SH. PARMINDER SINGH, KAPURTHALA V. A.C.I.T, CENTRAL CIRCLE- I, JALANDHAR

ITA 329/ASR/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9193 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 29-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SURINDER MAHAJAN LD
• Keywords: Business income; Salary income; Question of law; Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA NO.329(ASR)/2017 ASSESSMENT YEAR: 2009-10 SH. PARMINDER SINGH GOPAL PARK, KAPURTHALA [PAN:ACMPS 6748R] VS. ASST. CIT, CENTRAL CIRCLE-I, JALANDHAR (APPELLANT) (RESPONDENT) APPELLANT BY: SH. SURINDER MAHAJAN (LD. CA) RESPONDENT BY: SH. CHARAN D ASS (LD. DR) DATE OF HEARING: 28.11.2018 DATE OF PRONOUNCEMENT: 19.12.2018 ORDER PER N.K.CHOUDHRY, JM: THE INSTANT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE/AP PELLANT AGAINST THE ORDER DATED 03.02.2017, PASSED BY THE LD. CIT(A), BATHINDA, U/S. 250(6) OF THE I.T. ACT, 1961 (HEREINAFTER CALLED AS THE ACT), FOR ASST. YEAR:2009-10. 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEA L. 1. A) THAT ON THE FACTS & CIRCUMSTANCES OF THE CAS E, LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] HAS GROSSLY ERRED IN LAW IN CONCLUDING THAT TRANSACTION OF SALE OF PURCHASE OF PROPERTY BY THE ASSESEE IS IN THE NATURE OF TRADE, PROFITS OF WHICH ARE TO BE CONSIDERED AS BUSINESS INCOME. CONCLUSION DRAWN IS BAD IN LAW. B) THAT ON THE FACTS & CIRCUMSTANCES OF THE CAS E, CONCLUSION DRAWN BY LEARNED CIT(A) IS WITHOUT ANY MATERIAL ON RECORDS. 2. A) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. ASSESSING OFFICER HAS GROSSLY ERRED IN MAKING ADDITION OF RS. 74,701/- BY HOLDING THAT ASSESSEE IS NOT ENTITLED TO INDEXATION SINCE A S ALLEGED BY LD. ITA NO.329/ASR/2017 (A.Y.2009-10) PARMI NDER SINGH, KAPURTHALA V. ACIT 2 ASSESSING OFFICER, MAIN SOURCE OF INCOME OF ASSESSE E WAS SALE AND PURCHASED OF PROPERTIES. CONCLUSION DRAWN BY THE LD . ASSESSING OFFICER IS ILLEGAL AND BAD IN LAW. B) THAT WHILE MAKING ADDITION OF RS.74,701/-, LD. ASSESSING OFFICER HAS MADE HIS OWN CALCULATIONS WHICH HAVE NEVER BEEN CON FRONTED TO THE ASSESSEE. THIS MAKES THE ADDITION MADE ILLEGAL AND BAD IN LAW. 3. AS PER ASSESSMENT ORDER, THE BRIEF FACTS OF THE CASE ARE THA T IN THE INSTANT CASE, DURING THE YEAR UNDER CONSIDERATION, THE A SSESSEE WAS WORKING AS DIRECTOR OF VARIOUS COMPANIES AND ENGAGED IN THE BUSI NESS OF PROPERTY DEALINGS AND HAD SHOWN INCOME OF RS.55,000/- FROM SHORT TERM CAPITAL GAIN AND RS.2,34,701/- FROM LONG TERM CAPITAL GAIN FROM TH E SALE OF PROPERTY AND PLOT. THE MAIN SOURCE OF INCOME OF THE ASSESSEE WAS FROM SAL E AND PURCHASE OF PROPERTIES AND THAT OF COMMISSIONS. DURING THE COURSE O F ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO PRODUCE BALANCE SHEET , PROFIT & LOSS ACCOUNT, DETAILS OF PROPERTIES HELD AS CLOSING STOCK