Purchase and Sale of Land in short span is business activity chargeable to tax

By | October 12, 2016

Held

we have no hesitation to hold that the impugned land was purchased with an intention to sell the same to the identified buyers to achieve commercial objectives outright. As noted earlier, section 2(13) of the Act seek to explain the term of ‘business’ by way of inclusive definition. As per section 2(13) expression ‘business’ include not only trade or commerce, etc. but definition further extends to encompass within its ambit an ‘adventure in the nature of trade’. The entire gamut of action of the assessee in engaging in such big ticket land purchase without employing any fund of his own and almost immediate re-sale thereof clearly demonstrates the implicit intention of the assessee that the transaction entered was nothing but an ‘adventure in the nature of trade’ i.e. a business transaction under extended definition of S. 2(13) of the Act. Consequently, profits arising therefrom acquires the character of ‘business income’ chargeable under S. 28 of the Act.

IN THE ITAT PUNE BENCH ‘B’

Dilip Battu Karanjule

v.

Income-tax Officer, Ward 5 (2), Pune

VIKAS AWASTHY, JUDICIAL MEMBER
AND PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER

IT APPEAL NO. 1960 (PN.) OF 2014
[ASSESSMENT YEAR 2009-10]

AUGUST  12, 2016

S.N. Doshi for the Appellant. P.L. Kureel and Hitendra Ninawe for the Respondent.

ORDER

Pradip Kumar Kedia, Accountant Member – The captioned appeal filed by the assessee is against the order of CIT (A)-III, Pune dated 17.09.2014 relating to assessment year 2009-10 passed under section 143(3) of the Income-tax Act, 1961 (in short “the Act”).

2. In this appeal, the assessee revised and filed concise Grounds of Appeal, which is reproduced hereunder :—

“1. On the facts and in the circumstances of the case the learned CIT (A) has erred in holding that the gain arose on sale of the rural agricultural lands constitute Business Income overlooking the fact that appellant being an agriculturist acquired those lands with the predominant intention of making investments and cultivating those agricultural lands.
2. On the facts and in the circumstances of the case the CIT (A) has erred in holding that the agricultural income declared is not commensurate with the quantum of land holding and thereby inferring that appellant is not agriculturist.
3. On the facts and in the circumstances of the case CIT (A) has erred in holding that since the part of the agricultural land is under cultivation and not the entire land and therefore it is not an agricultural land.
4. On the facts and in the circumstances of the case CIT (A) has erred in holding that there were frequencies of sale transactions of agricultural lands totally ignoring the fact that upto Assessment Year under consideration there were only two transactions which lands were purchased on 05.07.1990 and 13.05.2003 clearly proving the predominant intention of acquiring and holding the agricultural lands as investments.

The above grounds of appeal may kindly be allowed to be altered, amended, and modified, etc in the interest of natural justice.”

3. The relevant facts, in short, are that the assessee is an Advocate by profession. During the year under consideration, the assessee has shown professional receipts of Rs. 5,77,280/- on which net profits have been shown at Rs. 1,89,522/-. The case of the assessee was selected for scrutiny assessment as per Annual Information Report (AIR) received by the Income Tax Department. The assessee was found to have sold immovable property (land) on which gains arising therefrom were not offered for taxation. The assessee claimed the gains arising from sale of lands as exempt from tax taking shelter of section 2(14) r.w.s. 45 of the Act. From the purchase and sale deeds filed by the assessee, it was noticed by the Assessing Officer that agricultural land situated at Annapur Village, Tal. Shirur, Dist. Pune were purchased by the assessee for a consideration of Rs. 93,36,000/-. Similar adjacent agricultural land bearing different Gat Numbers were simultaneously purchased by wife of the assessee for a consideration of Rs. 46,64,000/-. The properties were bought by the assessee and his wife on 17.10.2008. The aforesaid land altogether including land owned by wife of the assessee (involving nearly 45 Acres 28 Gunthas) were sold for a total consideration of Rs. 2,00,00,000/- on 28.11.2008. The property were sold to Shri Shriprakash Ramgopal Porwal and Shri Vijayprakash Ramgopal Porwal. The property were purchased for and on behalf of the company namely Chartered Realtors Pvt. Ltd. through its Directors aforementioned. It was noticed by the Assessing Officer from the sale deed that out of total consideration of Rs. 2,00,00,000/-, the purchasers (Porwals) had advanced Rs. 1,00,00,000/- through demand draft on 13.08.2008 i.e. two months before the assessee ventured to purchase the properties on 17.10.2008. The assessee took a stand that these lands sold were agricultural land and situated beyond 8 kilometers of the municipal limits/cantonment area etc. and therefore, not being a ‘capital asset’ is exempt from capital gains. The Assessing Officer, however, discredited the claim of the assessee for exemption of the alleged capital gains. The Assessing Officer observed that these parcels of lands acquired by the assessee were not with any intention to hold it for capital accretion, enjoyment and own use but were purchased with the sole motive of earning huge profits on immediate sale thereof as a trading asset. As per Assessing Officer, since the lands were not purchased with the intention of holding it but held as business asset only with sole intention of earning profits from sale thereof, the provisions of section 2(14) of the Act will not come into play. The Assessing Officer observed that since the land so acquired was not a capital asset at the first place, there is no merit in the contention of the assessee that said parcel of agricultural land were to be excluded from the definition of the capital asset and consequently income from sale thereof was not liable to be taxed. The Assessing Officer simultaneously with reference to the Revenue records (7/12 extracts) observed that the major portion of these agricultural lands were ‘Pad’ (not useful for cultivation) and in the remaining portion of land, the cultivation of crop was ‘Jowar’. The Assessing Officer next observed that assessee is mainly engaged in legal profession as a Lawyer and his occupation is not primarily as an agriculturist. The Assessing Officer thereafter observed that the aforesaid land has been acquired out of borrowed funds. The Assessing Officer went on to observe that assessee has shown a meager income of Rs. 1,01,845/- derived from existing agricultural land held by him which is too low compared to the land holdings of the assessee. On the totality of these facts, the Assessing Officer concluded that entire activity of purchase and immediate sale of land by the assessee falls within the domain of ‘adventure in nature of trade’. He accordingly treated the proportionate profit of Rs. 35,86,980/- relatable to assessee (in exclusion to share of profits of wife) arising on sale of land as ‘business income’ under section 28(i) r.w.s. 2(13) of the Act. For such action, he also relied upon the decision of the Hon’ble Bombay High Court in the case of Dy. CIT v.Gopal Ramnarayan Kasat [2011] 328 ITR 556  (Bom.).

