Law:

Section:

Section 28 of the Income-tax Act, 1961 - Business income - Chargeable as - Assessee along with her mother and brother owned certain land - On 1-4-1970 they formed a partnership firm which was constituted- along with seven other persons - In that firm, assessee, her mother and brother contributed said land as their share of capital contribution but other seven members had not contributed any capital whatsoever -Book value of land of assessee as on 31-3-1970 was Rs. 37,428 - Assessee put market value of land at Rs. 4,45,929 as on 1-4-1970 in her books and surplus of Rs. 4,11.193 was transferred to capital account - Similar entries were made in books of her mother and brother - Assessee, her mother and brother took retirement from said firm on 31-8-1970 - Whether in view of fact that it was found that past history of purchase of said land by assessee, her mother and brother showed that said purchase was an adventure in nature of trade and not just an investment, aforesaid surplus of Rs. 4,11,192 was to be treated as transaction in course of business and was, thus, taxable under head 'Profits or gains of business or profession' -Held, yes Facts The assessee, her mother and brother were holding certain land which was purchased by them in 1962. On 1-4-1970, they along with other seven persons formed a firm, the assessee, her mother and brother contributed land as their share of capital contribution. The other seven members had not contributed any capital whatsoever. The book value of the land as on 31-3-1970 was Rs. 37,428. As on 1-4-1970, the assessee in her books of account put the market value of the land at Rs. 4,45,929. The surplus of Rs. 4,11,192 was transferred in the capital account of the assessee and the similar entries were passed in the books of account of mother and brother also. The said three partners, who contributed land, retired on 31-8-1970 from the firm which was formed on 1-4-1970. The firm had not done any business in dealing with land. In the assessment year 1971-72 corresponding to the accounting year ending on 31-3-1971, the assessee claimed that the. said surplus was not capital gain as much as there was neither transfer of any capital asset…

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