AND RELEVANT BOOKS OF ACCOUNT. HOWEVER, NO SUCH RECORD WAS MADE AVAILABLE BY TH E ASSESSEE. AS THE MAIN SOURCE OF INCOME OF ASSESSEE WAS FROM THE SALE AND PURCHASE OF PROPERTIES, THEREFORE, IT WAS HELD BY ASSESSING OFFICER TH AT THE ASSESSEE IS NOT ENTITLED FOR INDEXATION BENEFIT IN RESPECT OF BUSI NESS PROPERTIES. ACCORDINGLY, INCOME CLAIMED TO BE TAXABLE UNDER THE LON G TERM CAPITAL GAIN IS TAXABLE UNDER THE HEAD BUSINESS INCOME AS FOLLOWS: SALE CONSIDERATION OF PLOT RS.5,00,000/- LESS: COST OF ACQUISITION RS.1,60,000/- BUSINESS INCOME RS.3,40,000/- ACCORDINGLY, A SUM OF RS.74,701/- [2,34,701/--1,60,000] WAS ADDED TO THE RETURNED INCOME OF THE ASSESSEE AND INCOME OF RS.3 ,40,000/- TAXABLE AT NORMAL RATES. IN CRUX THE ADDITION OF RS.74,701/- WAS ADDED IN THE R ETURN OF INCOME OF RS.10,27,210/- AS DECLARED BY THE ASSESSEE WHICH LEAD TO TAX AND INTEREST DEMAND OF RS.32,663/-. ITA NO.329/ASR/2017 (A.Y.2009-10) PARMI NDER SINGH, KAPURTHALA V. ACIT 3 4. THE SAID ADDITION WAS CHALLENGED BY THE ASSESSEE BEFORE T HE LD. CIT(A) WHO UPHOLD THE ADDITION ON THE SIMILAR REASONING GIV EN BY THE ASSESSING OFFICER. 5. FEELING AGGRIEVED AGAINST THE CONFIRMATION OF ACTION OF THE ASSESSING OFFICER BY THE CIT(A), THE ASSESSEE HAS PREFERRED THE INST ANT APPEAL. THE ASSESSEE HAD SHOWN THE COMPUTATION OF INCOME WHERE THE AMO UNT OF RS.2,28,000/- HAS BEEN SHOWN AS INCOME FROM SALARY AND A MOUNT OF RS.467,579/- AS INCOME FROM CAPITAL GAINS AND RS.331,626 /- AS INCOME FROM OTHER SOURCES, THUS, TOTAL COMES TO RS.10,27,205/-, ON WHICH THE TAX OF RS.1,71,905/- HAS BEEN PAID. THE ASSESSEE HAS SUBMITTED TH AT THE ASSESSEE IS NOT IN THE BUSINESS OF PROPERTIES AS ASSUMED BY THE AUTH ORITIES BELOW, NEITHER MADE ANY TRANSACTIONS AS BUSINESS IN NATURE, THE TRANSACTION OF PLOT WHICH WAS SOLD AT RS.5 LAC WAS PURCHASED BY THE ASSESSEE IN HI S INDIVIDUAL NAME AND THAT WAS A PERSONAL INVESTMENT AND DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SOLD TWO PROPERTIES FOR RS.5 LACS AND RS.2,25,000/- AS THE SAME WERE PURCHASED IN F.Y.1998-99 AND 1997-98 RESPECTIVELY AND THERE IS NO MATERIAL THAT THE ASSESSE IS INVOLVED IN REGULAR SALE AND/OR PURCHASE OF PROPERTY. THE ASSESSEE HAS ALREADY DEMONSTRATED THAT THE APPELLANT IS WORKING AS A DIRECTOR IN M/S. K APURTHALA ESTATES (P) LTD. AND M/S KAPURTHALA PROMOTERS & DEVELOPERS (P) L TD. AND DERIVING INCOME FROM SALARY AND DURING THE YEAR UNDER CONSIDERAT ION CAUSED CAPITAL GAINS. THE ASSESEE HAS ALSO RELIED UPON THE FOLLOWING DE CISIONS OF THE HONBLE SUPREME COURT OF INDIA WHICH FOR THE CLARITY A ND COMPLETENESS, WE WOULD LIKE TO QUOTE HERE. (A) IN THE CASE OF G. VENKATASWAMI NAIDU & CO. VS. COMMISSIONER OF INCOME TAX [1959] 35 ITR 0594(SC). 