RAMSWAROOP SAUDAGAR, Dausa V. ITO, Dausa

ITA 329/JPR/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2102 (ITAT-JAIPUR)
• Duration Of Justice: 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 02-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NEENA JEPH JT CIT DHK
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Gift; Business income; Business expenditure; Question of law; Cost of acquisition; Fair market value; Difference of opinion; Reassessment proceedings
• Section: 45(2); 50C; 147; 37; 56

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH HKKXPAN] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, A M VK;DJ VIHY LA-@ ITA NO. 329/JP/2017 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2007-08 RAMSWAROOP SAUDAGAR, C/O- TIRUPATI MOTORS, JAIPUR ROAD, DAUSA (RAJ.). CUKE VS. INCOME TAX OFFICER, DAUSA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ACZPS 5438 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI ROHAN SOGANI (CA) JKTLO DH VKSJ LS@ REVENUE BY : SMT. NEENA JEPH (JT.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 20/02/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 22/02/2018 VKNS'K@ ORDER PER: BHAGCHAND, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE EMANATES FR OM THE ORDER OF THE LD. CIT(A), ALWAR DATED 06/03/2017 FOR THE A.Y. 2 007-08. 2. THE ASSESSEE WAS HAVING AGRICULTURAL LAND IN DAUSA KHURD ADMEASURING 5910 SQ. YARD. DURING THE YEAR, THE ASS ESSEE HAD DEVELOPED THE LAND INTO 23 PLOTS OF VARYING AREAS R ANGING FROM 182 SQ. YARDS TO 462 SQ. YARDS AND NAMED IT AS BHAGWATI NAGA R RESIDENTIAL SCHEME. ALL THESE PLOTS WERE SOLD ON THE BASIS OF AG REEMENT TO SALE TO DIFFERENT PERSONS AND SALE CONSIDERATION STATED WAS AT RS. 24,15,600/- ITA 329/JP/2017_ RAMSWAROOP SAUDAGAR VS. ITO 2 AND OFFERED CAPITAL GAIN OF RS. 85,258/- AFTER INDE XATION OF COST AND IMPROVEMENT/DALALI EXPENSES. THE ASSESSING OFFICER E STIMATED THE LONG TERM CAPITAL GAIN BY INVOKING THE PROVISIONS OF SEC TION 50C OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) BY ADOPTING DLT RATE. THE LD. CIT(A) HAS SUSTAINED THE ADDITION BY HOLDING THAT TH E SALE OF 23 PLOTS OF LAND DURING THE YEAR UNDER CONSIDERATION COMES UNDE R THE ADVENTURE IN THE NATURE OF TRADE AND LIABLE TO BE TAXED UNDER T HE PROFITS AND GAINS OF BUSINESS AND PROFESSION. THE LD. CIT(A) HAS ALLOWED DA LALI EXPENSES OF RS. 76,500/- AS BUSINESS EXPENSES U/S 37 OF THE ACT AND SUSTAINED ADDITION OF RS. 23,39,100/-. 3. NOW THE ASSESSEE IS IN APPEAL BEFORE THE ITAT BY T AKING FOLLOWING GROUNDS OF APPEAL: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ID. CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF THE ID. A O IN REOPENING THE ASSESSMENT U/S 147 OF INCOME TAX ACT, 1961. THE ACTION OF ID. CIT (A) IS ILLEGAL, UNJUSTIFIED, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY QUASHI NG THE REASSESSMENT PROCEEDINGS BEING ILLEGAL AND WITHOUT ANY BASIS. 2(A) IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ID. CIT(A) HAS ERRED IN MAKING AN ADDITION OF RS. 23,39 ,100 ON THE SALE OF LAND UNDER THE HEAD PROFITS & GAINS OF BUS INESS OR PROFESSION, TREATING THE TRANSACTION OF SALE OF CA PITAL ASSET AS ADVENTURE IN THE NATURE OF TRADE. THEREFORE, ID. CI T(A) HAS ERRED IN MAKING ADDITION OF RS. 23,39,100 ON SALE OF LAND UNDER THE HEAD PROFITS & GAINS OF BUSINESS AND PROFESSION AS AGAINST CAPITAL GAIN OF RS. 85,258 DECLARED BY THE ASSESSEE AND ASSESSED AT RS. 58,60,918 BY ID. AO. THE ACTION OF THE ID. CIT(A) ITA 329/JP/2017_ RAMSWAROOP SAUDAGAR VS. ITO 3 IS ILLEGAL, UNJUSTIFIED, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY QUASHING THE ADDITI ON UNDER BUSINESS HEAD. (B) IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ID. CIT(A), IN TERMS OF HIS POWER U/S 251, HAS ERRED IN CHANGING THE HEAD FROM CAPITAL GAINS TO PROFITS & GAINS OF BUSIN ESS OR PROFESSION. THE ACTION OF THE ID. CIT(A) IS ILLEGAL , UNJUSTIFIED, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY QUASHING THE ACTION OF ID. AO. 4. GROUNDS NO. 1 AND 2(B) OF THE APPEAL WERE NOT PRE SSED BY THE ASSESSEE, THEREFORE, THE SAME STANDS DISMISSED AS N OT PRESSED. 5. IN THE GROUND NO. 2(A) OF THE APPEAL, THE SOLE I SSUE INVOLVED IS SUSTAINING ADDITION OF RS. 23,39,100/- ON THE SALE OF PLOT OF LAND UNDER THE HEAD PROFITS & GAINS OF BUSINESS OR PROFESSION . THE LD. CIT(A) HAS DECIDED THE ISSUE BY HOLDING AS UNDER: 6.3 I HAVE PERUSED THE ASSESSMENT ORDER AS WELL AS SUBMISSIONS MADE BY THE APPELLANT. FOLLOWING FACTS HAVE EMERGED; 1. THAT THE APPELLANT HAD INHERITED AGRICULTURAL LA ND AT DAUSA KHURD ADMEASURING 5910 SQ. YARD. 2. THAT DURING THE YEAR UNDER CONSIDERATION THE APP ELLANT HAD DEVELOPED THE LAND INTO 23 PLOTS OF VARYING AREAS R ANGING FROM 182 /220/205/223/236/334/462 SQ. YARD. THE LAND PLO TS HAD BEEN DEVELOPED AS RESIDENTIAL PLOTS UNDER THE NAME OF BHAGWATI NAGAR RESIDENTIAL SCHEME. ITA 329/JP/2017_ RAMSWAROOP SAUDAGAR VS. ITO 4 3. THAT THE APPELLANT HAD SOLD THESE PLOTS TO 23 PE RSONS THROUGH AGREEMENT TO SELL WITHOUT REGISTERED SALE DEED FO R A TOTAL STATED CONSIDERATION OF RS 24,15,600/- AND DECLARED LONG TERM CAPITAL GAIN OF RS. 85,258/- AFTER INDEXATION OF CO ST AND IMPROVEMENT/ DALALI EXP. 4. THAT THE A.O HAD CALLED FOR INFORMATION FROM THE SUB-REGISTRAR, DAUSA TO ASCERTAIN THE PREVAILING MARKET RATE. ON T HE BASIS OF PREVAILING DLC RATE IN THE AREA, THE A.O HAD ESTIMA TED THE LTCG BY INVOKING SECTION 50C OF THE ACT AT RS. 58,60,918 /-. 5. THAT THE APPELLANT HAS CLAIMED THAT THE SALE OF LAND WAS NEVER REGISTERED AND SO NO DLC RATE CAN BE TAKEN BESIDE T AKING THE PLEA THAT THE AMENDMENT IN THE SECTION 50C TO INCOR PORATE THE WORD ASSESSABLE TO INCLUDE EVEN ASSESSABLE VALUE OF TRANSFER WITHIN THE AMBIT OF SECTION 50C OF THE ACT WAS MADE EFFECTIVE FROM 01 ST OCTOBER, 2009. IN THIS CASE THE SALE WAS MADE DURI NG F.Y 2006-07. THE APPELLANT HAS ALSO TAKEN THE PLEA THAT WITHOUT REFERRING THE PROPERTY VALUATION TO DVO, SECTION 50 C CANNOT BE INVOKED. 