.E. WHAT THE PARTNERSHIP FIRM IS GOING TO DO AFTER GETTING REGISTERED. OBVIOUSLY ONLY THOSE PERSONS WILL BECOME PARTNER OF A FIRM WHOSE INDIVIDUAL GOAL MATCHES WITH THE PARTNERSHIP FIRM'S GOAL. IN THE CASE OF OUR APPELLANT FIRM, ALL THE PARTNERS CAME UP WITH A COMMON GOAL OF REAL ESTATE AND NOTHING ELSE. THE OBJECT GO AL INCLUDES NO OTHER BUSINESS APART FROM THE ABOVE MENTIONED GOAL. SO TH E INTENTION IS CRYSTAL CLEAR, I.E. TO DEAL IN PROPERTIES AND NOT TO HOLD T HEM AS INVESTMENTS. HAVE THE PROPERTIES TO BE HELD AS INVESTMENTS, THEN THE PARTNERS WOULD NOT HAVE OPTED FOR THE PARTNERSHIP FIRM AND WOULD HAVE HELD THEM ON THEIR INDIVIDUAL NAMES, AS IN THAT CASE THEY WOULD HAVE AVAILED VARI OUS TAX BENEFITS IN THE FORM OF SLAB RATES INSTEAD OF A MAXIMUM MARGINAL RA TE AND OF EXEMPTIONS CONTAINED IN SECTION 54 OF THE INCOME TAX ACT, 1961 ON THE SALE OF PROPERTIES WHICH IS AVAILABLE ONLY TO INDIVIDUALS & HUF AND NO T TO PARTNERSHIP FIRM. SO IT IS WORST TO OPEN A PARTNERSHIP FIRM FOR THE I NVESTMENT PURPOSES. HENCE THE BASIC INTENTION OF ALL THE PARTNERS WAS TO GO F OR A BUSINESS OF REAL ESTATE AND EARN HUGE PROFITS. SO THE BASIC OBJECTIVE TO START A PARTNERSHIP FIRM IS TO DO A BUSINESS OF REAL ESTATE. INFACT THE PARTNERSHIP FIRM CONST ITUTED UNDER THE PARTNERSHIP DEED DATED 27.07.2005 TO CARRY ON THE B USINESS OF: * SALE-PURCHASE OF PROPERTIES; * LAND DEVELOPING AND CONSTRUCTION OF HOUSE/COMMERCIAL BUILDINGS; * DEVELOP COLONIES, RESIDENTIAL C OMPLEXES, COMMERCIAL COMPLEXES; AND * PURCHASE-SALE OF BUILDING MATERIALS AND ALLIED GOODS AND SUBJECTS, ETC. IN FACT, IN THE INITIAL YEAR, THE ASSESSEE FIRM BOU GHT A LAND AMOUNTING TO RS, 60,53,542, THE SOURCE OF WHICH INCLUDE THE CAPITAL INTRODUCTION BY THE 6 PARTNERS AND THE UNSECURED LOANS. THE SAME WAS HELD AS STOCK IN TRADE BY THE ASSESSEE FIRM DUE TO THE OBJECT CLAUSE OF THE P ARTNERSHIP FIRM. THE ASSESSEE FIRM IS FILING ITS RETURN SINCE A AY 2006- 07 SHOWING INCOME UNDER THE HEAD PROFITS & GAINS FROM BUSINESS OR PROFESSIO N. APART FROM THE OBJECT CLAUSE IN THE PARTNERSHIP DEED, THERE EXISTS TWO CL AUSES WHICH INDICATE THE BUSINESS OBJECT OF THE FIRM TO BE REAL ESTATE. CLAUSE 2 THAT THE NET PROFIT OF LOSS AS THE CASE MAY BE OF T HE PARTNERSHIP DEED BUSINESS AS PER ACCOUNTS MAINTAINED BY THE FIRM AFT ER DEDUCTION OF ALL EXPENSES RELATING TO THE BUSINESS OF PARTNERSHIP IN CLUDING RENT, SALARIES AND OTHER ESTABLISHMENT EXPENSES ETC. AS WELL AS INTERE ST, SHALL BE DIVIDED AND DISTRIBUTED AMONGST PARTNERS ON THE CLOSE OF ACCOUN TING YEAR. CLAUSE 5 - THAT THE PARTNERSHIP FIRM MAY RAISE ANY LOAN FR OM BANK FOR ITS WORKING CAPITAL AS WELL AS TERM LOAN REQUIREMENT. A LSO THE BOOKS OF ACCOUNTS OF THE ASSESSEE FIRM HAS BEEN AUDITED DURI NG THE YEAR UNDER CONSIDERATION BY THE CHARTERED ACCOUNTANT AND THENC E THE AUDIT REPORT CONFIRMS THE VIEW OF THE ASSESSEE FIRM TO CONSIDER THE IMMOVABLE PROPERTIES AS STOCK IN TRADE. SO IT IS ALTOGETHER WRONG TO TAX THE PROFIT EARNED ON THE SALE OF THE PROPERTY AS THE SHORT TERM CAPITAL GAIN INSTEAD OF BUSINESS INCOME, THE OBSERVATIONS OF THE AO ARE AS UNDER: THERE IS ONLY ONE TRANSACTION AND THAT IS SALE OF L AND. THE PURCHASE IS FROM ONE PARTY AND THE SALE IS ALSO TO ONE PARTY. THERE IS THUS A SINGLE TRANSACTION, IN FACT DURING THE PERIOD OF FIVE YEAR S FROM F/Y 2005-06 TO F/Y 2009-10 AS PER THE DETAILS PROVIDED BY THE ASSESSEE FIRM ITSELF THERE IS NO OTHER TRANSACTION OF REAL ESTATE OF PURCHASE OR SAL E. TO CONSTITUTE A BUSINESS, THERE MUST BE A CONTINUOU S AND SYSTEMATIC ACTIVITY; THERE MUST BE A COURSE OF DEALINGS. FREQUENCY, CONT INUITY AND REGULARITY OF TRANSACTIONS ARE A MUST FOR ANY ACTIVITY TO BE CATE GORIZED AS BUSINESS ACTIVITY. A SINGLE TRANSACTION GENERALLY DOES NOT C ONSTITUTE BUSINESS. FIRSTLY, IT IS STATED THAT IN THE FIRST TWO YEARS, THERE IS ONLY ONE TRANSACTION OF PURCHASE AND THAT TOO AT THE COMMENCEMENT OF THE BU SINESS OUT OF THE TOTAL CAPITAL AND LOAN RAISED BY THE FIRM. NOW NO FURTHER MONEY WAS LEFT WITH THE FIRM TO INVEST ANYWHERE ELSE. REGARDING THIS, IT IS STATED THAT HOWEVER THE PURCHASE IS MADE FROM ONE PERSON BUT THE WHOLE CHUN K OF LAND MEASURING MORE THAN 5 ACRES WAS PURCHASED BY WAY OF FOUR REGI STRATION DEEDS AND ON DIFFERENT DATES WITH A GAP OF 5 MONTHS BETWEEN SUCH DIFFERENT DATES. SO IT IS NOT A SINGLE TRANSACTION OF PURCHASE, RATHER IT IS FOUR TRANSACTIONS OF PURCHASE BUT FROM A SINGLE SELLER. SO FOUR PURCHASE S FROM A SINGLE PURCHASER SHALL NOT BE TAKEN TO BE A SINGLE PURCHASE BECAUSE IT WAS PURCHASED FROM 7 ONE PARTY. THE ASSESSEE FIRM HAS BEEN SHOWING THE L AND UNDER THE HEAD STOCK IN TRADE IN THE BALANCE SHEETS MADE FROM THE INITIAL YEAR UPTO THE YEAR UNDER CONSIDERATION. IN THE RETURN OF INCOME FOR TH E YEAR UNDER CONSIDERATION, THE SAME HAS AGAIN BEEN SHOWN AS THE STOCK IN TRADE. FURTHER IT IS THE WISH OF THE PARTNERS TO INVEST IN WHICHEVER PROPERTY THEY WANT TO. THEY FOUND THE PROPERTY TO HAVE A GREAT SC OPE IN