13. AS WE HAVE ALREADY OBSERVED IT IS IMPOSSIBLE TO EVOLVE ANY FORMULA WHICH CAN BE APPLIED IN DETERMIN ING THE CHARACTER OF ISOLATED TRANSACTIONS WHICH COME ITA NO.329/ASR/2017 (A.Y.2009-10) PARMI NDER SINGH, KAPURTHALA V. ACIT 4 BEFORE THE COURTS IN TAX PROCEEDINGS. IT WOULD BESIDES BE INEXPEDIENT TO MAKE ANY ATTEMPT TO EVOLVE SUCH A RU LE OR FORMULA. GENERALLY SPEAKING, IT WOULD NOT BE DIFFIC ULT TO DECIDE WHETHER A GIVEN TRANSACTION IS AN ADVENTURE IN THE NATURE OF TRADE OR NOT. IT IS THE CASES ON THE BORDER LINE TH AT CAUSE DIFFICULTY. IF A PERSON INVESTS MONEY IN LAND INTENDING TO HOLD IT, ENJOYS ITS INCOME FOR SOME TIME, AND THEN SELLS IT AT A PROFIT, IT WOULD BE A CLEAR CASE OF CAPITAL ACCRETION AND NOT PROFIT DERIVED FROM AN ADVENTURE IN THE NATURE OF TRADE. CASES OF REALISATION OF INVEST MENTS CONSISTING OF PURCHASE AND RESALE, THOUGH PROFITABL E, ARE CLEARLY OUTSIDE THE DOMAIN OF ADVENTURES IN THE NATURE OF TRADE. IN DECIDING THE CHARACTER OF SUCH TRANSACTIONS SEVERAL FACTORS ARE TREATED AS RELEVAN T. WAS THE PURCHASER, A TRADER AND WERE THE PURCHASE O F THE COMMODITY AND ITS RESALE ALLIED TO HIS USUAL TR ADE OR BUSINESS OR INCIDENTAL TO IT ? AFFIRMATIVE ANSWE RS TO THESE QUESTIONS MAY FURNISH RELEVANT DATE FOR DETERMINING THE CHARACTER OF THE TRANSACTION. WHAT IS THE NATURE OF THE COMMODITY PURCHASED AND RESOLD AN D IN WHAT QUANTITY WAS IT PURCHASED AND RESOLD ? IF T HE COMMODITY PURCHASED IS GENERALLY THE SUBJECT-MATTER OF TRADE, AND IF IT IS PURCHASED IN VERY LARGE QUANTIT IES, IT WOULD TEND TO ELIMINATE THE POSSIBILITY OF INVESTME NT FOR PERSONAL USE, POSSESSION OR ENJOYMENT. DID THE PURCHASER BY ANY ACT SUBSEQUENT TO THE PURCHASE IMPROVE THE QUALITY OF THE COMMODITY PURCHASED AND THEREBY MADE IT MORE READILY RESALEABLE ? WHAT WERE THE INCIDENTS ASSOCIATED WITH THE PURCHASE AND RESA LE ? WERE THEY SIMILAR TO THE OPERATIONS USUALLY ASSOCIA TED WITH TRADE OR BUSINESS ? ARE THE TRANSACTIONS OF PURCHASE AND SALE REPEATED ? IN REGARD TO THE PURCH ASE OF THE COMMODITY AND ITS SUBSEQUENT POSSESSION BY T HE PURCHASER, DOES THE ELEMENT OF PRIDE OF POSSESSION COME INTO THE PICTURE ? A PERSON MAY PURCHASE A PIECE OF ART, HOLD IT FOR SOME TIME AND IF A PROFITABLE OFFER IS RECEIVED MAY SELL IT. DURING THE TIME THAT THE PURCHASER HAD ITS POSSESSION HE MAY BE ABLE TO CLAIM PRIDE OF POSSESS ION AND AESTHETIC SATISFACTION; AND IF SUCH A CLAIM IS UPHELD THAT WOULD BE A FACTOR AGAINST THE CONTENTIO N THAT THE TRANSACTION IS IN THE NATURE OF TRADE . THESE AND OTHER CONSIDERATIONS ARE SET OUT AND DISCUSSED IN J UDICIAL DECISIONS WHICH DEAL WITH THE CHARACTER OF TRANSACT IONS ALLEGED TO BE IN THE NATURE OF TRADE. IN CONSIDERIN G THESE DECISIONS, IT WOULD BE NECESSARY TO REMEMBER THAT T HEY DO NOT ITA NO.329/ASR/2017 (A.Y.2009-10) PARMI NDER SINGH, KAPURTHALA V. ACIT 5 PURPORT TO LAY DOWN ANY GENERAL OR UNIVERSAL TEST. THE PRESENCE OF ALL THE