6.3.2 I HAVE CONSIDERED THE ABOVE MENTIONED FACTS. IT WOULD BE IMPERATIVE TO REPRODUCE THE PROVISION OF SECTION 50 C OF THE ACT. IT SAYS; SECTION 50C. (1) WHERE THE CONSIDERATION RECEIVED OR ACCRUING A S A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING L AND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED 57 [OR ASSESSABLE] BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE 'STAMP VALUATION AUTHORITY') FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOP TED OR ASSESSED 57A [OR ASSESSABLE] SHALL, FOR THE PURPOSES OF SECTION 48 , BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER : ITA 329/JP/2017_ RAMSWAROOP SAUDAGAR VS. ITO 5 ASSESSABLE IS INSERTED BY THE FINANCE (NO.2) ACT, 2009, W.E.F. 01/10/2009. (2) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SEC TION (1), WHERE (A) THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFICER TH AT THE VALUE ADOPTED OR ASSESSED 59 [OR ASSESSABLE] BY THE STAMP VALUATION AUTHORITY UN DER SUB- SECTION (1) EXCEEDS THE FAIR MARKET VALUE OF THE PR OPERTY AS ON THE DATE OF TRANSFER; (B) THE VALUE SO ADOPTED OR ASSESSED 59 [OR ASSESSABLE] BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) HAS NOT B EEN D ISPUTED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MADE BE FORE ANY OTHER AUTHORITY, COURT OR THE HIGH COURT, THE ASSESSING OFFICER MAY REFER THE VALUATION OF TH E CAPITAL ASSET TO A VALUATION OFFICER AND WHERE ANY SUCH REFERENCE IS MADE, THE PROVISIONS OF SUB-SECTIONS (2), (3), (4), (5) AND ( 6) OF SECTION 16A, CLAUSE (I) OF SUB-SECTION (1) AND SUB-SECTIONS (6) AND (7) OF SECTION 23A, SUB-SECTION (5) OF SECTION 24, SECTION 34AA, SECTION 35 AND SECTION 37 OF THE WEALTH-TAX ACT, 1957 (27 O F 1957), SHALL, WITH NECESSARY MODIFICATIONS, APPLY IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATION TO A REFERENCE MADE BY TH E ASSESSING OFFICER UNDER SUB-SECTION (1) OF SECTION 16A OF THA T ACT. 60 [EXPLANATION 1].FOR THE PURPOSES OF THIS SECTION, 'VALUATION OFFICER' SHALL HAVE THE SAME MEANING AS IN CLAUSE ( R) OF SECTION 2 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957). 61 [EXPLANATION 2.FOR THE PURPOSES OF THIS SECTION, T HE EXPRESSION 'ASSESSABLE' MEANS THE PRICE WHICH THE STAMP VALUAT ION AUTHORITY WOULD HAVE, NOTWITHSTANDING ANYTHING TO THE CONTRAR Y CONTAINED IN ANY OTHER LAW FOR THE TIME BEING IN FORCE, ADOPTED OR ASSESSED, IF IT WERE REFERRED TO SUCH AUTHORITY FOR THE PURPOSES OF THE PAYMENT OF STAMP DUTY.] (3) SUBJECT TO THE PROVISIONS CONTAINED IN SUB-SECT ION (2), WHERE THE VALUE ASCERTAINED UNDER SUB-SECTION (2) EXCEEDS THE VALUE ADOPTED OR ASSESSED 61 [OR ASSESSABLE] BY THE STAMP VALUATION AUTHORITY RE FERRED TO IN SUB-SECTION (1), THE VALUE SO ADOPTED OR ASSE SSED 61 [OR ASSESSABLE] BY SUCH AUTHORITY SHALL BE TAKEN AS THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T HE TRANSFER.] THUS, LOOKING AT THE PROVISION OF THE ACT, IT IS OB VIOUS THAT IN THE PRESENT CASE, THE SALE WAS NOT MADE THROUGH REGISTR ATION HENCE, THE ASSESSABLE VALUE OF THE LAND CANNOT BE TAKEN AS THE AMENDMENT IN THE ACT IS APPLICABLE FROM 01/10/2009 WHERE AS THE ITA 329/JP/2017_ RAMSWAROOP SAUDAGAR VS. ITO 6 SALE IN THIS CASE WAS DONE DURING F.Y 2006-07. IN T HE EVENT OF A DISPUTE IN THE VALUATION AND BEFORE INVOKING THE PR OVISION OF SECTION 50C, THE A.O SHOULD HAVE REFERRED THE MATTE R TO DVO FOR VALUATION, WHICH WAS NOT DONE IN THIS CASE. THEREFO RE A.O IS NOT JUSTIFIED IN TAKING THE VALUE OF STAMP DUTY PREVALE NT IN THAT AREA FOR THE PURPOSE OF CALCULATING CAPITAL GAIN BY INVOKING SECTION 50C OF THE ACT. 6.3.3 HOWEVER, AS THE APPELLATE AUTHORITY IS ALSO A FACT FINDING BODY, I HAVE CONSIDERED THE SUBMISSION MADE BY THE APPELLAN T AND THE EVIDENCES ON RECORD. LOOKING AT THE NATURE OF TRANS ACTION, A VERY PERTINENT QUESTION ARISES. WHETHER THE TRUE NATURE OF TRANSACTION HAS BEEN DECLARED BY THE APPELLANT OR NOT WHICH FOR MS THE BASIS OF THE PRESENT APPEAL? IN THE PRESENT GROUNDS OF APPEA L, WHETHER THE TRANSACTION INVOLVING THE SALE OF PLOTS COMES UNDER THE PURVIEW OF ADVENTURE IN THE NATURE OF TRADE OR NOT? IN THIS REGARD, I AM INCLINED TO TAKE INTO ACCOUNT SOME VERY BASIC FACTS OF THE LAND IN TRANSACTION. IN THE PRESENT CASE, THE APPELLANT HAD DEVELOPED THE INHERITED AGRICULTURAL LAND INTO 23 PLOTS OF VARYIN G SIZES RANGING FROM 182/220/205/223/236/334/462 SQ. YARD. THESE LA ND PLOTS HAVE BEEN DEVELOPED AS RESIDENTIAL PLOTS UNDER THE NAME OF BHAGWATI NAGAR RESIDENTIAL SCHEME BEFORE SELLING THEM UNDER AGREEMENT TO SELL TO THE PROSPECTIVE BUYERS. THUS, THE NATURE OF LAND HAD UNDERGONE IRREVERSIBLE CHANGE FROM AGRICUL TURAL LAND TO RESIDENTIAL PLOTS. THE APPELLANT HAS DEVELOPED THE ENTIRE LAND BANK WITH HIM UNDER THE SCHEME BHAGWATI NAGAR RESIDENTI AL SCHEME. THE PLOTTING HAS BEEN DONE IN A MANNER TO CATER TO A LARGE CUSTOMER BASE AS PER THE MARKET NEED. THUS, THERE S EEMS TO BE A PROPER SCHEME IN THE MIND OF THE APPELLANT TO USE T HE LAND ASSETS ITA 329/JP/2017_ RAMSWAROOP SAUDAGAR VS. ITO 7 IN A MANNER TO MAXIMIZE THE RETURN BY RESORTING TO MARKET PRACTICES AND NEEDS. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE AP PELLANT HAS BEEN ASKED TO FILE SUBMISSION ON THIS ISSUE. IN THIS REG ARD, THE APPELLANT HAD CITED A LARGE NUMBER OF JUDICIAL PRONOUNCEMENTS IN FAVOUR OF ITS CLAIM. I HAVE GONE INTO THE PLETHORA OF JUDGMEN TS CITED BY THE APPELLANT. HOWEVER THE GIST OF MOST OF THE CITED JU DGMENTS HINGE BROADLY ON THE PARAMETERS SET BY THE HONBLE SUPREM E COURT IN THE CASE OF G. VENKATASWAMY NAIDU VS. CIT (1959) 35 ITR 594(SC). THEREFORE IT IS PERTINENT TO GO INTO THE RATIONALE AND THE PARAMETERS SET BY THE APEX COURT IN THE SAID JUDGME NT.' THE RELEVANT PART OF THE JUDGMENT IS REPRODUCED AS UNDE R: THE TRIBUNAL AND THE HIGH COURT HAVE FOUND THAT THE TRANSACTION IN QUESTION IS AN ADVENTURE IN THE NATURE OF TRADE; AND IT IS THE CORRECTNESS OF THIS VIEW THAT IS CHALLENGED IN THE PRESENT APPEAL. THE EXPRESSION ' ADVENTURE IN THE NATURE OF TRADE' IS USED BY THE ACT IN S. 2, SUB-S. (4) WHICH DEFINES BUSINESS AS INCLUDING A NY TRADE, COMMERCE OR MANUFACTURE, OR ANY ADVENTURE OR CONCERN IN THE NATURE OF TRADE, COMMERCE OR