THE SHORT TERM AND WHICH WAS BEING SALEABLE TO THEM LESS THAN THE NORM AL MARKET PRICE. NOW THE PARTNERS INSTEAD OF GOING FOR SUCH GREAT OPTION FOR THEIR BUSINESS WILL NOT START THINKING ABOUT THE FACT THAT IF THEY INVEST W HOLE OF THE MONEY IN A PROPERTY OF ONE PERSON THEN IT WILL BE TAKEN TO BE THE FIRM'S INVESTMENT RATHER THAN STOCK IN TRADE. AS THEY WERE NOT LEFT W ITH ANY MONEY AFTER SUCH PURCHASE SO THE FIRM, DID NOT GO FOR ANY OTHER PURC HASE AND THE PARTNERS WERE NOT AGREEING TO GO FOR LOAN FOR ANY FURTHE R PURCHASE. INFACT, AS THE PROPERTY UNDER CONSIDERATION WAS SOLD BY TH E APPELLANT FIRM; AMOUNT RECOVERED FROM SUCH SALE WAS INVESTED IMMEDIATELY B Y WAY OF ADVANCES GIVEN FOR THE PURCHASE OF THREE MORE PROPERTIES. SO THIS CLEARS THE INTENTION OF THE APPELLANT FIRM THAT IT WAS ENGAGED IN THE BUSINESS OF REAL ESTATE AND NOT MERELY DOING INVESTMENTS. AS FAR AS NO SALE IN FIRST TWO YEARS IS CONCERNED, IT IS STATED THAT THE TOTAL PROPERTY WAS PURCHASED ON 13.01.2006 AND THE FIRM G OT A GOOD CHUNK OF LAND. HOWEVER THE MOTIVE OF THE PARTNERS WAS TO DEV ELOP RESIDENTIAL FLATS ON THE SAME, BUT SELLING THE PROPERTY AS IT IS DOES NO T MEAN THAT SELLING AS IT IS DOES NOT CONSTITUTE THE BUSINESS PURPOSE OF THE ASS ESSEE FIRM, RATHER SALE- PURCHASE OF THE PROPERTIES IS ONE OF ITS OBJECT. AC TUALLY THE PARTNERS INVESTED IN THE LAND TO DEVELOP RESIDENTIAL FLATS BUT DUE TO SOME REASONS THEY WERE FORCED TO SELL THE LAND AS IT IS. THE WHOLE PROPERTY BY WAY OF FOUR REGISTRATION DEED S CAME UNDER THE OWNERSHIP OF THE FIRM ON 13.01.2006, BUT IN THE MID OF THE YEAR 2006 THERE WERE RUMOURS ABOUT COMPULSORY ACQUISI TION OF LAND BY NHAI AND THAT THE EXPANSION OF ROAD IN 4 LANES ABOVE THE PRO PERTY. DUE TO THESE RUMOURS THE PARTNERS DECIDED TO DROP THE PLAN OF DEVELOPING RESIDENTIAL FLATS AND DECIDED TO SELL AS SUCH, BUT THEY WERE UN ABLE TO GET ANY BUYER OVER THERE AT A PRICE EQUAL TO THE WORTH OF THE PROPERTY . UNTIL AND UNLESS THEY GET ANY BUYER, IN THE MEANTIME THE FRONT AREA OF PROPER TY OF THE FIRM WAS COMPULSORILY ACQUIRED BY THE NHAI ON 01.04.2007. SO THERE WAS NO REASON WITH THE PARTNERS TO LOP RESIDENTIAL FLATS OVER THE RE. NOW NO LOCAL BUYER WAS INTERESTED IN THE PROPERTY AND BIG GROUPS WERE HAVI NG EYE ON THE SAME. SO M/S GMR HIGHWAY PVT. LTD. APPROACHED THE PARTNERS F OR THE PURCHASE OF THE SAME AND AFTER VARIOUS NEGOTIATIONS THE PROPERTY W AS TRANSFERRED TO IT ON 31.12.2007. SO THERE ARE PROPER REASONS FOR NOT DEVELOPING IT AND FOR NOT SELLING IT WITHIN A SHORT SPAN OF TIME. ALSO HOW IT CAN BE SAID THAT THE PROPERTY IF NOT SO LD FOR A PERIOD OF FEW YEARS, THE SAME WILL GO UNDER THE HEAD INVESTMENTS INSTEAD OF STOCK IN TRADE. 8 IT IS OF NOBODY'S BUSINESS THAT HOW ONE CARRIES ON ITS BUSINESS, IT IS PURELY WISH OF THE BUSINESSMAN WHETHER TO FOR SALE OF HIS PRODUCT OR NOT. EVEN THE DEFINITION OF URBAN LAND CONTAINED IN WEALTH TAX ACT 1957 ASSUMES THE 'URBAN LAND HELD AS STOCK IN TRADE' TO BE IN THE NATURE OF INVESTMENT IF IT IS HELD AS STOCK IN TRADE FOR A PERIOD OF MORE THAN 10 YEAR S AND IN OUR CASE THEY ARE CONSIDERING IT AS INVESTMENTS FOR THE MEAGER RE ASON THAT IT WAS HELD FOR A PERIOD OF A YEAR AND A HALF. FURTHER THE POINT RAISED WAS THAT THE SALE OF PROPE RTY IS MADE TO ONE PARTY. IT IS STATED REGARDING THIS THAT THE CONDITION OF N OT SELLING THE PROPERTY IN PARTS HAS ALREADY BEEN STATED TO YOUR GOODSELF DUE TO UNAVAILABILITY OF LOCAL BUYER AND INTEREST OF BIG GROUPS IN SUCH HUGE CHUNK AND IF THE PARTNERS WERE GOING TO GET SUCH A HUGE PRICE FOR THE SALE OF THE PROPERTY, THEN THERE IS NO REASON T6 REJECT THE SAME ONLY FOR THE REASON THAT THE LAND WILL THEN BECOME INVESTMENT FOR THE FIRM. IN LAKSHMINARAYAN G OPAL & SON LTD, V. GOVT. OF HYDERABAD ( 1954) 25 ITR 449 SC, IT WAS HELD THAT ACTIVITIES NEED NOT BE CONCERNED WITH SEVERAL INDIVIDUALS/CONCERNS - IN ORDER TO CONSTITUTE A BUSINESS THE ACTIVITIES NEED NOT NECESSARILY BE C ONCERNED WITH SEVERAL INDIVIDUALS OR CONCERNS. THEY WOULD CONSTITUTE BUSI NESS IN SPITE OF THEIR BEING RESTRICTED TO ONLY ONE INDIVIDUAL OR CONCERN. WHAT IS RELEVANT TO CONSIDER IS WHAT IS THE NATURE AND SCOPE OF THESE A CTIVITIES THOUGH EITHER BY CHANCE OR DESIGN THESE MIGHT BE RESTRICTED TO ONLY ONE INDIVIDUAL OR CONCERN. IT IS THE NATURE AND SCOPE OF THESE ACTI VITIES, AND NOT THE EXTENT OF THE OPERATIONS, WHICH IS RELEVANT FOR THIS PURPOSE . SO UNTIL NOW WE HAVE EXPLAINED THAT THE APPELLANT F IRM HAS NOT MADE ONLY ONE TRANSACTION FROM THE FOLLOWING POINTS: PURCHASE OF THE PROPERTY UNDER CONSIDERATION IS NOT A SINGLE TRANSACTION, BUT A SERIES OF FOUR TRANSACTIONS PURCHASED WITH A MOTIVE TO DEVELOP RESIDENTIAL FLATS; THERE ARE STEPS TAKEN BY THE PARTNERS FOR ANOTHER PURCHASES OF THREE PROPERTIES, OUT OF WHICH ONE MATERIALIZES AND THE R EMAINING TWO FAILED TO MATERIALIZE DUE TO NON DEPOSIT OF THE BALANCE AMOUN T IN TIME; AND THE SALE OF THE PROPERTY UNDER CONSIDERATION TOOK TIME OF TWO YEARS