RELEVANT CIRCUMSTANCES MENTIONE D IN ANY OF THEM MAY HELP THE COURT TO DRAW A SIMILAR INFERENCE ; BUT IT IS NOT A MATTER OF MERELY COUNTING THE NUMBER OF FACTS AND CIRCUMSTANCES PRO AND CON; WHAT IS IMPORTANT TO CON SIDER IS THEIR DISTINCTIVE CHARACTER. IN EACH CASE, IT IS TH E TOTAL EFFECT OF ALL RELEVANT FACTORS AND CIRCUMSTANCES THAT DETERMI NES THE CHARACTER OF THE TRANSACTION; AND SO, THOUGH WE MAY ATTEMPT TO DERIVE SOME ASSISTANCE FROM DECISIONS BEARING ON THIS POINT, WE CANNOT SEEK TO DEDUCE ANY RULE FROM THEM AND MECHANICALLY APPLY IT TO THE FACTS BEFORE US. 14. IN THIS CONNECTION, IT WOULD BE RELEVANT TO REFER T O ANOTHER TEST WHICH IS SOMETIMES APPLIED IN DETERMIN ING THE CHARACTER OF THE TRANSACTION. WAS THE PURCHASE MADE WITH THE INTENTION TO RESELL IT AT A PROFIT ? IT IS OFTEN SAID THAT A TRANSACTION OF PURCHASE FOLLOWED BY RESALE CAN EITHER BE AN INVESTMENT OR AN ADVENTURE IN THE NATURE OF TRADE. THERE IS NO MIDDLE COURSE AND NO HALF-WAY HOUSE. THIS STATEMENT MAY BE BROADLY TRUE; AND SO SOME JUDICIAL DECISIONS APPLY THE TEST OF TH E INITIAL INTENTION TO RESELL IN DISTINGUISHING ADVEN TURES IN THE NATURE OF TRADE FROM TRANSACTIONS OF INVESTM ENT. EVEN IN THE APPLICATION OF THIS TEST DISTINCTION WI LL 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 PURCHAS ED AT PROFIT, BUT HE WOULD ALSO INTEND AND BE WILLING TO HOLD AND ENJOY IT IF A REALLY HIGH PRICE IS NOT OFF ERED. THE INTENTION TO RESELL MAY IN SUCH CASES BE COUPLE D WITH THE INTENTION TO HOLD THE PROPERTY. CASES MAY, HOWEVER, ARISE WHERE THE PURCHASE HAS BEEN MADE SOLELY AND EXCLUSI VELY WITH THE INTENTION TO RESELL AT A PROFIT AND THE PU RCHASER HAS NO INTENTION OF HOLDING THE PROPERTY FOR HIMSELF OR OTHERWISE ENJOYING OR USING IT. THE PRESENCE OF SUCH AN INTEN TION IS NO DOUBT A RELEVANT FACTOR AND UNLESS IT IS OFFSET BY THE PRESENCE OF OTHER FACTORS IT WOULD RAISE A STRONG PRESUMPTIO N THAT THE TRANSACTION IS AN ADVENTURE IN THE NATURE OF TRADE. EVEN SO, THE PRESUMPTION IS NOT CONCLUSIVE; AND IT IS CONCEI VABLE THAT, ON CONSIDERING ALL THE FACTS AND CIRCUMSTANCES IN T HE CASE, THE COURT MAY, DESPITE THE SAID INITIAL INTENTION, BE I NCLINED TO HOLD THAT THE TRANSACTION WAS NOT AN ADVENTURE IN T HE NATURE OF TRADE. WE THUS COME BACK TO THE SAME POSITION AN D THAT IS THAT THE DECISION ABOUT THE CHARACTER OF A TRANSACT ION IN THE ITA NO.329/ASR/2017 (A.Y.2009-10) PARMI NDER SINGH, KAPURTHALA V. ACIT 6 CONTEXT CANNOT BE BASED SOLELY ON THE APPLICATION O F ANY ABSTRACT RULE, PRINCIPLE OR TEST AND MUST IN EVERY CASE DEPEND UPON ALL THE RELEVANT FACTS AND CIRCUMSTANCES. (B) IN THE CASE OF JANKI RAM BAHADUR RAM VS. COMMISSIONER OF INCOME TAX [1965] 57 ITR 0021(SC). HELD: IT IS FOR THE REVENUE TO ESTABLISH THAT THE PROFIT EARNED IN A TRANSACTION IS WITHIN THE TAXING PROVISION