MANUFACTURE. UNDER S. 10, TAX SHALL BE PAYABLE BY AN ASSESSEE UNDER THE HEAD PROFITS AND GAINS OF BUSINE SS, PROFESSION OR VOCATION IN RESPECT OF THE PROFIT OR GAINS OF ANY B USINESS, PROFESSION OR VOCATION CARRIED ON BY HIM. THUS THE APPELLANT W OULD BE LIABLE TO PAY THE TAX ON THE RELEVANT AMOUNT IF IT IS HELD TH AT THE TRANSACTION WHICH BROUGHT HIM THIS AMOUNT WAS BUSINESS WITHIN T HE MEANING OF S. 2, SUB-S. (4) AND IT CAN BE SAID TO BE BUSINESS OF THE APPELLANT IF IT IS HELD THAT IT IS AN ADVENTURE IN THE NATURE OF TRADE . IN OTHER WORDS, IN REACHING THE CONCLUSION THAT THE TRANSACTION IS ADVENTURE IN THE NATURE OF TRADE , THE TRIBUNAL HAS TO FIND PRIMARY EVIDENTIARY FACTS AND THEN APPLY THE LEGAL PRINCIPLES INVOLVED IN THE EXP RESSION ' ADVENTURE IN THE NATURE OF TRADE' USED BY S. 2, SUB-S. (4). IT IS PATENT THAT THE CLAUSE ' IN THE NATURE OF TRADE' POSTULATES THE EXISTENCE OF CERTAIN ELEMENTS IN THE ADVENTURE WHICH IN LAW WOULD INVEST IT WITH THE CHARACTER OF A TRADE OR BUSINESS; AND THAT WOULD MAKE THE QUESTION AND ITS DECISION ONE OF MIXED LAW AND FACT. THIS VI EW HAS BEEN INCIDENTALLY EXPRESSED BY THIS COURT IN THE CASE OF MEENAKSHI MILLS, ITA 329/JP/2017_ RAMSWAROOP SAUDAGAR VS. ITO 8 MADURAI (I) IN REPELLING THE APPELLANT'S ARGUMENT B ASED ON THE DECISION OF THE (I) [1956] S. C. R. 691. THIS QUESTION HAS BEEN THE SUBJECT-MATTER OF SEVER AL JUDICIAL DECISIONS; AND IN DEALING WITH IT ALL THE JUDGES AP PEAR TO BE AGREED THAT NO PRINCIPLE CAN BE EVOLVED WHICH WOULD GOVERN THE DECISION OF ALL CASES IN WHICH THE CHARACTER OF THE IMPUGNED TR ANSACTION FALLS TO BE CONSIDERED. WHEN S. 2, SUB-S. (4), REFERS TO AN ADVENTURE IN THE NATURE OF TRADE , IT CLEARLY SUGGESTS THAT THE TRANSACTION CANNOT PROPERLY BE REGARDED AS TRADE OR BUSINESS. IT IS ALLIED TO TRANSACTIONS THAT CONSTITUTE TRADE OR BUSINESS BUT MAY NOT BE TRADE OR BUSINESS ITSELF. IT IS CHARACTERISED BY SOME OF THE ESSENTIA L FEATURES THAT MAKE UP TRADE OR BUSINESS BUT NOT BY ALL OF THEM; AND SO, EVEN AN ISOLATED TRANSACTION CAN SATISFY THE DESCRIPTION OF AN ADVENTURE IN THE NATURE OF TRADE . SOMETIMES IT IS SAID THAT A SINGLE PLUNGE IN THE WA TERS OF TRADE MAY PARTAKE OF THE CHARACTER OF AN ADVENTURE IN THE NATURE OF TRADE . THIS STATEMENT MAY BE TRUE; BUT IN ITS APPLICATION DUE REGARD MUST BE SHOWN TO THE REQUIREMENT THAT THE SINGLE PL UNGE MUST BE IN THE WATERS OF TRADE. IN OTHER WORDS, AT LEAST SOME OF THE ESSENTIAL FEATURES OF TRADE MUST BE PRESENT IN THE ISOLATED OR SINGLE TRANSACTION. ON THE OTHER HAND, IT IS SOMETIMES SAI D THAT THE APPEARANCE OF ONE SWALLOW DOES NOT MAKE A SUMMER. T HIS MAY BE TRUE IF, IN THE METAPHOR, SUMMER REPRESENTS TRADE; BUT IT MAY NOT BE TRUE IF SUMMER REPRESENTS AN ADVENTURE IN THE NATURE OF TRADE , BECAUSE, WHEN THE SECTION REFERS TO AN ADVENTURE IN THE NATURE OF TRADE , IT IS OBVIOUSLY REFERRING TO TRANSACTIONS WHICH IND IVIDUALLY CANNOT THEMSELVES BE DESCRIBED AS TRADE OR BUSINESS BUT ARE ESSENTIALLY OF SUCH A SIMILAR CHARACTER THAT THEY A RE TREATED AS IN THE NATURE OF TRADE. IT WAS FAINTLY ARGUED FOR THE APPELLANT THAT IT WOU LD BE DIFFICULT TO REGARD A SINGLE OR AN ISOLATED TRAN SACTION AS ONE IN THE NATURE OF TRADE BECAUSE INCOME RESULTING FROM IT WOULD INEVITABLY LACK THE CHARACTERISTICS ATTRIBUTED TO IT BY SIR GE ORGE LOUNDES IN COMMISSIONER OF I. T. VS. SHAW WALLACE AND COMPANY(L). 'INCOME THEIR LORDSHIPS (1) (1932) L. R. 591.A. 206. LORD CARMONT OBSERVED THAT HE DID NOT WISH TO READ THE SAID PASSAGE OUT OF ITS CONTEXT AND WITHOUT REGARD TO THE FACTS OF THE CASE THEN UNDER CONSIDERATION. THEN LORD CARMONT ADDED THAT T HOUGH THE LANGUAGE USED BY LORD DUNEDIN 'MAY COVER THE PURCHA SE OF HOUSES' IT 'WOULD NOT COVER A SITUATION IN WHICH A PURCHASE R BOUGHT A COMMODITY WHICH FROM G ITS NATURE CAN GIVE NO ANNUAL RETURN'. 'THIS COMMENT OF MINE', SAID LORD CARMONT, ' IS JUST ANOT HER WAY OF SAYING ITA 329/JP/2017_ RAMSWAROOP SAUDAGAR VS. ITO 9 THAT CERTAIN TRANSACTIONS SHOW INHERENTLY THAT THEY ARE NOT INVESTMENTS BUT INCURSIONS INTO THE REALM OF TRADE OR ADVENTURES OF THAT NATURE THEN REFERENCE WAS MADE TO THE FACT THAT THE ASSESS EE WAS A WAREHOUSE COMPANY DIRECTOR AND NOT A PROPERTY AGENT OR SPECULATOR AND THAT THE ONLY PURCHASES OF PROPERTY WITH WHICH HE WAS CONCERNED WERE TWO SEPARATED BY TEN YEARS AND THAT THE FIRST HERITAGE WAS ACQUIRED WITHOUT THE INTENTION TO SELL , WHICH ONLY AROSE FORTUITOUSLY. HIS LORDSHIP THEN PUT HIS CONCLUSION IN THIS WAY: 'I WOULD THEREFORE SAY THAT THE COMMISSIONERS OF INLAND REVE NUE HAVE FAILED TO PROVE AND THE ONUS IS ON THEM THE CASE THEY SOUG HT TO MAKE OUT'. ACCORDING TO LORD CARMONT, LORD DUNEDIN'S OBSERVATI ONS DO NOT SUGGEST THAT THE INITIAL DECLARATION OF INTENTION P ER SE LEADS TO THE CONCLUSION THAT THE TRANSACTION WAS IN THE NATURE OF TRADE . HE THOUGHT THAT MUCH MORE WAS REQUIRED TO SHOW THAT TH E ASSESSEE WAS ENGAGED IN AN ADVENTURE IN THE NATURE OF TRADE THAN WAS PROVED IN THE CASE BEFORE THE COURT. LORD RUSSELL, WHO CONCUR RED WITH THIS OPINION, BEGAN WITH THE OBSERVATION THAT 'PRIMA FAC IE THE DIFFERENCE OF OPINION AMONG THE GENERAL COMMISSIONERS SUGGESTS THAT THE CASE IS A NARROW ONE AND THAT THE ONUS ON THE APPELLANTS OF SHOWING THAT THE TRANSACTION WAS AN ADVENTURE IN THE NATURE OF TRADE IS NOT A LIGHT ONE'. LORD RUSSELL THEN MENTIONED THE ARGUMENT OF T HE LORD ADVOCATE THAT IF A PERSON BUYS ANYTHING WITH A VIEW TO SALE THAT IS A TRANSACTION IN THE NATURE OF TRADE BECAUSE THE PURPOSE OF THE ACQUISITION IN THE MIND OF THE PURCHASER IS ALL- IM PORTANT AND CONCLUSIVE; AND THAT THE NATURE OF THE THING PURCHASED AND THE OTHER SURROUNDING CIRCUMSTANCES DO NOT AND CANNOT OPERATE SO AS TO RENDER THE TRANSACTION OTHER THAN AN ADVENTURE IN THE NATURE OF TRADE , AND OBSERVED THAT IN HIS OPINION THE ARGUMENT SO FORMUL ATED ' IS TOO ABSOLUTE AND IS NOT SUPPORTED BY THE JUDICIAL PRONO UNCEMENTS ON WHICH IT WAS SOUGHT TO BE RAISED '. HE THEN REFERRE D TO THE VARIETY OF CIRCUMSTANCES WHICH ARE OR MAY BE RELEVANT TO THE D ETERMINATION OF SUCH A QUESTION; AND HE CONCLUDED WITH THE OBSERVAT