Law:

Section:

Section 2(13) of the Income-tax Act, 1961 - Adventure in nature of trade - Whether selling of own land after plotting it out in order to secure better price, is not an adventure in nature of trade or business - Held, yes - Whether an isolated transaction or activity of selling land cannot be part of business and there must be regular activities of purchasing and selling for treating said activity as business - Held, yes Section 260A of the Income-tax Act, 1961 - High Court, appeals to - Whether if amount of tax is below Rs. 2 lakhs, in view of circular dated 27-3-2000, no appeal should be filed by revenue and same shall not be maintainable - Held, yes Circulars and Clarifications : Circular dated 27-3-2000 FACTS The assessee received certain agricultural land by way of a gift deed. Thereafter the assessee got the said land diverted for non-agricultural purposes. Thereafter, the land was converted into plots and in all 40 plots were carved out. The assessee undertook the development work of the colony such as levelling of the land, construction of roads and drainage system, etc., and thereafter sold the said plots. The Assessing Officer held that the activity of selling the plots to different members in different assessment years amounted to an adventure in the nature of trade. On appeal, the Commissioner (Appeals) upheld the order of the Assessing Officer on the ground that the activity of the assessee indicated that he was carrying on business in real property and it was a business venture. On further appeal, the Tribunal held that the gain arising out of the sale of the plots was an income in the nature of capital gain since the sale of plots was not a business activity. On revenue's appeal, the assessee raised an objection that as per the circular issued by the CBDT dated 27-3-2000 monetary limit of Rs. 2 lakhs has been prescribed for filing the appeal with a direction that if the amount of the tax is below the prescribed limit, no appeal should be filed by the revenue and the same shall not be maintainable. HELD The selling of own land after plotting it out in order to secure a better price, was not an adventure in the nature of trade or business. The word…

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