AND IS ON THAT ACCOUNT LIABLE TO BE TAXED AS INCOME. THE NATURE OF THE TRANSACTION MUST BE DETERMINED ON A CONSIDERATION O F ALL THE FACTS AND CIRCUMSTANCES WHICH ARE BROUGHT O N THE RECORD OF THE IT AUTHORITIES . THE QUESTION WHETHER PROFIT IN A TRANSACTION HAS ARISEN OUT OF AN ADVENT URE IN THE NATURE OF TRADE IS A MIXED QUESTION OF LAW AND FACT . PURCHASE OF THE PROPERTY BY THE APPELLANT WAS AN ISOLATED TR ANSACTION NOT RELATED TO THE BUSINESS OF THE APPELLANT. GRANT ING THAT THE APPELLANT MADE A PROFITABLE BARGAIN WHEN HE PURCHAS ED THE PROPERTY, AND GRANTING FURTHER THAT THE APPELLANT H AD WHEN HE PURCHASED IT A DESIRE TO SELL THE PROPERTY, IF A FA VOURABLE OFFER WAS FORTHCOMING, THESE COULD NOT WITHOUT OTHER CIRC UMSTANCES JUSTIFY AN INFERENCE THAT THE APPELLANT INTENDED BY PURCHASING THE PROPERTY TO START A VENTURE IN THE NATURE OF TR ADE. ABSENCE OF ADVERTISEMENT INVITING OFFERS FOR PURCHASING THE PROPERTY, AND ABSENCE OF BROKERS IN THE NEGOTIATIONS FOR SALE BETWEEN THE APPELLANT AND R ARE CIRCUMSTANCES WHICH LEAD TO NO POSITIVE INFERENCE. THERE IS NOTHING TO SHOW THAT T HE APPELLANT DESIRED TO CONVERT THE PROPERTY TO SOME OTHER USE. NO WORKERS RE EMPLOYED FOR ENTERING INTO A TRANSACTION OF SALE . IT APPEARS THAT R ON COMING TO LEARN THAT THE FACTORY WAS FOR SALE APPROACHED THE COMPANY AFTER THE SALE DEED WAS EXEC UTED IN FAVOUR OF THE APPELLANT AND HE WAS INFORMED THAT IT HAD ALREADY BEEN SOLD TO THE APPELLANT. THEREAFTER R CO NTACTED THE APPELLANT AND AGREED TO PURCHASE THE PROPERTY. THE PROPERTY PURCHASED WAS NOT SUCH THAT AN INFERENCE THAT A VEN TURE IN THE NATURE OF TRADE MUST HAVE BEEN INTENDED BY THE APPELLANT IN RESPECT THEREOF MAY BE RAISED. A PERSON PURCHASI NG 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 F AVOURABLE TERMS. THE 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 CAPABLE OF FETCHING ANNUAL INCOME, AND THERE IS NO EVIDENCE THAT AT THE MATERIAL TIME IT COULD NOT BE REASONABL Y LET OUT . ITA NO.329/ASR/2017 (A.Y.2009-10) PARMI NDER SINGH, KAPURTHALA V. ACIT 7 JANKI RAM BAHADUR RAM VS. C1T (1963) 50 ITR 350 (CA L) : TC12R.362 REVERSED. (C) IN THE CASE OF KHAN BAHADUR AHMED ALLADIN & SONS VS. COMMISSIONER OF INCOME TAX [1968] 68 ITR 0573 (SC). HELD: THE QUESTION WHETHER THE TRANSACTION IS AN ADVENTURE IN THE NATURE OF TRADE MUST BE DECIDED ON A CONSIDERATION OF ALL THE RELEVANT FACTS AND CIRCUMSTANCES WHICH ARE PROVED IN THE PARTICULAR CASE. THE ANSWER TO THE QUESTION DOES NOT DEPEND UPON THE APPLICATION OF ANY ABSTRACT TRUE, PRINCIPL E OR FORMULA BUT MUST DEPEND UPON THE TOTAL IMPRESSION AND EFFECT OF ALL THE RELEVANT FACTS AND CIRCUMSTAN CES ESTABLISHED IN THE PARTICULAR CASE. BUT IN JUDGING THE CHARACTER OF SUCH TRANSACTIONS SEVERAL FACTORS HAVE BEEN TREATED AS SIGNIFICANT IN DECIDED CASES. FOR INSTAN