ION THAT THE APPELLANTS HAD NOT DISCHARGED THE BURDEN OF SHOWING THAT THE TRANSACTION WAS AN ADVENTURE IN THE NATURE OF TRADE . LORD KEITH ALSO TOOK THE SAME VIEW AND STATED THAT 'THE FACTS WERE, IN HIS OPINION, INSUFFICIENT TO ESTABLISH THAT THIS WAS AN ADVENTURE IN THE NATURE OF TRADE '. THIS CASE WAS NO DOUBT A CASE ON THE BORDER LINE ;- AND IF WE MAY SAY SO WITH RESPECT IT WAS PERHAPS NEARER AN ADVENTURE IN THE NATURE OF TRADE THAN OTHERWISE. IT WOULD NOT BE UNREASONABLE TO SUGGEST THAT, IN THIS CASE, IF THE COMMISSIONERS HA D FOUND THAT THE TRANSACTION WAS AN ADVENTURE IN THE NATURE OF TRADE , THE COURT WOULD PROBABLY NOT HAVE INTERFERED WITH THE SAID CONCLUSI ON; BUT THE ITA 329/JP/2017_ RAMSWAROOP SAUDAGAR VS. ITO 10 COMMISSIONERS WERE EQUALLY DIVIDED AND SO THE ASSES SMENT HAD BEEN DISCHARGED BY THEM. IT WAS UNDER THESE CIRCUMSTANCE S THAT THE POINT ABOUT THE ONUS OF PROOF BECAME Q MATTER OF SUBSTANC E; AND, AS WE HAVE ALREADY POINTED OUT, ALL TILE LEARNED JUDGES H AVE EMPHASIZED THAT THE ONUS HAD NOT BEEN DISCHARGED AND THAT NO C ASE HAD BEEN MADE OUT FOR REVERSING THE ORDER OF DISCHARGE -PASS ED BY THE COMMISSIONERS. HOWEVER THAT MAY BE, IT WOULD, WE TH INK, BE UNSAFE TO TREAT THIS CASE AS LAYING DOWN ANY GENERAL PROPO SITION THE APPLICATION OF WHICH WOULD ASSIST THE APPELLANT BEF ORE US. WE WOULD ALSO LIKE TO ADD THAT THERE CAN BE NO DOUBT THAT LO RD RUSSELL'S CRITICISM AGAINST THE CONTENTION RAISED BY THE LORD ADVOCATE WAS FULLY JUSTIFIED BECAUSE THE CONTENTION AS RAISED CLEARLY OVERSTATED THE SIGNIFICANCE AND EFFECT OF THE INITIAL INTENTION. A S WE HAVE ALREADY POINTED I OUT, IF IT IS SHOWN THAT, IN PURCHASING T HE COMMODITY IN QUESTION, THE ASSESSEE WAS ACTUATED BY THE SOLE INT ENTION TO SELL IT AT A PROFIT, THAT NO DOUBT IS A RELEVANT CIRCUMSTANCE WHICH WOULD RAISE A STRONG PRESUMPTION THAT THE PURCHASE AND SUBSEQUENT SALE ARE AN ADVENTURE IN THE NATURE OF TRADE ; BUT THE SAID PRESUMPTION IS NOT CONCLUSIVE AND IT MAY BE REBUTTED OR OFFSET BY OTHE R RELEVANT CIRCUMSTANCES. WHAT THEN ARE THE RELEVANT FACTS IN THE PRESENT CASE? THE PROPERTY PURCHASED AND RESOLD IS LAND AND IT M UST BE CONCEDED IN FAVOUR OF ' THE APPELLANT THAT LAND IS GENERALLY THE SUBJECT-MA TTER OF INVESTMENT. IT IS CONTENDED BY MR. VISWANATHA SASTR I THAT THE FOUR PURCHASES MADE BY THE APPELLANT REPRESENT NOTHING M ORE THAN AN INVESTMENT AND IF BY RESALE SOME PROFIT WAS REALISE D THAT CANNOT IMPRESS THE TRANSACTION WITH THE CHARACTER OF AN ADVENTURE IN THE NATURE OF TRADE . THE APPELLANT, HOWEVER, IS A FIRM AND IT WAS NOT A PART OF ITS ORDINARY BUSINESS TO MAKE INVESTMENT IN LANDS. BESIDES, WHEN THE FIRST PURCHASE WAS MADE IT IS DIFFICULT TO TREAT IT AS A MATTER OF INVESTMENT. THE PROPERTY WAS A SMALL PIECE OF 28 -1/4 CENTS AND IT COULD YIELD NO RETURN WHATEVER TO THE PURCHASER. IT IS CLEAR THAT THIS PURCHASE WAS THE FIRST STEP TAKEN BY THE APPELLANT IN EXECUTION OF A WELL-CONSIDERED PLAN TO ACQUIRE OPEN PLOTS NEAR THE MILLS AND THE WHOLE BASIS FOR THE PLAN WAS TO SELL THE SAID LANDS TO THE MILLS AT A PROFIT. JUST AS THE CONDUCT OF THE PURCHASER SUBSEQ UENT TO THE PURCHASE OF A COMMODITY IN IMPROVING OR CONVERTING IT SO AS TO MAKE IT MORE READILY RESALEABLE IS A RELEVANT FACTOR IN DETERMINING THE CHARACTER OF THE TRANSACTION, SO WOULD HIS CONDUCT PRIOR TO THE PURCHASE BE RELEVANT IF IT SHOWS A DESIGN AND A PUR POSE. AS AND WHEN PLOTS ADJOINING THE MILLS WERE AVAILABLE FOR SALE, THE APPELLANT CARRIED OUT HIS PLAN AND CONSOLIDATED HIS HOLDING OF THE SA ID PLOTS. THE ITA 329/JP/2017_ RAMSWAROOP SAUDAGAR VS. ITO 11 APPELLANT IS THE MANAGING AGENT OF THE JANARDANA MI LLS AND PROBABLY IT WAS FIRST THOUGHT THAT PURCHASING THE PLOTS IN I TS OWN NAME AND SELLING THEM TO THE MILLS MAY INVITE CRITICISM AND SO THE FIRST PURCHASE WAS MADE BY THE APPELLANT IN THE NAME OF ITS BENAMI DAR V. G. RAJA. APPARENTLY THE APPELLANT CHANGED ITS MIND AND TOOK THE SUBSEQUENT SALE DEEDS IN ITS OWN NAME. THE CONDUCT OF THE APPE LLANT IN REGARD TO THESE PLOTS SUBSEQUENT TO THEIR PURCHASE CLEARLY SH OWS THAT IT WAS NOT INTERESTED IN OBTAINING ANY RETURN FROM THEM. NO DO UBT THE APPELLANT SOUGHT TO EXPLAIN-ITS PURPOSE ON THE GROUND THAT IT WANTED TO BUILD TENEMENTS FOR THE EMPLOYEES OF THE MILLS; BUT IT HA D TAKEN NO STEPS IN THAT BEHALF FOR THE WHOLE OF THE PERIOD DURING WHIC H THE PLOTS REMAINED IN ITS POSSESSION. BESIDES, IT WOULD NOT B E EASY TO ASSUME IN THE CASE OF A FIRM LIKE THE APPELLANT THAT THE ACQU ISITION OF THE OPEN PLOTS COULD INVOLVE ANY PRIDE OF POSSESSION TO THE PURCHASER. IT IS REALLY NOT ONE TRANSACTION OF PURCHASE AND RESALE. IT IS A SERIES OF FOUR TRANSACTIONS UNDERTAKEN BY THE APPELLANT IN PURSUAN CE OF A SCHEME AND IT WAS AFTER THE APPELLANT HAD CONSOLIDATED ITS HOLDINGS THAT AT A CONVENIENT TIME IT SOLD THE LANDS TO THE JANARDANA MILLS IN TWO LOTS. WHEN THE TRIBUNAL FOUND THAT, AS THE MANAGING AGENT OF THE MILLS, THE APPELLANT WAS IN A POSITION TO INFLUENCE THE MILLS TO PURCHASE ITS PROPERTIES ITS VIEW CANNOT BE CHALLENGED AS UNREASO NABLE. IF THE PROPERTY HAD BEEN PURCHASED BY THE APPELLANT AS A M ATTER OF INVESTMENT IT WOULD HAVE TRIED EITHER TO CULTIVATE THE LAND, OR TO BUILD ON IT; BUT THE APPELLANT DID NEITHER AND JUST ALLOW ED THE PROPERTY TO REMAIN UNUTILISED EXCEPT FOR THE NET RENT OF RS. 80 PER ANNUM WHICH IT RECEIVED FROM THE HOUSE ON ONE OF THE PLOTS. THE RE ASON GIVEN BY THE APPELLANT FOR THE PURCHASE OF THE PROPERTIES BY THE MILLS HAS BEEN REJECTED BY THE TRIBUNAL; AND SO WHEN THE MILLS PUR CHASED THE PROPERTIES IT IS NOT SHOWN THAT THE SALE WAS OCCASI ONED BY ANY SPECIAL NECESSITY AT THE TIME. IN THE CIRCUMSTANCES OF THE CASE THE TRIBUNAL WAS OBVIOUSLY RIGHT IN INFERRING THAT THE APPELLANT KNEW THAT IT WOULD BE ABLE TO SELL THE LANDS TO THE MILLS WHENEVER IT THOUGHT IT PROFITABLE SO TO DO. THUS THE APPELLANT PURCHASED THE FOUR PLO TS DURING TWO YEARS WITH THE SOLE INTENTION TO SELL THEM TO THE M ILLS AT A PROFIT AND THIS INTENTION RAISES A STRONG PRESUMPTION IN FAVOU R OF THE VIEW TAKEN BY THE TRIBUNAL. IN REGARD TO THE