Activity of selling various small properties acquired from sale of land couldn’t be treated as business activity
Munish Singla v. ACIT –  107 taxmann.com 176 (Chandigarh – Trib.)
The assessee sold a property during the year.
He invested the sale consideration in purchase of 28 properties including booths, plots, etc.
Out of these properties some properties were again sold by him and rest were retained for a long period of time.
The assessee claimed such income as capital gains.
In view of the number of transactions carried out, Assessing Officer (AO) treated the income from sale and purchase of property as business income.
Aggrieved-assessee filed an appeal against the order of AO. Both, CIT(A) and Tribunal upheld the order of the AO.
On further appeal, the High Court held in favour of assessee that merely because the assessee had purchased many small properties from the sale consideration of large chunk of land, was not sufficient to hold that he was doing regular business in sale and purchase of immovable property.
The quantum or number or number of investments does not change the nature of the investment to categorize it as business transaction.
The lower authorities had no jurisdiction to treat assessee’s income as business income. Thus, the order of the lower authorities was set aside and AO was directed to treat the income as capital gains.