CE, IF A TRANSACTION IS RELATED TO THE BUSINESS WHICH IS NOR MALLY CARRIED ON BY THE ASSESSEE, THROUGH NOT DIRECTLY PA RT OF IT, AN INTENTION TO LAUNCH UPON AN ADVENTURE IN THE NATURE OF TRADE MAY READILY BE INFERRED. A SIMILAR INFERENCE WOULD ARISE WHERE A COMMODITY IS PURCHASED AND SUB-DIVIDED, ALT ERED, TREATED OR REPAIRED AND SOLD OR IS CONVERTED INTO A DIFFERENT COMMODITY AND THEN SOLD. THE MAGNITUDE OF THE TRANS ACTION OF PURCHASE, THE NATURE OF THE COMMODITY, THE SUBSE QUENT DEALINGS OF THE ASSESSEE, THE NATURE OF THE ORGANIZ ATION EMPLOYED BY THE ASSESSEE AND THE MANNER OF DISPOSAL MAY BE SUCH THAT THE TRANSACTION MAY BE STAMPTED WITH T HE CHARACTER OF A TRADING VENTURE. A TRANSACTION OF PU RCHASE OF LAND CANNOT BE ASSUMED WITHOUT MORE TO BE AN ADVENT URE IN THE NATURE OF TRADE. 6. ON THE CONTRARY, THE LD. DR RELIED UPON THE ORDER O F AUTHORITIES BELOW. 7. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE FA CTS AND CIRCUMSTANCES OF THE CASE AND REALIZED THAT THE REVENUE DE PARTMENT FAILED TO BRING ANY MATERIAL BY WHICH IT CAN BE ESTABLISHED T HAT THE ASSESSEE DURING THE ASSESSMENT YEAR UNDER CONSIDERATION WAS ENGAGED IN THE SALE AND/OR PURCHASE OF THE PROPERTY AND THE PROPERTIES WHICH HAVE BEEN SOLD DURING THE YEAR UNDER CONSIDERATION, WERE ACTUAL IN STOCK IN TRADE AND/OR RELATED TO THE BUSINESS OF THE ASSESSEE. WHEREAS, THE SUBMISSIONS OF THE ASSESSE E FOUND ITA NO.329/ASR/2017 (A.Y.2009-10) PARMI NDER SINGH, KAPURTHALA V. ACIT 8 SEEMS TO BE QUITE LOGICAL THAT THE INVESTMENT IN THE SAI D PROPERTIES WAS PERSONAL IN NATURE. THE APEX COURT IN THE AFORESAID J UDGMENTS CLEARLY HOLD THAT THE EXPRESSION IN THE NATURE OF TRADE POSTULATE S EXISTENCE OF CERTAIN ELEMENTS IN THE ADVENTURE WHICH IN LAW WOULD INVEST I T WITH THE CHARACTER OF THE TRADE OR BUSINESS. FURTHER, OBSERVED THAT IF A PERSO NAL INVESTMENT OF MONEY IN LAND INTENDING TO HOLD IT, ENJOYS ITS INCOME FOR SOME TIME, AND THEN SELL IT AT A PROFIT, IT WOULD BE A CLEAR CASE OF CA PITAL ACCRETION AND NOT PROFIT DERIVED FROM AN ADVENTURE IN THE NATURE OF T RADE. CASES OF REALIZATION OF INVESTMENTS CONSISTING OF PURCHASE AND RESALE, THOUGH PR OFITABLE, ARE CLEARLY OUTSIDE THE DOMAIN OF ADVENTURES IN THE NATURE OF TRADE. IN DECIDING THE CHARACTER OF SUCH TRANSACTIONS, SEVERAL FACTORS ARE TRE ATED AS RELEVANT. WAS THE PURCHASER, A TRADER AND WERE THE PURCHASE OF TH E COMMODITY AND ITS RESALE ALLIED TO HIS USUAL TRADE OF BUSINESS OR INCIDENT AL TO IT AND IF THE COMMODITY PURCHASED IS VERY LARGE IN QUANTITIES THEN IT WOULD TEND TO ELIMINATE THE POSSIBILITY OF INVESTMENT FOR PERSONAL USE , POSSESSION OR ENJOYMENT. FURTHER FROM THE JUDGMENT, IT EMERGES THAT THE NATUR E OF TRANSACTIONS MUST BE DETERMINED ON A CONSIDERATION OF ALL THE FACTS A ND CIRCUMSTANCES WHICH ARE BROUGHT ON RECORD OF