OTHER RELEVANT FA CTS AND CIRCUMSTANCES IN THE CASE, NONE OF THEM OFFSETS OR REBUTS THE PRESUMPTION ARISING FROM THE INITIAL INTENTION; ON THE OTHER HAND, MOST OF THEM CORROBORATE THE SAID PRESUMPTION. WE M UST, THEREFORE, HOLD THAT THE HIGH COURT WAS RIGHT IN TAKING THE VI EW THAT, ON THE FACTS AND CIRCUMSTANCES PROVED IN THIS CASE, THE TR ANSACTION IN ITA 329/JP/2017_ RAMSWAROOP SAUDAGAR VS. ITO 12 QUESTION IS AN ADVENTURE IN THE NATURE OF TRADE . THE RESULT IS THE APPEAL FAILS AND MUST BE DISMISSED WITH COSTS. THEREFORE, THE ABOVE MENTIONED JUDGMENT HAS LAID DO WN CERTAIN TESTS TO FIND OUT WHETHER A PARTICULAR TRANSACTION OF PURCHASE AND SALE WOULD AMOUNT TO AN ADVENTURE IN THE NATURE OF TRADE OR NOT, AND AT THE SAME TIME CAUTIONED THAT IN EACH CASE, I T IS THE TOTAL EFFECT OF ALL RELEVANT FACTORS AND CIRCUMSTANCES TH AT DETERMINE THE CHARACTER OF THE TRANSACTION. THE SUPREME COURT IN THAT CASE OBSERVED THAT THE FOLLOWING FACTORS ARE RELEVANT FO R DECIDING THE CHARACTER OF A TRANSACTION: (1) WAS THE PURCHASER, A TRADER AND WHETHER THE PUR CHASE OF THE COMMODITY AND ITS RESALE ALLIED TO HIS USUAL TRADE OR BUSINESS OR INCIDENTAL TO IT? (2) WHAT IS THE NATURE OF COMMODITY PURCHASED AND S OLD AND IN WHAT QUANTITY WAS IT PURCHASED OR RESOLD? (3) DID THE PURCHASER BY ANY ACT SUBSEQUENT TO THE PURCHASE IMPROVE THE QUALITY OF COMMODITY PURCHASED AND THER EBY MADE IT MORE READILY RESALEABLE? (4) WHAT WERE THE INCIDENCES ASSOCIATED WITH THE PU RCHASE AND SALE AND WHETHER THEY ARE AKIN TO THE OPERATIONS US UALLY ASSOCIATED WITH TRADE OR BUSINESS? (5) ARE THE TRANSACTIONS OF THE PURCHASE AND SALE R EPEATED? (6) IN REGARD TO THE PURCHASE OF THE COMMODITY AND ITS SUBSEQUENT POSSESSION BY THE PURCHASER, DOES THE EL EMENT OF PRIDE OF POSSESSION COME INTO PICTURE? 6.3.4 NOW, APPLYING THE PARAMETERS SET BY THE HONB LE SUPREME COURT IN THE PRESENT CASE, THE SEQUENCE OF EVENTS LEADING TO THE EVENTUAL SALE OF THE LAND PLOTS DO NOT SEEM TO HELP THE CAUS E OF THE APPELLANT. THE APPELLANT HAD INHERITED AN AGRICULTU RAL LAND ITA 329/JP/2017_ RAMSWAROOP SAUDAGAR VS. ITO 13 ADMEASURING 5910 SQ YARDS. THE APPELLANT HAD DEVELO PED THE LAND INTO A PROPER RESIDENTIAL SCHEME UNDER THE NAME OF BHAGWATI NAGAR RESIDENTIAL SCHEME AND CARVED OUT 23 PLOTS A ND STARTED SELLING THOSE PLOTS AT A PREMIUM. IF WE LOOK AT THE SEQUENCE OF EVENTS AS MENTIONED ABOVE, I HAVE NO DOUBT WHATSOEVER, THAT THE MOTIVE, INTENTION AND RE ALIZATION OF THE ENTIRE SCHEME OF THING ADOPTED BY THE APPELLANT WAS TO MAXIMIZE THE VALUE OF THE ASSET AND USING IT FOR BUSINESS PU RPOSES. IN THAT PURSUIT, THE APPELLANT HAD CONSTANTLY TRIED AND EXE CUTE DIFFERENT METHODS AT DIFFERENT TIME EXPLOITING THE RESOURCES AND MAXIMIZE THE PROFIT OUT OF IT. IN THIS REGARD, I HAVE ALSO NOTED THE ABOVE MENTIO NED APEX COURT JUDGMENT WHERE IT HAS SAID THAT JUST AS THE CONDUCT OF THE PURCHASER SUBSEQUENT TO THE PURCHASE OF A COMMODITY IMPROVING OR CONVERTING IT SO AS TO MAKE IT MORE READILY RESA LABLE IS A RELEVANT FACTOR IN DETERMINING THE CHARACTER OF THE TRANSACT ION, SO WOULD IS CONDUCT PRIOR TO PURCHASE BE RELEVANT IF IT SHOWS A DESIGN AND PURPOSE. I HAVE CLEARLY NOTED A PURPOSE AND DESIGN IN THE U TILIZATION OF THE LAND AND IT ALL POINTED TOWARDS A BUSINESS SENSE AN D EVENTUALLY A BUSINESS TRANSACTION. EVEN HONBLE RAJASTHAN HIGH COURT JUDGMENT IN THE CASE OF SOHAN KHAN AND MOHAN KHAN AS REPORTED IN 304 ITR 194(RAJ. ), OBSERVED IN THE CONCLUDING PARA OF THE JUDGMENT AS UNDER; IT IS THE DIFFERENT STORY THAT THE QUESTION, AS TO WHETHER A PARTICULAR TRANSACTION FALLS WITHIN THE CATEGORY OF ADVENTURE IN THE NATURE OF TRADE' OR IS MERELY A TRANSACTION OF TRANSFER OF CA PITAL ASSET, SINCE DEPENDS ON APPRECIATION OF FACTS.... ITA 329/JP/2017_ RAMSWAROOP SAUDAGAR VS. ITO 14 THEREFORE, ON THE FACTUAL MATRIX OF THE CASE, IT IS MY CONSIDERED VIEW THAT THE SALE OF 23 PLOTS OF LAND DURING THE Y EAR UNDER CONSIDERATION COMES UNDER ADVENTURE IN THE NATURE OF TRADE AND IS LIABLE TO BE TAXED UNDER BUSINESS HEAD. ACCORDINGLY, THE DALALI EXPENDITURE OF RS. 76,500/- IS ALLOWABLE AS BUSINES S EXPENSES UNDER SECTION 37 OF THE ACT. ACCORDINGLY, AN ADDITION OF RS. 23,39,100/- UNDER THE HEAD BUSINESS IS SUSTAINED. APPELLANTS G ROUND OF APPEAL ON THE ISSUE IS PARTLY ALLOWED. 6. WHILE PLEADING ON BEHALF OF THE ASSESSEE, THE LD AR HAS SUBMITTED AS UNDER: 2.1 SUBMISSION MADE BEFORE CIT(A) WITH REGARD TO TH E TRANSACTION BEING ONE OF CAPITAL GAIN, ALSO REPRODUCED BY HIM I N HIS ORDER FROM PAGE 9-11, MAY PLEASE BE CONSIDERED IN CORRECT PERSPECTIVE. THOSE SUBMISSIONS ARE AGAIN REPRODUCED HEREUNDER FOR THE SAKE OF CONVENIENCE. 2.2 THE TERM BUSINESS IS INCLUSIVELY DEFINED U/S 2(13) OF THE IT ACT, 1961 BEING ANY TRADE, COMMERCE OR MANUFACTURE OR ANY ADVENTURE OR CONCERN IN THE NATURE OF TRADE, COMMER CE OR MANUFACTURE. 2.3 THEREFORE, NEITHER THE TERM BUSINESS NOR ADV ENTURE IN THE NATURE OF TRADE IS DEFINED UNDER THE PROVISIONS OF INCOME TAX ACT, 1961. THEREFORE, THE DICTIONARY MEANING, THAT TOO FOR EACH WORD SEPARATELY, HAS TO BE CONSIDERED, WHICH IS AS UNDER: 2.3.I AS FAR AS THE WORD 'ADVENTURE' IS CONCERNED, IT IMPLIES A PECUNIARY RISK, A VENTURE, A COMMERCIAL PURPOSE. TH E ITA 329/JP/2017_ RAMSWAROOP SAUDAGAR VS. ITO 15 WORD 'VENTURE' IS DEFINED AS A COMMERCIAL ACTIVITY IN WHICH THERE IS A RISK OF LOSS AS WELL AS A CHANCE OF GAIN . 2.3.II THE TERM 'TRADE' IN THE CONTEXT OF THE DEFIN ITION OF THE EXPRESSION 'BUSINESS' IS A WIDER CONCEPT AND ONCE THIS TERM IS ASSOCIATED WITH THE TERM 'ADVENTURE,' THE SCOPE IS FURTHER ENLARGED. THE TERM TRADE MEANS THE ACTION OF BUYING AND SELLING GOODS AND SERVICES BETWEEN TWO O R MORE PARTIES IN CONSIDERATION OF MONEY OR MONEYS W ORTH. 2.3.III THE BUSINESS IS CHARACTERIZED BY SOME OF ESSENTIAL VENTURES SUCH AS REPETITIVE TRANSACTIONS, BUSINESS SKILLS, RISKS & UNCERTAINTIES, HOLDING OF STOCK-IN-TRADE, D EALING WITH THE CUSTOMERS AND IMPLIED INTENTION BETWEEN TH E PARTIES, ETC. 2.4 BASED ON THE ABOVE DEFINITIONS, THE ADVENTURE IN THE NATURE OF TRADE OR COMMERCE CAN BE DEFINED AS A PECUNIARY RI SK OR VENTURE OF BUYING AND SELLING THE GOODS OR SERVICES BETWEEN TWO OR MORE PARTIES IN CONSIDERATION OF MONEY OR MONEY S WORTH, WHERE THERE IS A RISK OF LOSS AS WELL AS A CHANCE O F GAIN AND THESE ACTIVITIES MAY BE QUITE SIMILAR TO THE ORDINA RY BUSINESS. 