Capital Gain (LTCG) or Business income

  the tests laid down in the decisions support the plea of the Assessee that he did not do any adventure in the nature of trade when he sold the larger extent of property after dividing them into smaller sites.

 The dates of acquisition of the property and its conversion into sites and obtaining approval and the dates of sale by the Assessee all go to show his intention at the time of acquisition was not with a view to indulge in an adventure in the nature of trade

 AO took the view that the assessee was engaged in an adventure of the nature of trade and therefore the income declared under the head “capital gains” is to be taxed under the head Income from Business

 Intention at the time of purchase was to construct a house for self occupation and that intention was given up due to the fact that the land was outside Mysore city and due to financial crunch.

Therefore the tests laid down in the decisions support the plea of the Assessee that he did not do any adventure in the nature of trade when he sold the larger extent of property after dividing them into smaller sites.

The dates of acquisition of the property and its conversion into sites and obtaining approval and the dates of sale by the Assessee all go to show his intention at the time of acquisition was not with a view to indulge in an adventure in the nature of trade.

The case of B.Narasimha Reddy [1984 (7) TMI 72 – KARNATAKA HIGH COURT] was considered.

Thus gain on sale of land is to be regarded as income under the head “capital gain”.

 Consequently, the Assessee should be entitled to all the deductions permissible while computing income under the head “Capital Gain”.

The issue is a decision on facts of that case.

 Decided in favour of assessee