Solitary instance of sale of all property couldn’t be termed as adventure in nature of trade

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Solitary instance of sale of all property couldn’t be termed as adventure in nature of trade
Facts:
a) The assessee filed its return showing amount received on sale of certain properties and claiming exemption from capital gains alleging it to be sale of agricultural land.
b) Assessing Officer (AO) initiated proceedings under section 143(3) and found that the properties were acquired between 1992-93 to 1997-98 as also a solitary purchase in 2006-07, which were together sold in the subject assessment year to a group of builders.
c) He held that purchases were made on account of the real estate business deals by the assessee and it was an adventure in the nature of trade insofar as the assessee had sold the entire properties through one solitary sale transaction.
d) Lower authorities reversed order of AO. Aggrieved-AO filed the instant appeal before the High Court.
The High Court held in favour of assessee as under:
1) It was found that the assessee had made investments in the lands prior to the sale and had held the land for a considerable period of time for almost 12-15 years. It was an admitted fact that the assessee had not derived any income from the lands and also not made any improvements in the land.
2) However, these deals couldn’t be adventure in the nature of trade found, since the assessee had not identified the seller termed as and had not purchased the land holdings with a definite and sole intention to sell it.
3) On sufficient profits being received the assessee eventually sold the property, which resulted in an accretion of capital for which capital gains taxation would have to be satisfied.
4) Though there was an intention to derive profit on sale of such properties purchased as an investment, the assessee was willing to hold it so that the eventual purchase gave him sufficient profit.
5) This alone would take it out of the definition of adventure in the nature of trade and the solitary instance of sale alone couldn’t be characterise the transaction as an adventure in the nature of trade.
 – [2019] 101 taxmann.com 244 (Kerala)

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