2.5 IN THE INSTANT CASE, THE ASSESSEE HAD INHERITED THE AGRICULTURAL LAND WHICH HAS BEEN SOLD BY HIM. THE ASSESSEE DID N OT GET THE LAND CONVERTED INTO NON- AGRICULTURAL LAND. THE ASS ESSEE IS HAVING HIS OWN BUSINESS OF PLYING TRUCKS. THE BUSIN ESS IS LOCATED AT TIRUPATI MOTARS, NEAR RAILWAY CROSSING, JAIPUR R OAD, DAUSA. THE ASSESSEE RESIDES AT DAUSA, TEHSIL DAUSA. DURING THE TENURE OF SALE, THE ASSESSEE WAS AGED ABOUT 64 YEARS. NO E FFORTS LIKE AN ENTREPRENEUR WERE INVOLVED IN THE TRANSACTION NOR H AS THE ITA 329/JP/2017_ RAMSWAROOP SAUDAGAR VS. ITO 16 ASSESSEE HIRED SERVICES OF ANY PERSON TO MAKE EFFOR TS ON HIS BEHALF. 2.6 IT IS SUBMITTED THAT IN DETERMINING WHETHER A P ARTICULAR TRANSACTION IS AN ADVENTURE IN THE NATURE OF TRADE, THE COURTS HAVE EMPHASIZED THAT ALL THE CIRCUMSTANCES OF THE T RANSACTION MUST BE CONSIDERED AND THAT NO SINGLE CRITERION CAN BE FORMULATED. 2.7 THE DISTINCT FACTS OF THE INSTANT CASE ARE AS F OLLOWS: 2.7.I AGRICULTURAL LAND WHICH WAS SOLD WAS INHERITE D AND NOT PURCHASED. 2.7.II LAND CONVERTED INTO NON-AGRICULTURAL LAND. 2.7.III LAND WAS SOLD IN SMALL PLOTS TO REALIZE OPT IMUM VALUE OF ITS CAPITAL ASSET. 2.7.IV NO SUCH KIND OF FURTHER TRANSACTION HAS BEE N DONE BY ASSESSEE TILL DATE 2.7.V NO EFFORTS LIKE AN ENTREPRENEUR HAS BEEN MAD E BY ASSESSEE. 2.8 IT IS EVIDENT THAT NO TWO INGREDIENTS OF TRADE I.E. PURCHASE & SALE WAS INVOLVED IN THE TRANSACTION. IN THE TRANSACTION , PURCHASE WAS MISSING AND ONLY SALE WAS THERE. THERE WAS NO UNCER TAINTY AS TO THE EARNING OF PROFIT AND INCURRING THE LOSS. ASSES SEE WAS CERTAIN OF EARNING THE PROFITS, BUT HE MAXIMIZES THE SAME B Y SELLING THE LAND IN SMALL PLOTS. THEREFORE, THE ISOLATED TRANSA CTION OF SALE OF INHERITED AGRICULTURAL LAND IN SMALL PLOTS CANNOT B E TERMED AS ADVENTURE IN THE NATURE OF TRADE. ITA 329/JP/2017_ RAMSWAROOP SAUDAGAR VS. ITO 17 2.9. UNDER SAME SET OF FACTS, IN THE BELOW MENTIONE D JUDGMENT TRANSACTIONS WERE REFERRED TO AS ONE OF CAPITAL GAI N AND NOT ADVENTURE IN THE NATURE OF TRADE. RELEVANT EXTRACTS OF SUCH JUDGMENTS ARE ALSO REPRODUCED HERE UNDER FOR THE SA KE OF READY REFERENCE:- 2.9.I SUSHILA DEVI JAIN LTD. [2003] 130 TAXMAN 120 (PUNJ. & HAR.) (CASE LAW PAGE 30-31) NX. SODHI, J. - THIS APPEAL BY THE REVENUE IS DIR ECTED AGAINST THE ORDER DATED MARCH 14, 2001, PASSED BY THE INCOME-TA X APPELLATE TRIBUNAL WHEREBY THE APPEAL FILED BY THE DEPARTMENT WAS PARTLY ALLOWED. TWO ISSUES WERE RAISED BEFORE THE TRIBUNAL . THE FIRST ISSUE RELATES TO THE COMPUTATION OF PROFIT ON THE SALE OF PLOT WHICH HAD BEEN ASSESSED BY THE ASSESSING AUTHORITY AS ADVENTU RE IN THE NATURE OF THE TRADE WHEREAS THE COMMISSIONER OF INCOME-TAX (APPEALS) DIRECTED THE SAME TO BE TAXED UNDER THE HEAD 'CAPIT AL GAINS'. THE ASSESSEE INHERITED A PIECE OF AGRICULTURAL LAND ON THE BASIS OF A WILL DATED OCTOBER 30, 1990, MADE BY HER THE LATE HUSBAN D BIMAL PRASAD JAIN. DURING THE RELEVANT YEAR IN QUESTION THE ASSE SSEE SOLD A PART OF THIS LAND FOR A CONSIDERATION OF RS. 40 LAKHS ON FE BRUARY 18, 1993. SHE WORKED OUT THE INDEXED COST OF ACQUISITION AND DISCLOSED INCOME TO THE TUNE OF RS. 17,70,177 UNDER THE HEAD 'LONG-T ERM CAPITAL GAINS'. THE ASSESSING OFFICER DID NOT ACCEPT HER PL EA AND OBSERVED THAT THE ASSESSEE HAD SOLD SOME PARCELS OF LAND TO DIFFERENT CONCERNS ON FEBRUARY 5, 1991, AND FEBRUARY 13, 1991, AND, TH EREFORE, SHE HAD A PROFIT MOTIVE IN ACQUIRING THE LAND AND SELLING T HE SAME. FIE TAXED THE ENTIRE INCOME OF RS. 40 LAKHS AS INCOME ARISING FROM TRADE. FEELING AGGRIEVED BY HIS ORDER THE ASSESSEE FILED A N APPEAL BEFORE THE COMMISSIONER OF INCOME- TAX (APPEALS) WHO ALLOW ED THE SAME BY IS ORDER DATED NOVEMBER 8, 1994, HOLDING THAT TH E LAND HAD NOT BEEN PURCHASED BY THE ASSESSEE BUT THE SAME WAS ACQ UIRED BY VIRTUE OF A WILL FROM HER LATE HUSBAND. IT WAS FURT HER HELD THAT THE LAND HAD BEEN SOLD IN PARTS BECAUSE THE AREA WAS HU GE AND COULD NOT BE SOLD IN ONE GO. IN THIS VIEW OF THE MATTER, THE COMMISSIONER OF INCOME-TAX (APPEALS) HELD THAT THE INCOME EARNED BY THE ASSESSEE WAS TAXABLE UNDER THE HEAD 'CAPITAL GAINS' . SINCE THE LAND WAS HELD BY THE ASSESSEE FOR MORE THAN THREE YEARS THE PROFIT WAS TAXABLE UNDER THE HEAD 'LONG-TERM CAPITAL GAINS'. F IE ALLOWED THE INDEXED COST OF ACQUISITION. NOT SATISFIED WITH THE ORDER OF THE ITA 329/JP/2017_ RAMSWAROOP SAUDAGAR VS. ITO 18 COMMISSIONER (APPEALS) THE DEPARTMENT FILED AN APPE AL BEFORE THE TRIBUNAL. IT WAS REITERATED BEFORE THE TRIBUNAL THAT THE ASSESSE E HAD A PROFIT MOTIVE IN SELLING THE LAND IN DIFFERENT PA RCELS AND, THEREFORE, THE INCOME DERIVED THEREFROM WAS FROM AN ADVENTURE IN THE NATURE OF TRADE. THIS ARGUMENT WAS REJECTED. THE TRIBUNAL REFERRED TO THE DEFINITION OF 'BUSINESS' IN SECTION 2(13) OF THE IN COME-TAX ACT, 1961 (FOR SHORT 'THE ACT'), AND OBSERVED THAT A PARTICUL AR ACTIVITY CAN CONSTITUTE BUSINESS ONLY IF IT IS CONTINUOUS. SINCE THERE WAS NO CONTINUOUS ACTIVITY IN REGARD TO THE SALE THE TRIBU NAL HELD THAT IT WAS NOT BUSINESS INCOME AND THAT THE INCOME DERIVED FRO M THE SALE OF LAND COULD BE TAXED ONLY UNDER THE HEAD 'CAPITAL GA INS'. HENCE, THE PRESENT APPEAL. WE HAVE HEARD THE LEARNED SENIOR COUNSEL FOR THE D EPARTMENT AND FIND NO GROUND TO ENTERTAIN THE APPEAL. THE TRIBUNA L AND THE COMMISSIONER (APPEALS) HAVE BOTH RIGHTLY HELD THAT THE SALE OF LAND BY THE ASSESSEE WAS NOT IN THE NATURE OF BUSINESS B ECAUSE THERE IS NO CONTINUOUS ACTIVITY. IT IS TRUE THAT EVEN A SING LE VENTURE COULD BE REGARDED AS A TRADE OR BUSINESS BUT THERE HAVE TO B E CIRCUMSTANCES WHICH SHOULD GIVE RISE TO SUCH A CONCLUSION. THERE ARE NO SUCH CIRCUMSTANCES EXISTING IN THE PRESENT CASE. WHAT IS NECESSARY IS TO FIND OUT THE INTENTION OF THE ASSESSEE AT THE TIME OF THE PURCHASE OF LAND. IN THE CASE BEFORE US, THE LAND WAS NEVER PURCHASED BY HER. SHE ACQUIRED THE SAME ON THE BASIS OF A WILL ON THE DEATH OF HER HUSBAND. SHE SOLD THE SAME IN PARCELS BECAUSE THE H UGE AREA COULD NOT BE SOLD IN ONE GO. SUCH AN ACTIVITY, IN OUR OPI NION, CANNOT AMOUNT TO TRADE OR BUSINESS WITHIN THE MEANING OF T HE ACT. BOTH THE COMMISSIONER AND THE TRIBUNAL HAVE FOLLOWED THE COR RECT PRINCIPLES OF LAW AND NO FACTUAL OR LEGAL ERROR COULD BE POINT ED OUT BY THE DEPARTMENT. IN THIS VIEW OF THE MATTER, WE ARE OF T HE OPINION THAT NO SUBSTANTIAL QUESTION OF LAW ARISES FROM THE ORDER O F THE TRIBUNAL SO AS TO WARRANT THE ENTERTAINMENT OF THIS APPEAL. 