BECAUSE IT WAS ACTUALLY PURCHASED FOR DEVELOPMENT P URPOSES, BUT AFTER FIVE MONTHS OF ITS PURCHASE, THERE WERE RUMOURS OF COMPU LSORY ACQUISITION, HEN THERE WAS ACTUAL COMPULSORY ACQUISITION BY NHAI AFT ER A PERIOD OF 1 YEAR, AFTER WHICH IT WAS HELD FOR SALE AND SOLD AFTER A P ERIOD OF 9 MONTHS. MOVING ON TO THE JUDGMENTS/CASE LAWS QUOTED BY THE AO, LETS DEAL THEM ONE BY ONE: 9 CIT VS. MAHAVIR PRASAD R. MORARKA (1992) 193 ITR 53 0 BUSINESS INCOME'BUSINESS'ADVENTURE IN THE NATURE OF TRADE ASSESSEE, ALLEGEDLY WITH A MOTIVE TO SAVE FROM LIQUIDATION A COMPANY IN WHICH HE WAS INTERESTED PURCHASED ACTIONABLE CLAIM OF ANOTHE R COMPANYEARNED PROFIT IN THE COURSE OF SETTLEMENTIN THE ABSENCE O F REBUTTAL BY REVENUE ABOUT ALLEGED MOTIVE, PROFITS EARNED COULD NOT BE T REATED AS BUSINESS INCOME. THE PROPERTY INVOLVED HEREIN IS NOT ANY LAND/BUILDI NG, BUT IT IS ACTIONABLE CLAIMS AND HOW ONE CARRY ON THE BUSINESS OF ACTIONA BLE CAN CLAIMS, RAJA J. RAMESHWAR RAO VS. CIT (1961) 42 ITR 179 SC BUSINESS INCOME ADVENTURE IN THE NATURE OF TRADEASSESSEE A JAGIRDA R ACQUIRED A VILLAGE AND VAST AREA OF LAND, DEVELOPED IT, LAID OUT PLOTS AND SOLD THEM AFTER DEVELOPING THE AREA TO MAKE IT MORE ATTRACTIVELAND SOLD NOT AS A SINGLE UNIT AS HE BOUGHT IT BUT IN PARCELSDEALING IN LAND WAS AS HIS STOCK-IN- TRADE AND ASSESSEE WAS CARRYING ON BUSINESS AND MAK ING A PROFITTHERE WAS, THUS, EVIDENCE OR THE CONCLUSION THAT THIS WAS A VENTURE IN NATURE OF TRADE OR BUSINESSINCOME FROM THE SALE OF LAND, WAS BY WAY OF BUSINESS AND S. 14(5)(A) OF HYDERABAD IT ACT CANNOT BE CALLE D IN AID TO SHOW THAT SALE WAS ALSO FOR PUBLIC WELFAREEXPENDITURE ALLOWA BLE. IN THE CASE LAW ABOVE, THE HON'BLE SC HAS NOWHERE E XCLUDED PURCHASE AND SALE OF IMMOVABLE PROPERTIES AS SUCH. RATHER THE CA SE BELONGED TO A PERSON WITH NO BUSINESS OBJECTIVE OF DEVELOPING LAND FOR S ELLING; EVEN THEN THE SAME IS TAKEN TO BE HIS BUSINESS INCOME. IT IS NOWH ERE ASKED THAT SALE AS SUCH OF PROPERTIES IS NOT A BUSINESS. S ASHOK KUMAR JALLAN VS. CIT (1991) 187 ITR 316 (BO M) BUSINESS INCOMEADVENTURE IN THE NATURE OF TRADEPROFIT ARIS ING OUT OF SOLITARY TRANSACTION OF PURCHASE AND SALE OF GOLD BONDS IS NOT ASSESSABLE AS BUSINESS INCOME. AGAIN THE PROPERTY INVOLVED IS GOLD BONDS AND NOT A NY LAND & BUILDING. THE NATURE OF THE PROPERTY ALSO MATTERS A LOT IN DE CIDING WHETHER A TRANSACTION IS BUSINESS TRANSACTION AND NOT CAPITAL INVESTMENT. ALSO IN OUR CASE, THERE IS NOT A SOLITARY TRANSACTION AS EXPLAI NED EARLIER. THE FIRST PURCHASE WAS BY WAY OF FOUR DEEDS AND THEN IT WAS J UST LOOKING FOR THE CAPITAL TO BE INVESTED FURTHER WHICH IT DID ALSO AT THE TIME OF SALE OF PROPERTY. IF WE HAVE A LOOK AT THE JUDGMENT OF THE SIMILAR HIGH COURT IN THE CASE OF GURDIAL NARAIN DAS & CO. VS. COMMISSIONER O F INCOME TAX (50 ITR 633), WHERE THE FACTS ARE SIMILA R TO OUR CASE, SUCH AS A PARTNERSHIP FIRM, PURCHASED LAND WITH AN INTEN TION TO DEVELOP, BUT SOLD AS SUCH: 10 BUSINESS INCOME BUSINESSADVENTURE IN THE NATURE O F TRADE LAND PURCHASED FROM GOVERNMENT FOR CONSTRUCTION PURPOSES SOLD FOR PROFIT WITHOUT UNDERTAKING ANY CONSTRUCTION ACTIVITY AS PE R AGREEMENT-INTENTION TO MAKE PROFIT MANIFEST TRANSACTION CONSTITUTED AD VENTURE IN THE NATURE OF TRADE GIVING RISE TO TAXABLE BUSINESS INCOME S JANKI RAM BAHADUR RAM VS. CIT (SC) 57 ITR 21 BUSINESS ADVENTURE IN THE NATURE OF TRADE ISOLATE D TRANSACTION PURCHASE OF THE PROPERTY BY THE APPELLANT WAS AN IS OLATED TRANSACTION NOT RELATED TO THE BUSINESS OF THE APPELLANT GRANTING THAT THE APPELLANT MADE A PROFITABLE BARGAIN WHEN HE PURCHASED THE PROPERTY , AND GRANTING FURTHER THAT THE APPELLANT HAD WHEN HE PURCHASED IT A DESIR E TO SELL THE PROPERTY, IF A FAVORABLE OFFER WAS FORTHCOMING, THESE COULD NOT WITHOUT OTHER CIRCUMSTANCES JUSTIFY AN INFERENCE THAT THE APPELLA NT INTENDED BY PURCHASING THE PROPERTY TO START A VENTURE IN THE N ATURE OF TRADE A PERSON PURCHASING A JUTE PRESS MAY INTEND TO START HIS OWN BUSINESS EVEN IF HE IS NOT ALREADY IN THAT BUSINESS, OR HE MAY LET IT OUT ON FAVOURABLE TERMS PROPERTY PURCHASED BY THE APPELLANT WAS CAPABLE OF BEING LET OUT AND IT HAD IN FACT BEEN LET OUT BY THE COMPANY BEFORE THE DATE OF SALE IN FAVOUR OF THE APPELLANT IT WAS OF FETCHING ANNUAL INCOME, AN D THERE IS NO EVIDENCE THAT AT THE MATERIAL TIME IT COULD NOT BE REASONABLY LET OUT THERE WAS NO ADVENTURE IN THE NATURE OF TRADE. IN THE ABOVE JUDGMENT, THE BASE OF THE DECISION OF THE HON'BLE SUPREME COURT WAS NON RELATION OF THE TRANSACTION WITH THE BUSINESS OF THE ASSESSEE AND NO INTENTION OF THE ASSESSES RELATING TO SALE-P URCHASE OF PROPERTY , WHICH IN OUR CASE IS CLEAR-THAT THE TRANSACTION WAS RELATED TO THE BUSINESS AND THERE WAS INTENTION OF THE ASSESSEE FOR THE SAL E PURCHASE OF THE PROPERTY, CIT VS. PKN CO. LTD. (SC) 60 ITR 65 BUSINESS INCOMEADVENTURE IN THE NATURE OF TRADE A SSESSEE- COMPANY FORMED WITH PRIMARY OBJECT TO TAKE OVER ASS ETS OF A FIRM PKN AND TO CARRY ON BUSINESS