Law:

Section:

[2008] 304 ITR 194 (RAJ.) HIGH COURT OF RAJASTHAN Commissioner of Income-tax v. Sohan Khan & Mohan Khan N. P. GUPTA AND KISHAN SWAROOP CHAUDHARI, JJ. ITA NOS. 69 OF 2005 AND 58 OF 2006 APRIL 24, 2008 Section 45 of the Income-tax Act, 1961 - Capital gains - Chargeable as Where land was purchased in 1970, and after cloud of land ceiling laws, was cleared and other adjoining lands had been developed, it was decided to be sold in piecemeal by earmarking plots, nonetheless sale transaction would remain a disposal of capital asset only, and not a transaction of any 'stock-in-trade' so as to be described as 'adventure in nature of trade' and therefore, it was liable to be taxed only as capital gain In order to arrive at a conclusion, as to whether sale consideration is to be taxed as capital gain or the sale transaction is to be treated to be an "adventure in the nature of trade", things cannot be put in any strait jacket formula, and it is dependent upon the facts and circumstances of each case to be decided on the basis of relevant considerations. One of most significant considerations would be the regularity of transaction of purchase and sale. Mere fact that there was a series of transactions of sale only, by selling the part of the whole land, purchased in one go, or purchased once upon a time, in piecemeal, would not render the activity of sale to be an 'adventure in the nature of trade'. The question, as to whether a particular transaction falls within the category of 'adventure in the nature of trade', or is merely a transaction of transfer of capital asset, since depends on appreciation of facts, cannot be said to be giving any rise to the substantial question of law. The assessee's purchased a chunk of land measuring few lakhs square feets, somewhere in 1970 under a valid document and the land was lying fallow, during all this time. The land was under the cloud of ceiling laws and after it got cleared therefrom, the assessee picked up the idea of disposing it of by making the best profit, i.e., by ensuring that it fetched the best price, and accordingly, the site plan was prepared, showing the land to be divided into different plots, and the plots were,…

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