2.9.II SHASHI KUMAR AGARWAL [2003] 131 TAXMAN 823 ( ALL.) (CASE LAW PAGE 32) HEAD NOTES : SECTION 2(13), READ WITH SECTION 45, OF THE INCOME-TAX ACT, 1961 - ADVENTURE IN NATURE OF TRADE - WHETHER PROFIT FROM SALE OF LAND, AFTER PLOTTING IT OUT TO SECURE BETTER PRI CE, CAN BE TAXED AS PROFIT FROM AN ADVENTURE IN NATURE OF TRADE - HELD, NO - WHETHER IT SHOULD BE TAXED UNDER HEAD CAPITAL GAINS - HELD, YES ITA 329/JP/2017_ RAMSWAROOP SAUDAGAR VS. ITO 19 2.9.III SMT. SARASWATI JAISWAL [2003] 131 TAXMAN 30 6 (MP) (CASE LAW PAGE 36) 6.ON THE ANVIL OF THE AFORESAID LAW, WE HAVE TO ANALYSE THE PRESENT FACT SITUATION. ON A PERUSAL OF THE ASSESSMENT ORDE R, IT IS QUITE LUMINESCENT THAT SHE HAD INHERITED THE LAND FROM SM T. KAMLA JAISWAL, HER MOTHER, WHO EXPIRED ON 18-1-1976. HER NAME WAS DULY MUTATED IN REVENUE RECORDS IN RESPECT OF THE LAND IN QUESTI ON. THE LAND WAS ACQUIRED BY JABALPUR DEVELOPMENT AUTHORITY WHICH HA D ISSUED A LETTER ON 15-7-1985 TO THE ASSESSEE PROPOSING ALLOT MENT OF CERTAIN PLOTS IN CONSIDERATION OF THE ACQUISITION OF AGRICU LTURAL LAND. THIS ACTION IS PURPORTED TO BE TAKEN UNDER SECTION 56 OF THE 1973 ADHINIYAM. THUS, IT IS A COMPULSORY ACQUISITION. TH E TRIBUNAL IN PARAGRAPH 6 OF ITS ORIGINAL ORDER HAS HELD AS UNDER '6. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BOTH THE SIDES AND HAVE PERUSED THE MATERIAL PLACED BEFORE US. WHE N A TRANSACTION IS ENTERED INTO WITH THE PRIMARY OR THE SOLE INTENT ION OF MAKING PROFIT, IT WOULD AMOUNT TO ADVENTURE IN THE NATURE OF THE TRADE. TO ASCERTAIN THE INTENTION OF THE PARTY, ONE HAS TO LO OK INTO THE FACTS AND THE SURROUNDING CIRCUMSTANCES. IF ON THE CONSID ERATION OF ALL THE FACTS, IT APPEARS THAT THE SOLE INTENTION OF THE PA RTY IN PURCHASING THE PARTICULAR LAND AND SELLING THEREOF, WAS TO MAKE PR OFIT, IT MAY BE TERMED AS ADVENTURE IN THE NATURE OF TRADE. HOWEVER , IN THIS CASE, WE FIND THAT THE ASSESSEE HAD NOT PURCHASED THE LAN D, BUT IT WAS RECEIVED BY HER AS PER THE WILL OF HER LATE MOTHER. MOREOVER, SHE DID NOT SELL THIS LAND, BUT IT WAS COMPULSORILY ACQUIRE D BY THE JABALPUR DEVELOPMENT AUTHORITY BY WAY OF NOTIFICATION DATED 29-4-1983. THUS, THE ASSESSEE HAD NEITHER PURCHASED THE LAND U NDER CONSIDERATION NOR SOLD THE SAME ON HER OWN VIOLATIO N. HOWEVER, WHEN HER LAND WAS COMPULSORILY ACQUIRED BY THE GOVE RNMENT, SHE DID TRY TO MAXIMISE THE COMPENSATION BY WAY OF OPTI NG TO ACCEPT THE DEVELOPED PLOTS AS AGAINST CASH COMPENSATION. IT IS ONLY THE REALIZATION OF THE VALUE OF THE LAND AND IT CANNOT BE SAID TO BE AN ACTIVITY CARRIED ON FOR PROFIT, SO AS TO TERM IT AS ADVENTURE IN THE NATURE OF TRADE. FOR ANY ADVENTURE OR THE TRADE, PU RCHASE AND SALE ARE TWO NECESSARY INGREDIENTS. SINCE IN THE CASE UN DER CONSIDERATION BEFORE US THE FIRST INGREDIENT, THAT IS, PURCHASE O F THE LAND IS MISSING. IT CANNOT BE SAID THAT THE TRANSACTION UNDER CONSID ERATION IS ADVENTURE IN THE NATURE OF TRADE. THE DECISION OF H ONBLE ALLAHABAD HIGH COURT IN THE CASE OF SHASHI KUMAR AGRAWAL (SUP RA) IS DIRECTLY ON THE POINT AND THEIR LORDSHIPS HAVE HELD AS UNDER: ITA 329/JP/2017_ RAMSWAROOP SAUDAGAR VS. ITO 20 'THAT THE TRIBUNAL HAD FOUND THAT THE LAND IN QUES TION WAS NOT PURCHASED BY THE ASSESSEE BUT WAS RECEIVED BY HIM F ROM HIS FATHER UNDER A DEAL OF GIFT. SINCE THE ASSESSEE WAS STAYIN G IN A DIFFERENT PLACE IN CONNECTION WITH HIS OFFICIAL DUTIES AND WA S NOT IN A POSITION TO CARRY ON AGRICULTURAL OPERATIONS, HE SOLD THE LA ND. THE TRIBUNAL FOUND THAT HE HAD SOLD THE LAND AFTER PLOTTING IT O UT IN ORDER TO SECURE A BETTER PRICE AND THAT HE HAD NOT EMBARKED ON AN ADVENTURE IN THE NATURE OF TRADE. THIS WAS ESSENTIALLY A QUES TION OF FACT. THE GAIN ARISING ON SALE OF LAND WAS NOT, THEREFORE, AS SESSABLE AS INCOME FROM BUSINESS.' 2.9.IV CIT VS. SURESH CHAND GOYAL [2007] 163 TAXMA N 54 (MP)(CASE LAW PAGE 40) IN THIS CASE, THE ASSESSEE RECEIVED SOME PROPERT Y, WHICH IS AGRICULTURAL LAND, ON GIFT AND THEREAFTER HE GOT IT DIVERTED FROM AGRICULTURAL TO NON- AGRICULTURAL AND THEREAFTER DE VELOPED AS MANY AS 40 PLOTS IN THE NAME OF GOYAL COLONY; AND AFTER DEV ELOPING THE PLOTS LIKE MAKING ROADS, PROVIDING PIPELINES FOR WATER DR AINAGE SYSTEM, ETC., THE LEARNED TRIBUNAL HAS HELD THAT THE ACTIVI TY IS NOT THE NATURE OF ADVENTURE IN TRADE AND COMMERCE AND SET ASIDE TH E ORDERS OF ASSESSING OFFICER AS WELL AS CIT(A). 15. CONSIDERING THE AFORESAID FACTS AND CIRCUMSTAN CES OF THE CASE, WE ARE ALSO OF THE VIEW THAT THE SELLING OF OWN LAN D AFTER PLOTTING IT OUT IN ORDER TO SECURE BETTER PRICE, IS NOT AN ADVE NTURE IN THE NATURE OF TRADE OR BUSINESS. THE WORD 'BUSINESS' HAS BEEN DEFINED UNDER SECTION 2(13) OF THE INCOME- TAX ACT, 1961, WHICH I NCLUDES ANY TRADE, COMMERCE OR MANUFACTURE OR ANY ADVENTURE OR CONCERN IN THE NATURE OF TRADE, COMMERCE OR MANUFACTURE. AN ISOLAT ED TRANSACTION OR ACTIVITY CANNOT BE PART OF BUSINESS. TO CONSIDER THE QUESTION OF BUSINESS, THERE MUST BE REGULAR ACTIVITY OF PURCHAS ING AND SELLING. IN THIS CASE/ THERE IS NOTHING ON RECORD TO SHOW THAT THE LAND WAS PURCHASED, FOR THE PURPOSE OF SELLING INTO PLOTS. B ASICALLY, IT IS A GIFTED LAND AND THE LAND WAS DEVELOPED AND WAS SOLD AFTER CONVERTING INTO THE PLOTS WITH A VIEW TO SECURE THE BETTER PRICE, THEREFORE, THE ISOLATED ACTIVITY CANNOT COME WITHIN THE PURVIEW OF ADVENTURE IN THE NATURE OF TRADE AND BUSINESS. THE MAIN EARNING ON THE SALE OF THE LAND WAS IN THE NATURE OF CAPITAL G AIN AND, THEREFORE, NOT ASSESSABLE HIS INCOME FROM BUSINESS AND