OF PLANTERS AND EARN PROFI TS BY SALE OF RUBBER IN 1937 BETWEEN MARCH, 1939 AND JULY, 1939, AN ARE A OF MORE THAN 3,000 ACRES OF RUBBER PLANTATIONS, SEVERAL HOUSES A ND OPEN PLOTS WHICH WERE ASSETS OF PKN FIRM TRANSFERRED TO THE CO MPANY COMPANY SELLING SOME OF ITS ADMINISTRATIVELY INCONVENIENT A ND UNMANAGEABLE LAND AND EARNING PROFIT SAME NOT ADVENTURE IN THE NATURE OF TRADE- INCIDENTAL SALE OF UNECONOMIC OR INCONVENIENT PLOTS OF LAND OR HOUSES COULD NOT CONVERT WHAT WAS ESSENTIALLY AN INVESTMEN T INTO A BUSINESS TRANSACTION IN REAL ESTATE. AGAIN THE BASE OF THE DECISION OF THE HON'BLE SUPRE ME COURT IS THAT THE TRANSACTION OF THE ASSESSEE IS NOT RELATED TO T HE BUSINESS OF THE ASSESSEE AS THE PRIMARY OBJECT OF THE COMPANY WAS TO TAKE OVER ASSETS OF THE FIRM AND TO CARRY ON THE BUSINESS OF THE PLA NTERS AND SALE OF 11 RUBBER. IN OUR CASE THE PRIMARY OBJECT OF THE APPEL LANT FIRM WAS THE SALE-PURCHASE OF PROPERTIES. INFACT WE ARE FURNISHI NG THE JUDGMENT OF THE HON'BLE SUPREME COURT ONLY IN THE CASE OF SAROJ KUMAR MAZUMDAR VS. CIT (37 ITR 242) (SC), IN WHICH IT WAS HELD AS UNDER: IF A TRANSACTION WERE IN THE LINE OF THE ASSESSEE'S BUSINESS, IT WOULD NOT MATTER MUCH WHETHER, IN THE ASSESSMENT YEAR, HE HAD SEVERAL SUCH TRANSACTIONS OR ONLY ONE. EVEN A SINGLE TRANSACTION OF DEALING IN LANDED ESTATES , BEING A PART OF THE ASSESSEE'S BUSINESS, WOULD BE L IABLE TO INCOME TAX, IF A PROFIT IS MADE IN THAT TRANSACT ION. THIS JUDGMENT IS AGAIN CLEARLY APPLICABLE IN OUR CA SE. CIT VS. SMT. SARASWATI BAI (1981) 137 ITR 656 (P&H) THE FINDING OF THE TRIBUNAL IS CLEAR AND POSITIVE. IT IS HELD THAT THERE IS NO EVIDENCE TO HOLD THAT THE APPELLANTS CONSTITU TED AN AOP AND CARRIED ON THE BUSINESS OF SALE AND PURCHASE OF LAND IN THAT C APACITY. IN THE ABOVE CASE, THREE LADIES PURCHASED A PROPERTY JOINTLY AND SOLD THEM OFF. THEY PLEADED THAT THEY WERE AN AOP AND THEREFORE THE TRA NSACTION IS A BUSINESS TRANSACTION. BUT THE TRANSACTION IS NOT TA KEN TO BE HELD BY AOP BECAUSE THERE WAS NO EVIDENCE OF AOP BEING FORMED A ND FURTHER THE LADIES WERE NOT CONSIDERED TO BE IN THE BUSINESS OF THE SA LE PURCHASE OF PROPERTIES WHEREAS IN OUR CASE THERE IS A PROPER PA RTNERSHIP DEED WHICH INCLUDES SALE PURCHASE OF PROPERTIES AS THE O BJECT OF THE FIRM AND THAT THERE IS NOT ONLY A SOLITARY TRANSACTION W HICH HAS ALREADY BEEN PROVED. FURTHER IN ALL THE CASES QUOTED ABOVE, THE IN TENTION OF THE ASSESSEE, THE BASIC OBJECTIVE OF THE ASSESSEE WAS NOT SA LE PURCHASE OF PROPERTIES AND THEY HAVE ACTUALLY SOLD THE PROPERTIES AND CLAI MED THE PROFITS UNDER THE HEAD CAPITAL GAINS. BUT THE AO ABOVE WANTED TO TAKE THE TRANSACTIONS UNDER THE HEAD PROFITS AND GAINS FROM BUSINESS/PROFESSION. SO THE COURTS DENIED THE SA ME ON THE PLEA THAT THE SOLE TRANSACTION CAN'T BE TAKEN TO BE ADVE NTURE IN THE NATURE OF TRADE. BUT IN OUR CASE WE WANT TO SAY THAT IT IS OPPOSITE , THAT IS, THE PARTNERSHIP FIRM WAS STARTED WITH THE SOLE OBJECTIVE OF REAL ES TATE AND HENCE EVEN A SINGLE TRANSACTION SHOULD BE TAKEN TO BE PURELY A TRADE/BUSINESS (AND NOT JUST ADVENTURE IN THE NATURE OF TRADE) AS THE RULING OF THE SUPREME COURT IN THE CASE OF SAROJ KUMAR MAZUM DAR (SUPRA). FURTHER WE PLACE RELIANCE ON THE FOLLOWING JUDG MENTS: 12 CIT V. ANANDLAL BECHARLAL & CO. [1977] 107 ITR 677 (BOM.) SOLITARY TRANSACTION OUTSIDE NORMAL LINE OF BUSINESS NEED NOT NECESSARILY BE A BUSINESS VENTURE - A SOLITARY TRAN SACTION OF PURCHASE OF LAND BY THE ASSESSEE-FIRM, DOING BUSINESS OF JEWELL ERS, FOR PURPOSES OF BUILDING HOUSES FOR PARTNERS AND ITS SALE SIX-YEARS LATER DUE TO THE UNHEALTHY CONDITIONS OF LOCALITY, COULD NOT CONSTIT UTE AN ADVENTURE IN THE NATURE OF TRADE, ESPECIALLY WHEN LAND IS NOT ORDINA RILY A COMMERCIAL COMMODITY. THE MERE FACT THAT SOME PROF IT WAS MADE IN THE TRANSACTION WOULD NOT, WITHOUT ANYTHING MO RE, INDICATE THAT THE INTENTION OF THE FIRM WAS TO TRADE IN LANDED PROPER TY, AND INDEED THERE WAS NOTHING MORE TO INDICATE THE SAME. S GURDIAL NARAIN DAS & CO. VS. CIT (50 ITR 633) BUSINESS INCOME BUSINESS ADVENTURE IN THE NATURE OF TRADE LAND PURCHASED FROM GOVERNMENT FOR CONSTRUCTION PURPOSES SOLD FOR PROFIT WITHOUT UNDERTAKING ANY CONSTRUCTION ACTIVITY AS PE R AGREEMENT-INTENTION TO MAKE PROFIT MANIFEST TRANSACTION CONSTITUTED ADVEN TURE IN THE NATURE OF TRADE GIVING RISE TO TAXABLE BUSINESS INCOME. CIT V PREMJI GOPALBHAL [1978] 113 ITR 785 (GUJ.) SOLE INTENTION TO RESELL AT A PROFIT, IS A STRONG F ACTOR - 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 EXCLUSIVEL Y WITH AN INTENTION TO RESELL IT AT A PROFIT, IT WOULD BE A STRONG FACTOR TO INDICATE THAT THE TRANSACTION WOULD BE AN ADVENTURE IN THE NATURE OF TRADE. R. DALMIA V. CIT [1982] 137ITR 665 (DELHI). DOMINANT INTENTION OF ASSESSEE IS RELEVANT - TO DET ERMINE THE NATURE OF THE TRANSACTION THE DOMINANT INTENTION OF THE ASSESSEE HAS TO BE SEEN. IF THE INTENTION IS TO EMBARK ON A VENTURE IN THE NATURE O F TRADE AS DISTINGUISHED FROM A CAPITAL INVESTMENT IT WOULD MAKE NO DIFFEREN CE EVEN IF THE TRANSACTION IS A SINGLE AND ISOLATED ONE. RAJPUTANA TEXTILES (AGENCIES) LTD. V. CIT [1961] 4 2 ITR 7 43 (SC). ASSESSEE'S INTENTION IS RELEVANT - IN CONSIDERING T HE QUESTION WHETHER THE TRANSACTION IS OR IS NOT AN ADVENTURE IN THE NATURE OF TRADE, ONE HAS TO TAKE INTO CONSIDERATION THE INTENTION OF THE ASSESSEE-KE EPING IN VIEW THE LEGAL REQUIREMENTS WHICH ARE ASSOCIATED WITH CONCEPT OF T RADE OR BUSINESS. 