THE I.T. AUTHORITIES AN D THE QUESTION WHETHER PROFIT IN A TRANSACTION AS ARISING OUT OF ADVENTURE IN THE NATURE OF TRADE IS MIXED QUESTION OF LAW AND FACTS. THE APEX COURT ALSO E MPHASIZED THAT THERE MUST BE DESIRED TO CONVERT THE PROPERTY TO SOME OTHER U SE AND SOME WORKERS WERE EMPLOYED FOR ENTERING INTO A TRANSACTIONS OF SALE. FURTHER, THE QUESTION WHETHER THE TRANSACTION IS AN ADVENTURE IN THE NATURE OF TRADE, MUST BE DECIDE ON CONSIDERATION OF ALL THE RELEVANT FAC TS AND CIRCUMSTANCES WHICH ARE PROVED IN THE PARTICULAR CASE. THE ANSWER TO T HE QUESTION DOES NOT DEPEND UPON THE APPLICATION OF ANY ABSTRACT RULE, PRIN CIPLE AND FORMULA BUT MUST DEPEND UPON THE TOTAL IMPRESSION AND EFFECT OF ALL THE RELEVANT FACTS AND CIRCUMSTANCES ESTABLISHED IN THE PARTICULAR CASE. BUT IN JUDGING THE ITA NO.329/ASR/2017 (A.Y.2009-10) PARMI NDER SINGH, KAPURTHALA V. ACIT 9 CHARACTER OF SUCH TRANSACTIONS SEVERAL FACTORS ARE REQUIRED T O BE TREATED AS SIGNIFICANT, SO WHILE RESPECTFULLY FOLLOWING THE DICTUM OF THE APEX COURT AND WHILE APPLYING TO THE INSTANT CASE, WE DO NOT FIND ANY MATERIAL BY WHICH IT CAN BE ESTABLISHED BY THE DEPARTMENT THAT THE ASSESSEE HAD UTILIZED THE SAID PROPERTIES FOR SALE AND PURCHASE. AS THE ASSESSEE HAD PURCHASE D THE PROPERTY IN QUESTION IN THE FINANCIAL YEAR: 1997-98 AND 1998-99 RESPECTIVELY AND HAVING SOLD THE SAME AFTER 9-10 YEARS AND THERE IS NOTHING ON RECORD TO SUGGEST THAT THE ASSESSEE HAS MADE ANY IMPROVEMENT IN THE SAID PROPERTIES FOR MAKING THE SAME AS MORE LUCRATIVE TO SELL IN OPEN M ARKET FOR BUSINESS PURPOSES AND FURTHER THERE IS ALSO NO MATERIAL THAT THE ASSESSEE IS INVOLVED IN REGULAR SALE AND/OR PURCHASE OF PROPERTY, HENCE WE A RE INCLINED TO SET ASIDE THE ADDITION MADE BY THE ASSESSING OFFICER AND AFF IRMED BY THE LD. CIT(A). 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19.12.2018. SD/- SD/- (SANJAY ARORA) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDI CIAL MEMBER DATED:19.12.2018 /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) SH. PARMINDER SINGH GOPAL PARK, KAPURTHALA (2) THE ASST. CIT, CENTRAL CIRCLE-I, JALANDHAR (3) THE CIT(A), BATHINDA (4) THE CIT CONCERNED (5) THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER FILENAME: PARMINDER SINGH. 329 ASR 2017 DIRECTORY: D:\DOCUMENT\NKC ORDERS 2018 TEMPLATE: C:\USERS\ETC PARMOD\APPDATA\ROAMING\MICROSOFT\TEMPLATES\NORMAL.D OT TITLE: IN THE INCOME TAX APPELLATE TRIBU NAL SUBJECT: AUTHOR: RAHUL PRABHAKAR KEYWORDS: COMMENTS: CREATION DATE: 12/10/2018 11:12:00 AM CHANGE NUMBER: 250 LAST SAVED ON: 12/21/2018 12:33:00 PM LAST SAVED BY: ETC PARMOD TOTAL EDITING TIME: 381 MINUTES LAST PRINTED ON: 12/21/2018 12:34:00 PM AS OF LAST COMPLETE PRINTING NUMBER OF PAGES: 10 (APPROX.) NUMBER OF WORDS: 2,912 (APPROX.) NUMBER OF CHARACTERS: 16,600 (APPROX.)