Law: Income Tax Ordinance, 2001

Section: 62,135

Income Tax Ordinance (XXXI of 1979)--- ----Ss. 62 & 135---Capital gain---Taxable income---"Adventure in nature of trade"---Taxpayer sold his property and relocated to another place due to security concerns but tax authorities added capital gain from sale of property as taxable income under adventure in nature of trade---Plea raised by department was that income received was taxable as it was akin to real estate business---Validity---Intention of a person could be traced out from some of his overt acts as well as surrounding circumstances---Assessing authorities were to give a convincing reasoning regarding overt act and its surrounding circumstances specially at a time of purchase of property under which assessee/taxpayer indulged into transaction before declaring the same as an 'adventure in nature of trade'---Reason given by taxpayer for selling both his plots was quite logical and coherent---When a person had decided to severe all his connections from a town, there remained no logic to keep properties there, which were retained by him for some time with intention to use the same for his personal affairs---Ingredient of 'intention of making profit' was missing in the entire episode and as such act of taxpayer did not fall under category of 'adventure in the nature of trade'---High Court set aside order passed by Income Tax Appellate Tribunal as taxpayer had rightly declared amount of capital gain accrued to him due to sale of two plots in his income tax returns and wealth statement as 'exempt' from provisions of Income Tax Ordinance, 1979---Appeal was allowed in circumstances. 2007 PTD 1687; 2011 PTD 1317; 1992 PTD 621; Commissioner Income Tax, East Pakistan, Dacca v. The Liquidator, Khulna Bagerahat Railway Company Ltd. PLD 1962 SC 128; (1989) 176 ITR 393; (1976) 102 ITR 202; 1989 PTD 445; 1990 PTD 345; (1959) 37 ITR 242; 2017 PTD 1687 and G. Venkataswami Naidu and Co v. The Commissioner of Income-Tax 1959 AIR 359 ref. Major General (Rtd.) M. Jalaluddin v. ACIT-IV, Zone-C, Karachi 2011 PTD 1377 rel. THIS JUDGMENT PASSED BY: FAHIM AHMED SIDDIQUI, JUSTICE:---.--- This single order would suffice to dispose of the instant appeals filed by the appellant…

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