13 G.VENKATASWAMI NAICFU & CO. V. CIT F19591 35 ITR 594 INTENTION TO SELL AT THE VERY THRESHOLD, WHICH IS N OT OFFSET BY OTHER FACTORS, IS CONCLUSIVE - IN CASES, WHERE PURCHASE HAS BEEN MADE SOLELY AND EXCLUSIVELY WITH INTENTION TO RESELL AT A PROFIT AND PURCHASER HAS NO INTENTION OF HOLDING PROPERTY FOR HIMSELF OR OTHERWISE ENJOYING OR USING IT, PRESENCE OF SUCH AN INTENTION IS A RELEVANT FACTOR AND UNLESS IT IS OFF SET BY PRESENCE OF OTHER FACTORS, IT WOULD RAISE A STRONG PRESUMPTION THAT T RANSACTION IS AN ADVENTURE IN THE NATURE OF TRADE. IT WOULD BE UNREASONABLE TO APPLY THE CONVENTIONAL TEST OF 'INCOME COMING IN WITH SOME SORT OF REGULARITY OR EXPECTED REGULARITY FROM DEFINITE SOURCES' OR 'INCOME BEING LIKENED PICTORIALLY TO THE FRUIT OF A TREE OR THE CROP OF THE FIELD' TO THE DETERMINATION OF THE QUESTION AS TO WHETHER A SINGLE OR AN ISOLATED TRANSACTION CAN BE REGARDED AS AN ADVENTURE IN THE NATURE OF TRADE. P.M. MOHAMMED M EERAKHAN V. CIT [1969] 73 ITR 735 THE FOLLOWING PRINCIPLES EMERGE TO CONSTITUTE A BUSINESS: 1. AN ADVENTURE IN THE NATURE OF TRADE NEED NOT BE BUS INESS ITSELF. ANY ACTIVITY AKIN TO BUSINESS MAY BE TAKEN TO BE AN ADV ENTURE IN THE NATURE OF TRADE. 2. A SINGLE TRANSACTION MAY ALSO CONSTITUTE AN ADVENTU RE IN THE NATURE OF TRADE. THERE NEED NOT BE REGULARITY OR REPETITIV ENESS IN THE ACTIVITY. 3. WHETHER A TRANSACTION IS IN THE NATURE OF TRADE AND COMMERCE MUST BE DECIDED ON THE FACTS AND CIRCUMSTANCES OF EACH C ASE. NO HARD AND FAST RULES CAN BE LAID DOWN IN THAT BEHALF. 4. THE ACTIVITY ALLEGED/CLAIMED TO BE AN ADVENTURE IN THE NATURE OF TRADE NEED NOT BE ALLIED TO THE ALREADY EXISTING ACTIVITY OF THE ASSESSEE. 5. THE ACTIVITY OR THE TRANSACTION SAID TO BE AN ADVEN TURE IN THE NATURE OF TRADE MUST BE WITH THE OBJECT OF EARNING PROFIT - ECLAT CONSTRUCTION (P.) LID, V. CIT [1988] 172 ITR 84 (PA T) LAKSHMLNARAYAN RAM GOPAL & SON LTD, V. GOVT. OF HYDERABAD [ 1954 7 25 ITR 449 (SUPREME COURT). ACTIVITIES NEED NOT BE CONCERNED WITH SEVERAL INDIV IDUALS/CONCERNS - IN ORDER TO CONSTITUTE A BUSINESS THE ACTIVITIES NEED NOT NE CESSARILY BE CONCERNED WITH SEVERAL INDIVIDUALS OR CONCERNS. THEY WOULD CONSTIT UTE BUSINESS IN SPITE OF THEIR BEING RESTRICTED TO ONLY ONE INDIVIDUAL OR CO NCERN. WHAT IS RELEVANT TO CONSIDER IS WHAT IS THE NATURE AND SCOPE OF THESE A CTIVITIES THOUGH EITHER BY 14 CHANCE OR DESIGN THESE MIGHT BE RESTRICTED TO ONLY ONE INDIVIDUAL OR CONCERN. IT IS THE NATURE AND SCOPE OF THESE ACTIVITIES, AND NOT THE EXTENT OF THE OPERATIONS, WHICH IS RELEVANT FOR THIS PURPOSE. ALL THE ABOVE JUDGMENTS ARE CLEARLY APPLICABLE IN O UR CASE. THE BASES OF MANY JUDGMENTS ARE INTENTION AND THERE IS CLEAR INT ENTION OF THE APPELLANT FIRM TO DO BUSINESS AS IS CLEAR FROM THE ABOVE SUBMISSION. THE AO'S VIEW THAT THERE WAS NOT AT ALL A SINGLE TR ANSACTION IS NOT CORRECT AS THERE EXISTS: AT FIRST FOUR TRANSACTIONS OF PURCHASE OF THE PROP ERTY UNDER CONSIDERATION, THEN ONE TRANSACTION OF SALE, THEN ADVANCES GIVEN FOR PURCHASE OF THREE PROPERT IES AS UNDER SUNIL ARORA - RS. 1,50,00,000 - 11.01.2008 MALA SHREEVASTAVA - RS, 40,00,000 - 01,02.2008 SUSHMITA - RS. 40,00,000 - 05.02.2008 RISHI - RS. 40,00,000 - 22.01.2008 RAJESH - RS. 40,00,000 - 27.10.2008 PRABHAT SRIVASTAVA RS. 40,00,000 - 22.0 1.2008, 11.02.2008 SEEMA - RS. 15,00,000 THE ADVANCES WERE TO ABOVE SIX PERSONS OUT OF WHICH ONE MATERIALIZED AND THE OTHER DO NOT. NON MATERIALIZATION OF THE TR ANSACTIONS ARE GENUINE AND ARE NOT AT ALL QUESTIONED BY THE AO DURING THE ASSESSMENT PROCEEDINGS. NOW HOW CAN ONE TREAT ALL THESE TRANSA CTIONS INDIVIDUALLY TO DECIDE THAT PROFIT OUT OF ONE WILL BE TAXABLE UN DER THE HEAD CAPITAL GAINS, LOSS FROM ONE WILL BE CAPITAL LOSS. ALL THES E TRANSACTIONS CONSTITUTE BUSINESS AND HENCE SHOULD BE TAXABLE UND ER THE HEAD PROFITS & GAINS FROM BUSINESS OR PROFESSION. HENCE, IT IS R EQUESTED TO YOUR GOODSELF TO TREAT THE PROFITS FROM SALE OF PROPERTI ES AS THE PROFITS AND GAINS FROM BUSINESS/PROFESSION AND LOSS OF FORFEITU RE TO BE THE BUSINESS LOSS.' 6. THE LD. CIT(APPEALS), HOWEVER, CONSIDERING THE RIVAL CONTENTIONS AND VARIOUS CASE LAWS CITED BEFOR E HIM, DELETED THE ENTIRE ADDITION AND HELD THAT PROF IT ARISING FROM THE TRANSACTION OF PURCHASE/SALE ARE CLEARLY ASSESSABLE UNDER THE HEAD 'INCOME FROM BUSINESS & PROFESSION'. THE FINDINGS OF LD. CIT(AP PEALS) 15 IN PARAS 4 TO 5 OF THE IMPUGNED ORDER ARE REPRODUCE D AS UNDER : 4. I HAVE CONSIDERED THE BASIS OF