Law:

Section:

Section 2(13) of the Income-tax Act, 1961 [Corresponding to section 2(4) of the Indian Income-tax Act, 1922] - Adventure in nature of trade - Assessee, who was a salaried employee, bought two plots of land with sole object of building houses thereon for himself and his parents - Subsequently, owing to change in family circumstances he found himself unable to build upon those plots and was compelled to part with them - There was no evidence to show that he intended to make a profit on these plots when he bought them and indeed when prices went up a few years later he refused offer which a broker had brought to him - Whether purchases and sale of building sites by assessee were not a transaction in nature of trade and consequently, excess realisation over cost in respect thereof was not taxable profit in his hands - Held, yes FACTS The assessee, who was a salaried employee, bought two plots of land in 1942. He sold those plots a few years later which yielded a net gain. The question arose whether the assessee was liable to pay income-tax on the amount of gain made by him. He did not originally include that sum in his assessment return, but when the matter came to the knowledge of the ITO he included it but immediately afterwards made a claim for exemption on the ground that the gain represented nothing more than an appreciation of capital and that these transactions were not in the nature of trade or business and the gain could not be treated as profit or gain of business. The ITO decided against the assessee. On appeal, the AAC held that the assessee had bought those plots for the purpose of building houses, one for himself and one for his parents and that owing to a change in family circumstances he found himself unable to build those houses and in 1945 and early in 1946 he sold them. He also took into account the fact that a broker had offered four times the purchase price to the assessee but he refused to accept this offer because at that time he thought that he would be in a position to build the two houses. The department appealed against that order to the Tribunal and the Tribunal gave a finding adverse to the assessee. The assessee then asked the Tribunal…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492