Law:

Section:

Section 28(i), read with section 2(13), of the Income-tax Act, 1961 - Business income - Chargeable as - Assessment years 1964-65 to 1967-68 - Whether where, purchase is made solely and exclusively with intention to resell at a profit and, purchaser has no intention of holding property for himself or otherwise enjoying or using it, presence of such an intention raises a strong presumption that transaction is an adventure in nature of trade - Held, yes - Whether if activity of purchaser in purchasing land and selling same into plots constituted an adventure in nature of trade, mere fact that land was agricultural land could not make profits arising from sales exempt from income-tax - Held, yes - Whether where, partners of a firm purchased certain agricultural land and soon after purchase of land, they divided whole area into building plots for developing a colony and got scheme approved by Town Planning Board, said act of partners were all indicative of fact that sole intention in purchasing land was of reselling it at a profit by dividing it into plots and to treat land as a stock-in-trade and not as a capital investment - Held, yes - Whether therefore, income arising from such sale would be assessable to tax as business income - Held, yes FACTS The partners of the assessee-firm purchased certain agricultural land on 16-10-1961, which was situated in the outskirts of the Jabalpur City. Soon after the purchase of the land, they divided the whole area into building plots for developing a colony and got the scheme approved by the Town Planning Board on 24-4-1962 and by May, 1963, some plots were sold. In the meanwhile the Madhya Pradesh Town Improvement Trust Act, 1960, was extended to the City of Jabalpur and, the said improvement trust proposed town improvement schemes in which there was a proposal to acquire certain acres of land which was purchased by the partners. A notice was issued by the trust in that behalf. The partners of the assessee-firm raised objections by stating that they had already divided the area into plots and the town planning scheme framed by them had already been approved by the Town Planning Board and the Corporation. The partners of the…

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