ADDITION MAD E BY THE ASSESSING OFFICER AND THE ARGUMENTS OF THE AR ON THE ISSUE. T HE MAIN REASON FOR ASSESSING OFFICER TO CONCLUDE, THAT THE ACTIVI TY CARRIED ON BY THE APPELLANT WAS IN THE NATURE OF INVESTMENTS AND NOT BUSINESS, IS SOLITARY TRANSACTION OF PURCHASE/SALE. IT IS ON THI S BASIS THAT THE ASSESSING OFFICER HAS CONCLUDED THAT IT HAD TO BE ASSESSED UNDER THE HEAD INCOME FROM CAPITAL GAINS. THE JUDICIAL PRON OUNCEMENTS RELIED UPON BY THE ASSESSING OFFICER IN THE GIVEN MATRIX O F FACTS OF THE CASE HAVE ALSO BEEN PERUSED. IT IS CLEAR THAT THE A PPELLANT FIRM HAD BEEN CONSTITUTED BY WRITTEN DEED OF PARTNERSHIP DAT ED 27/7/2005 FOR THE PURPOSE OF CARRYING ON THE BUSINESS OF SALE, PU RCHASE OF PROPERTY, LAND DEVELOPMENT/CONSTRUCTION OF HOUSES/COMMERCIAL BUILDINGS, TO DEVELOP COLONIES AND THE SAID PARTNERSHIP DEED CONT AINED VARIOUS OTHER CLAUSES REQUIRED TO SMOOTHLY CARRY ON THE INT ENDED BUSINESS. IT HAS ALSO BEEN SPECIFIED THAT THE PROPER BOOKS OF AC COUNTS SHALL BE MAINTAINED AT THE PLACE OF THE BUSINESS AND IN PURS UANCE OF THE SAME PROFIT AND LOSS ACCOUNT AS WELL AS BALANCE SHEET OF ALL THE YEARS FROM THE YEAR OF EXISTENCE OF PARTNERSHIP FIRM HAD BEE N PREPARED ACCORDINGLY. THE PERUSAL OF THE BALANCE SHEET PREPA RED AND FILED BY THE APPELLANT FROM YEAR TO YEAR BEFORE THE INCOME T AX DEPARTMENT CLEARLY REFLECTS THE TREATMENT GIVEN TO THE IMPUGNE D ASSET AS STOCK IN TRADE RATHER THAN UNDER THE HEAD INVESTMENTS. THIS FURTHER SHOW THAT VARIOUS PERSONS GOT TOGETHER WITH THE INTENSION OF CARRYING ON BUSINESS IN THE REAL ESTATE SECTOR BY CONTRIBUTING CAPITA! TO THE EXTENT SPECIFIED IN THE PARTNERSHIP DEED AND THE SAID INT ENTION WAS CLEARLY REDUCED IN WRITING IN THE FORM OF SPECIFIC OBJECT C LAUSE IN THE PARTNERSHIP DEED. THE TREATMENT OF IMPUGNED ASSET A S STOCK IN TRADE IN THE BOOKS OF ACCOUNTS FURTHER POINTS OUT T HE CONTINUED INTENTION TO EXPLOIT THE IMPUGNED ASSET COMMERCIALL Y TO THE MAXIMUM BENEFIT OF THE FIRM. THE SAID ASSET IN THE FIRM OF LAND HAD BEEN PURCHASED OVER PERIOD OF FIVE MONTHS FROM DIFF ERENT PERSONS AND RETAINED FOR CERTAIN NUMBER OF YEARS LOOKING TO USE THE SAME TO MAXIMIZE THE REVENUE. HOWEVER IN VIEW OF THE URG ENT AND SPECIFIC REQUIREMENTS OF THE BUYER I.E. M/S G.M.R. HIGHWAY (P) 16 LTD., THE APPELLANT FIRM COULD FETCH GOOD PRICE AND THE PROPERTY WAS SOLD DEEMING IT IN THE BEST INTERESTS OF THE FI RM FROM THE POINT OF VIEW OF GENERATING MAXIMUM REVENUE. THEREA FTER, THE FIRM PROCEEDED TO PURCHASE TWO MORE PROPERTIES FROM THE RESOURCES GENERATED FROM SAID DEAL SO AS TO FURTHER INCREASE THE POTENTIAL TO MAKE PROFITS, WHICH HOWEVER TURNED OUT TO BE BAD AS THE SAME !ED TO FORFEITURE. THE FACTS OF THE CASE HAVE BEEN CLEARLY DISTINGUISHED BY THE AR IN HIS WRITTEN SUBMISSIONS WITH REFERENCE TO THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE ASSE SSING OFFICER IN THE ASSESSMENT ORDER. THE CASE OF CIT VS. SMT. SARA SWATI BAI 137 ITR 656 ( P & H) WAS ON THE FACT THAT THREE LADIES JOINTLY PURCHASED A PROPERTY AND SOLD IT OFF ON PROFIT AND IT WAS HELD THAT THERE WAS NO AOP IN EXISTENCE. HOWEVER, THE APPELLA NT IS IN THE BUSINESS OF REAL ESTATE IN VIEW OF WRITTEN AND REGI STERED PARTNERSHIP DEED AND THE INTENTION TO DO BUSINESS H AS BEEN CLEARLY RECORDED THEREIN. FURTHER BOOKS OF ACCOUNTS HAVE BE EN REGULARLY MAINTAINED. THE FACTS OF THE CASE IN RESPECT OF CIT VS. P K N COMPANY LTD. 60 ITR 65 (SC) ARE ALSO ENTIRELY DIFFE RENT AS THE COMPANY HAD SOLD THE UNECONOMIC OR INCONVENIENT PLO TS, OF LAND OR HOUSES WHICH WAS INCIDENTAL TO THE MAIN BUSINESS. T HE PRIMARY OBJECT OF THE APPELLANT FIRM IN THIS CASE IS TO DO BUSINESS IN REAL ESTATE SECTOR WHICH HAS BEEN CLEARLY STIPULATED IN THE PARTNERSHIP DEED. THE HON'BLE SUPREME COURT IN THE CASE OF SARO J KUMAR MAJUMDAR VS. CIT 37 ITR 242 HAS CLEARLY HELD AS UND ER:- IF A TRANSACTION WERE IN THE LINE OF THE ASSESSEE'S BUSINESS, IT WOULD NOT MATTER MUCH WHETHER, IN THE ASSESSMENT YEAR, HE HAD SEVERAL SUCH TRANSACTIONS O R ONLY ONE. EVEN A SINGLE TRANSACTION OF DEALING IN LANDED ESTATES, BEING A PART OF THE ASSESSEE'S BUSINESS, W OULD BE LIABLE TO INCOME TAX, IF A PROFIT IS MADE IN THAT TRANSACTION.' THE JUDGEMENT OF THE HON'BLE APEX COURT IN THE CASE OF RAJ PUTANA TEXTILES LTD. VS, CIT 42 ITR 743 CLEARLY HIG HLIGHTS THAT ONE HAS TO TAKE INTO CONSIDERATION THE INTENTION OF THE ASSESSEE IN CONSIDERING THE QUESTION WHETHER THE TRANSACTION IS OR IS NOT AN ADVENTURE IN THE NATURE OF TRADE. FURTHER THE HO N'BLE APEX 17 COURT IN THE CASE G VENKATASWAMI & COMPANY VS. CIT 35 ITR. 594 HAS HELD AS UNDER; 'INTENTION TO SELL AT THE VERY THRESHOLD, WHICH IS NOT OFFSET BY OTHER FACTORS, IS CONCLUSIVE- IN CASES, WHERE PURCH ASE HAS BEEN MADE SOLELY AND EXCLUSIVELY WITH INTENTION TO RESELL AT A PROFIT AND PURCHASER HAS NO INTENTION OF HOLDING PROPERTY FOR HIMSELF OR OTHERWISE ENJOYING OR USING IT, PRESENCE OF SUCH AN INTENTION IS A RELEVANT FACTOR AND UNLESS IT IS OFFSET BY PRESEN CE OF OTHER FACTORS, IT WOULD RAISE A STRONG PRESUMPTION THAT T RANSACTION IS AN ADVENTURE IN THE NATURE OF TRADE. IT WOULD BE UNREASONABLE TO APPLY THE CONVENTIONAL TEST OF 'INCOME COMING IN WITH SOME SORT OF REGULARITY OR E XPECTED REGULARITY FROM DEFINITE SOURCES' OF 'INCOME BEING LIKENED PICTORIALLY TO THE FRUIT OF A TREE OR THE - CROP OF THE FIELD' TO THE DETERMINATION OF THE QUESTION AS TO WHETHER A SINGL E OR AN ISOLATED TRANSACTION CAN BE REGARDED AS AN ADVENTURE IN THE NATURE OF TRADE.' 