THIS QU ESTION IS ESSENTIALLY A QUESTION OF FACT. ITA 329/JP/2017_ RAMSWAROOP SAUDAGAR VS. ITO 21 2.10. LD. CIT(A) MISPLACED HIS RELIANCE ON JUDGMENT OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF SOHAN KHAN & MOHAN KHAN [2008] 304 ITR 194 [CASE LAW PAGE 41). FACTS: IN THIS CASE THE ASSESSEE HAD PURCHASED A CH UNK OF LAND MEASURING FEW LAKH SQUARE FEET IN 1970. THE LAND WA S UNDER CLOUD OF CEILING LAWS AND AFTER IT GOT CLEARED THEREFROM, ASSESSEE PICKED UP IDEA OF DISPOSING IT BY MAKING BEST PROFIT AND ACCO RDING THE SITE PLAN WAS PREPARED SHOWING THE LAND TO BE DIVIDED INTO DI FFERENT PLOTS AND THE PLOTS WERE ACCORDING SOLD. THE ID. AO IN CASE F OUND THE SALE TO BE NOT TAXED AS CAPITAL GAINS BUT IT WAS TREATED AS BUSINESS INCOME. HELD : HONBLE RAJASTHAN HIGH COURT ON THESE SET OF FACTS HELD THAT, THERE WAS NOTHING TO SHOW THAT THE LAND WAS PURCHASED WIT H THE INTENTION TO SELL AT A PROFIT, OR WITH REQUISITE INTENTION, T O BRING IT WITHIN THE PARAMETERS OF 'STOCK-IN-TRADE'. THE ASSESSEE WAS A REGULAR DEALER IN REAL ESTATE. IT APPEARED THAT THE LAND WAS PURCHASE D IN 1970, WHICH WAS UNDER CLOUD OF LAND CEILING LAWS, AND AFTER THA T CLOUD WAS CLEARED, AND OTHER ADJOINING LANDS HAD BEEN DEVELOP ED, AND SINCE THE LAND WAS NOT YIELDING ANY RETURN, IT WAS DECIDE D TO BE SOLD IN PIECEMEAL, BY EARMARKING PLOTS BUT THEN NONETHELESS IT WOULD REMAIN A DISPOSAL OF THE CAPITAL ASSET ONLY AND NOT A TRAN SACTION OF ANY 'STOCK-IN-TRADE' SO AS TO BE DESCRIBED AS 'ADVENTUR E IN THE NATURE OF TRADE'. OBVIOUSLY THEREFORE, IT WAS LIABLE TO BE TA XED ONLY AS CAPITAL GAIN. LD. CIT(A) HAS SIMPLY WITHOUT TAKING INTO ACCOUNT T HE ENTIRE FACTS OF THE CASE RELIED ON THE DECISION OF HONBLE RAJASTHAN HIGH COURT BY SIMPLY PICKING THOSE LINES FROM THE ORDER WHICH SUITED HIS REQUIREMENTS. IT IS PERTINENT TO NOTE THAT IN THE CASE AT HAND, ASSESSEE HAD NOT PURCHASED ANY LAND, HOWEVER, THE SAME BEEN INHE RITED BY HIM. THIS, IN ITSELF, PROVES THE TRANSACTION TO BE ONE OF CAPITAL GAINS. IN VIEW OF THE ABOVE, THE TRANSACTION OF SALE OF I NHERITED AGRICULTURAL LAND IN SMALL PLOTS WITHOUT CONVERTING THESE TO ITA 329/JP/2017_ RAMSWAROOP SAUDAGAR VS. ITO 22 RESIDENTIAL PLOTS CANNOT BE TERMED AS ADVENTURE IN THE NATURE OF TRADE. LD. A.R. HAS FURTHER SUBMITTED AS UNDER: LD. CIT(A) HAS NOT CONSIDERED SECTION 45(2). THE SA ME IS REPRODUCED FOR READY REFERENCE: SECTION 45(2) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECTION (1), THE PROFITS OR GAINS ARISING FROM THE TRANSFER BY WAY O F CONVERSION BY THE OWNER OF A CAPITAL ASSET INTO, OR ITS TREATMENT BY HIM AS STOCK-IN-TRADE OF A BUSINESS CARRIED ON BY HIM SHAL L BE CHARGEABLE TO INCOME-TAX AS HIS INCOME OF THE PREVIOUS YEAR IN WHICH SUCH STOCK-IN-TRADE IS SOLD OR OTHERWISE TRANSFERRED BY HIM AND, FOR THE PURPOSES OF SECTION 48, THE FAIR MARKET VALUE OF TH E ASSET ON THE DATE OF SUCH CONVERSION OR TREATMENT SHALL BE DEEME D TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUIN G AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET. IT IS SUBMITTED THAT IF THE CONVERSION INTO STOCK IN TRADE IS CONSIDERED TO HAVE BEEN TAKEN PLACE DURING THE RELE VANT YEAR THEN CAPITAL GAIN SHOULD HAVE BEEN CALCULATED AFTER CONSIDERING FAIR MARKET VALUE (NOT DLC VALUE) OF THE LAND AS ON THE DATE OF SUCH CONVERSION. FURTHER, LD. CIT(A) HAS NOT EVEN REDUCED THE COST OF LAND TO DETERMINE THE PROFITS FROM ADVENTURE IN THE NATURE OF TRADE. NET SALE PRICE CANNOT BE CONSIDERED TO BE THE PROFIT OF THE ASSESSEE. IN VIEW OF THE ABOVE, NECESSARY RELIEF MAY PLEASE B E GRANTED. 7. ON THE OTHER HAND, THE LD DR HAS VEHEMENTLY SUPP ORTED THE ORDERS OF THE AUTHORITIES BELOW. ITA 329/JP/2017_ RAMSWAROOP SAUDAGAR VS. ITO 23 8. THE BENCH HAVE HEARD BOTH THE SIDES ON THIS ISSUE . ALTHOUGH THE LAND WAS AGRICULTURAL LAND AND SITUATED IN THE LIMIT S OF CITY OF DAUSA. IT WAS DEVELOPED INTO 23 PLOTS OF VARIOUS SIZES AND SOL D DURING THE YEAR. THE NATURE OF LAND HAD GONE IRREVERSIBLE CHANGE FROM AGRICULTURAL TO RESIDENTIAL PLOTS, THEREFORE, WE ARE AGREE WITH THE F INDING OF THE LD. CIT(A) THAT THIS WAS AN ADVENTURE IN THE NATURE OF TR ADE AND INCOME HAS TO BE TAXED UNDER THE HEAD PROFIT AND GAINS OF BUS INESS AND PROFESSION. WE HAVE ALSO CONSIDERED THE VARIOUS CASE LAWS RELIED UPON BY THE LD AR OF THE ASSESSEE DURING THE HEARING OF APPEAL, IN AL L THESE CASES, THE FACTS WERE AT VARIANCE TO THE FACTS OF ASSESSEES CA SE. THEREFORE, NONE OF THE RATIO LAID DOWN BY THE HONBLE COURTS IS APPL ICABLE TO THE ASSESSEES CASE, ACCORDINGLY, FINDINGS OF THE LD. C IT(A) ON THIS ISSUE IS SUSTAINED. HOWEVER, THE PROVISIONS OF SECTION 45(2) OF THE ACT PROVIDES THAT THE PROFITS OR GAINS ARISING FROM THE TRANSFER BY WAY OF CONVERSION BY THE OWNER OF A CAPITAL ASSET INTO, OR ITS TREATM ENT BY HIM AS STOCK-IN- TRADE OF A BUSINESS CARRIED ON BY HIM SHALL BE CHAR GEABLE TO INCOME-TAX AS HIS INCOME OF THE PREVIOUS YEAR IN WHICH SUCH STO CK-IN-TRADE IS SOLD OR OTHERWISE TRANSFERRED BY HIM AND, FOR THE PURPOSES O F SECTION 48, THE FAIR MARKET VALUE OF THE ASSET ON THE DATE OF SUCH CONVERSION OR TREATMENT SHALL BE DEEMED TO BE THE FULL VALUE OF T HE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET. ITA 329/JP/2017_ RAMSWAROOP SAUDAGAR VS. ITO 24 APPARENTLY THESE PROVISIONS OF ACT HAVE NOT BEEN TA KEN INTO CONSIDERATION BY THE LD. CIT(A), THEREFORE, IN THE I NTEREST OF JUSTICE AND EQUITY, THE BENCH FIND DEEM IT FIT TO RESTORE THE I SSUE BACK TO THE FILE OF THE LD. CIT(A) TO GIVE EFFECT TO THE PROVISIONS OF S ECTION 45(2) OF THE ACT. HENCE, THE ISSUE IS RESTORED BACK TO THE FILE OF TH E LD. CIT(A). 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT ON 22/02/2018. SD/- SD/- FOT; IKY JKO HKKXPAN (VIJAY PAL RAO) (BHAGCHAND) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 22 ND FEBRUARY, 2018 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI RAMSWAROOP SAUDAGAR, DAUSA. 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, DAUSA. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 329/JP/2017) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR