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| The Tax Publishers2020 TaxPub(DT) 1399 (Visakhapatnam-Trib) INCOME TAX ACT, 1961
Section 14
Assessee purchased pieces of agricultural land on different dates and no agricultural operations were carried out and assessee converted same into non-agricultural land by taking necessary approvals from the competent authority and plotted the same. Thus, it was very clear that intention of assessee was to make profit out of the transaction, therefore entire activity carried by assessee, i.e., purchase of agricultural land conversion into non-agriculture land and plotting and then selling the plots was 'adventure in the nature of trade', and, therefore, resulting profit was rightly taxed as business income and not capital gains.
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Head of income - Business income or capital gain - Profit on sale of land - Adventure in the nature of trade
Assessee declared profit arisen out of sale of plots as income from capital gains, however, AO taxed the same as business income on the ground that assessee has purchased land with an intention to make profit. Held: As evident, assessee purchased pieces of agricultural land on different dates and no agricultural operations were carried out and assessee converted same into non-agricultural land by taking necessary approvals from competent authority and plotted the same. Thus, it was very clear that intention of assessee was to make profit out of the transaction, therefore, entire activity carried by assessee, i.e. purchase of agricultural land conversion into non-agriculture land and plotting and then selling the plots was 'adventure in the nature of trade', and, therefore, resulting profit was rightly taxed as business income and not capital gains.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. :
IN THE ITAT, VISAKHAPATNAM BENCH
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