5. THE INTENTION OF THE APPELLATE FIRM DOES NOT NEE D TO BE COMPREHENDED BY LOOKING INTO THE SURROUNDING CIRCUM STANCES AS THE SAME IS CLEARLY RECORDED IN THE PARTNERSHIP DEE D AT THE TIME OF CONSTITUTION OF THE SAME. THEREFORE, THE PROFIT ARISING FROM THE TRANSACTIONS OF PURCHASE/SALE ARE CLEARLY ASSES SABLE UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION. THE CLAIM OF LOSS ON ACCOUNT OF FORFEITURE OF AMOUNTS ADVANCED IS ALSO A BUSINESS LOSS AND CANNOT BE TREATED AS APPLICATION OF PROFITS. IN THE CIRCUMSTANCES, THE ADDITION MADE BY THE ASSESSING O FFICER IS DIRECTED TO BE DELETED. 7. THE LD. DR RELIED UPON ORDER OF THE ASSESSING OFFICER AS WELL AS FILED GIST OF HIS WRITTEN SUBMIS SIONS. THE LD. DR CONTENDED THAT THE LD. CIT(APPEALS) WRON GLY INTERPRETED THE JUDGEMENTS OF THE HON'BLE SUPREME COURT IN THE CASE OF SAROJ KUMAR MAJUMDAR (SUPRA) A ND 18 G. VENKATASWAMI & CO. ( SUPRA). THE LD. DR SUBMITT ED THAT THESE DECISIONS WOULD NOT SUPPORT THE CONCLUSI ON DRAWN BY THE LD. CIT(APPEALS). 7(I) ON THE OTHER HAND, LD. . COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIO NS MADE BEFORE AUTHORITIES BELOW AND PLACED ON RECORD COPY OF THE PARTNERSHIP DEED DATED 27.07.2005 AND SUBMIT TED THAT THE PARTNERSHIP WAS FORMED FOR THE PURPOSE OF CARRYING ON BUSINESS OF REAL ESTATE. THEREFORE, IN TENTION OF THE PARTIES SINCE BEGINNING WAS TO CONDUCT THE BUSINESS IN REAL ESTATE ONLY. HE HAS SUBMITTED THA T THE ASSESSEE FIRM PURCHASED THE LANDS ON DIFFERENT OCCASIONS ON 13.01.2006 ETC. AND SOLD ON 31.12.2007 . THE LAND HAS BEEN SHOWN AS CLOSING STOCK IN ASSESSM ENT YEAR UNDER APPEAL AS WELL AS IN PRECEDING ASSESSMEN T YEARS. THE ADVANCES GIVEN FOR PURCHASE OF LAND, AS FORFEITED, HAVE NOT BEEN DISPUTED BY THE ASSESSING OFFICER. THE TRANSACTIONS CONDUCTED BY THE ASSESSE E FIRM ARE IN THE LINE OF BUSINESS OF THE ASSESSEE, THEREFORE, LD. CIT(APPEALS) RIGHTLY HELD THE PROFIT ARISING FROM THE TRANSACTION OF PURCHASE/SALE ARE ASSESSABL E UNDER THE HEAD 'INCOME FROM BUSINESS & PROFESSION'. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT LD. CIT(APPEALS) CORRECTLY FOLLOWED THE VARIOUS DECISIO NS CITED BEFORE HIM AND THERE IS NO INFIRMITY POINTED OUT IN THE ORDER OF THE LD. CIT(APPEALS). HE HAS ALSO REL IED UPON ORDER OF ITAT AHMEDABAD BENCH IN THE CASE OF 19 DCIT VS SMT. RAJESHWARI MEHTA IN ITA 169/2011 FOR ASSESSMENT YEAR 2008-09 DATED 24.07.2015. 8. WE HAVE CONSIDERED RIVAL SUBMISSIONS. HON'BLE SUPREME COURT IN THE CASE OF G. VENKATASWAMI & CO. (SUPRA) OBSERVED THAT IN DECIDING CHARACTER OF TRANSACTION, SEVERAL FEATURES ARE RELEVANT I.E. WHE THER PURCHASER WAS A TRADER, NATURE AND QUANTITY OF COMMODITY PURCHASED AND SOLD. THE TRANSACTIONS ASSOCIATED WITH THE TRADE OR BUSINESS. IT WAS FURT HER OBSERVED THAT COURT MAY DRAW INFERENCE THAT TRANSAC TION IS IN THE NATURE OF TRADE. IN EACH CASE, IT IS THE TOTAL EFFECT OF ALL RELEVANT FEATURES AND CIRCUMSTANCES T HAT DETERMINE THE CHARACTER OF TRANSACTION. IN CASE WH ERE THE PURCHASE HAS BEEN MADE SOLELY AND EXCLUSIVELY W ITH INTENTION TO RESALE THE PROPERTY AT A PROFIT AND TH E PURCHASER HAS NO INTENTION OF HOLDING THE PROPERTY FOR HIMSELF OR OTHERWISE ENJOYING OR USING IT, THE PRES ENCE OF INTENTION IS RELEVANT FACTOR AND UNLESS IT IS OF F SET BY THE PRESENCE OF OTHER FACTORS, IT WOULD RAISE A STR ONG PRESUMPTION THAT TRANSACTION IS AN ADVENTURE IN NAT URE OF TRADE. IN THE CASE OF SAROJ KUMAR MAJUMDAR (SUP RA) HON'BLE SUPREME COURT OBSERVED THAT WHERE TRANSACTI ON WAS NOT IN THE LINE OF BUSINESS OF THE ASSESSEE, BU T WAS ISOLATED ON SINGLE INSTANCE OF TRANSACTION, THE ONU S WAS ON DEPARTMENT TO PROVE THAT TRANSACTION WAS AN ADVENTURE IN THE NATURE OF TRADE. 20 9. CONSIDERING THE FACTS OF THE CASE, MATERIAL ON RECORD AND IN THE LIGHT OF FINDINGS OF LD. CIT(APPE ALS), WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVEN UE. THEREFORE, NO INTERFERENCE IS CALLED FOR IN THE MAT TER. THE ASSESSEE HAS PLACED ON RECORD THE DETAILS OF SALE/PURCHASE OF PROPERTIES FOR THE PERIOD 01.04.20 05 TO 31.03.2006 WHICH SHOWS THAT THE ASSESSEE PURCHASED FOUR PROPERTIES IN THE SHAPE OF LAND FROM ONE SELLE R SHRI SUDHIR GULATI ON DIFFERENT DATES I.E. 13.01.2006, 01.08.2005, 01.08.2005 AND 10.01.2006. ALL THE SALE DEEDS ARE REGISTERED AND PAYMENTS HAVE BEEN MADE THROUGH BANKING CHANNEL. COPY OF THE BALANCE SHEET ENDING 31.03.2006 IS ALSO FILED WHICH SHOWS THAT TH E TOTAL LAND VALUE OF RS. 60,53,542/- HAS BEEN SHOWN IN THE BALANCE SHEET ON ASSET SIDE AS CLOSING STOCK. THE SAME VALUATION OF THE LAND HAVE BEEN SHOWN AS CLOS ING STOCK IN THE BALANCE SHEET ENDING 31.03.2007 IN A SUM OF RS. 60,53,542/-. THE SAME ARE SUPPORTED BY COPI ES OF ALL THE REGISTERED SALE DEEDS. THE ASSESSEE ALS O FILED COPY OF THE ASSESSMENT ORDER IN THE CASE OF THE ASS ESSEE FIRM FOR ASSESSMENT YEAR 2007-08 UNDER SECTION 143( 3) DATED 19/21.11.2008 IN WHICH THE ASSESSMENT HAS BEE N COMPLETED AT NIL INCOME AS DECLARED BY THE ASSESS EE. IT WOULD, THEREFORE, PROVE THAT WHEN ASSESSEE PURCHASE D THE LANDS FOR THE PURPOSE OF BUSINESS IN PRECEDING ASSESSMENT YEAR 2006-07, THE ASSESSEE FIRM HAS SHOW N THE VALUE OF THE LANDS AS CLOSING STOCK IN THE BALA NCE SHEET AND SAME TREATMENT HAS BEEN GIVEN IN PRECEDIN G 21 ASSESSMENT YEAR 2007-08 BY MENTIONING THE VALUE OF THE LAND IN THE CLOSING STOCK. EVEN IN ASSESSMENT YEAR 2007-08, THE DEPARTMENT ACCEPTED THE CLAIM OF THE ASSESSEE UNDER SECTION 143(3) OF THE ACT. THEREFOR E, IT IS CLEAR FROM THE ABOVE FACTS THAT WHEN ASSESSEE WA S CONSTITUTED BY PARTNERSHIP DEED ON 27.07.2005, THE INTENTION WAS VERY CLEAR THAT ASSESSEE FIRM WOULD B E DOING THE BUSINESS OF REAL ESTATE. WHEN ASSESSEE F IRM PURCHASED THE LAND IN ASSESSMENT YEAR 2006-07, VALU E OF THE LAND FOR THE PURPOSE OF BUSINESS WAS SHOWN A S CLOSING STOCK AND IN ASSESSMENT YEAR 2007-08, THE C LAIM OF THE ASSESSEE HAS BEEN ACCEPTED OF DOING BUSINESS IN REAL ESTATE BY SHOWING THE VALUE OF THE LAND IN CLO SING STOCK IN SCRUTINY ASSESSMENT UNDER SECTION 143(3). EVEN IN ASSESSMENT YEAR UNDER APPEAL, ASSESSEE HAS SHOWN VALUE OF LAND IN CLOSING STOCK. EVEN THE ASSESSING OFFICER HAS NOT DISPUTED THE FORFEITURE O F THE ADVANCE MONEY GIVEN BY ASSESSEE FOR THE PURPOSE OF PURCHASING LAND FOR BUSINESS PURPOSES. ALL THE PAR TNERS OF THE ASSESSEE FIRM CAME UP TOGETHER TO DO THE BUS INESS OF REAL ESTATE AND NOTHING ELSE. THE OBJECT OF THE ASSESSEE FIRM IS SPECIFIC THAT NO OTHER BUSINESS AP ART FROM REAL ESTATE SHALL BE CARRIED ON BY THE ASSESSE E FIRM. 9(I) THE ABOVE FACTS, THEREFORE, CLEARLY PROVE THE INTENTION OF THE ASSESSEE FIRM TO DEAL IN PROPERTI ES AND NOT TO HOLD THE PROPERTIES AS INVESTMENTS. THE ASS ESSEE 22 ALSO EXPLAINED BEFORE LD. CIT(APPEALS) THAT AFTER PURCHASING PROPERTIES THROUGH DIFFERENT REGISTERED DEEDS, CERTAIN PROPERTIES HELD BY ASSESSEE FOR BUSI NESS PURPOSES WERE COMPULSORILY ACQUIRED BY NATIONAL HIGHWAY AUTHORITY OF INDIA AND DUE TO THIS REASON, THE REMAINING PROPERTIES WERE SOLD. THE ASSESSEE, THEREFORE, DID NOT HELD ANY PROPERTY FOR INVESTMENT AND HELD THE PROPERTIES AS STOCK-IN-TRADE ONLY. THE TRANSACTIONS ARE, THEREFORE, CARRIED ON BY ASSESSEE IN THE LINE OF BUSINESS OF ASSESSEE I.E. REAL ESTATE. ALL THE RELEVANT FACTORS CONSIDERED ABOVE AND CIRCUMSTANCES NOTED CLEARLY DETERMINE THE CHARACTER OF TRANSACTIO N HELD BY THE ASSESSEE WITH THE SOLE OBJECTIVE OF REA L ESTATE ONLY. THE INTENTION OF THE ASSESSEE FIRM IS ALSO CLEAR SINCE BEGINNING THAT IT HAD PURCHASED THE LAN DS FOR THE PURPOSE OF REAL ESTATE BUSINESS ONLY. THE V IEW OF THE ASSESSEE THAT ITS INCOME IS ASSESSABLE UNDER TH E HEAD 'INCOME FROM BUSINESS & PROFESSION' AND SUCH V IEW ACCEPTED BY DEPTT. IN EARLIER YEAR ALSO SUPPORTS TH E FINDINGS OF LD. CIT(APPEALS) THAT INCOME OF THE ASS ESSEE IS ASSESSABLE UNDER THE HEAD 'INCOME FROM BUSINESS & PROFESSION'. IT IS WELL SETTLED LAW THAT RULE OF CONSISTENCY IS APPLICABLE TO THE INCOME TAX PROCEED INGS AND UNLESS SOME SPECIFIC MATERIAL IS FOUND AGAINST THE ASSESSEE, INCOME TAX AUTHORITIES ARE NOT PERMITTED TO TAKE A CONTRARY VIEW WHICH HAVE BEEN ACCEPTED IN EA RLIER YEARS. THE NATURE OF INCOME OF THE ASSESSEE CANNOT BE TAKEN DIFFERENTLY IN ASSESSMENT YEAR UNDER APPEAL 23 BECAUSE SAME INCOME OF THE ASSESSEE HAS BEEN ACCEPT ED AS 'INCOME FROM BUSINESS & PROFESSION' IN EARLIER Y EARS. 9(II) WE RELY UPON DECISION OF DELHI HIGH COURT IN THE CASE OF A.R.J. SECURITIES PRINTERS 264 ITR 276, DEC ISION OF MADHYA PRADESH HIGH COURT IN THE CASE OF GODAWAR I CORPORATION LTD. 156 ITR 835, DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF VIKAS CHEMI GUM INDIA 276 ITR 32 AND DECISION OF SUPREME COURT IN THE CASE OF RADHASOAMI SATSANG VS CIT 193 ITR 321. THE LD. CIT(APPEALS), THEREFORE, RIGHTLY FOLL OWED THE DECISIONS OF HON'BLE SUPREME COURT AS REFERRED TO IN HIS FINDINGS. WE, THEREFORE, DO NOT FIND ANY INFIR MITY IN THE ORDER OF LD. CIT(APPEALS) IN HOLDING THE PROFIT ARISING FROM THE TRANSACTION OF PURCHASE/SALES ASSESSABLE U NDER THE HEAD 'INCOME FROM BUSINESS & PROFESSION'. WE, THEREFORE, DO NOT FIND ANY MERIT IN THE DEPARTMENTA L APPEAL, SAME IS ACCORDINGLY, DISMISSED. 10. IN THE RESULT, DEPARTMENTAL APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (OM PRAKASH KANT) (BHAVNESH SA INI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 3 RD OCTOBER, 2016. POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT,DR ASSISTANT REGISTRAR, ITAT/CHD