3.1 Aggrieved by the aforesaid action of the Assessing Officer, the assessee preferred an appeal before the First Appellate Authority i.e. the CIT (A).

4. The CIT (A) revisited the entire issue but declined to interfere with the order of the Assessing Officer. She took a view by way of an elaborate order that the intention of the assessee was never to purchase the aforesaid lands with a view to cultivate the same. Hence, she confirmed the action of the Assessing Officer in holding that activities carried out by the assessee towards purchase and sale of impugned land as ‘adventure in nature of trade’ and thus a business activity chargeable to tax.

4.1 Aggrieved further by the order of the CIT (A), the assessee is in second appeal before the Tribunal.

5. The Ld. Authorized Representative (AR) for the assessee Shri S. N. Doshi contended that the assessee had purchased the impugned agricultural land in question primarily for the purposes of cultivation. He sought to argue that some part of the land was possibly ‘Pad’ but that does not necessarily mean that the land could not be used for the purposes of cultivation such as cultivation of trees. The Ld. AR for the assessee vociferously contended that the land was not purchased with the intention of selling it immediately for profits although the circumstances led to such eventuality. It was explained that the directors, Shri Shriprakash Ramgopal Porwal and Shri Vijayprakash Ramgopal Porwal were good friends of the assessee and at the request of the assessee, they advanced him Rs. 1,00,00,000/- from their company in which they were directors to enable the assessee to purchase the impugned agricultural land. It was further explained that with this loan amount, the assessee purchased the land and was intending to put it to the agricultural use, similar to other lands held by him for agricultural purposes. It was stated that the two Porwal brothers, however, asked the assessee to return their loan and since it was immediately not possible, the assessee first attempted to sell other existing parcel of lands, without any avail nonetheless. Therefore, it was proposed to sell the impugned land purchased by him on 17.10.2008 to Porwal brothers for which the Porwal brothers agreed. The Ld. AR asserted that it was in these changed circumstances that the land had to be reluctantly sold on 26.11.2008 but insisted that there was no intention to earn profits by its sale at the time of its purchase and therefore the transactions cannot be treated as an ‘adventure in the nature of trade’ as wrongly held by the revenue authorities.

5.1 Apart from the aforesaid argument, the Ld. AR also contended that the land in question cannot be treated as a ‘capital asset’ being agricultural land located more than 8 kilometers away from Shirur Municipality, which is nearest municipality to the land in question nor is the land located at any cantonment or such similar bodies.

5.2 Thus, firstly, the impugned land so purchased is a capital transaction and profit arising therefrom on sale is in the nature of capital gains and secondly, the land in this case is an agricultural land which is cultivable and situated outside the jurisdiction of a municipality in terms of section 2(14)(iii) and is thus not ‘capital asset’ liable for any taxation. The Ld. AR accordingly pleaded that on a holistic consideration of the above factual position, the addition made by the Assessing Officer of Rs. 35,86,980/- requires to be deleted.

5.3 The Ld. AR vehemently assailed the findings of the CIT (A) and alleged that the CIT (A) has proceeded on factually wrong premise at different places while coming to a wrongful conclusion and has also failed to take vital facts into consideration. To lend support to such allegations, the Ld. AR pointed out with reference to para 4 of the order of CIT (A) that the major portion of land are classified as ‘Pad’ which is factually not correct. He adverted our attention to the Revenue records to show that while a part of the land was ‘Pad’ which is natural in such large tract of land purchased, one cannot deny that the land was cultivable and crop ‘Jowar’ was cultivated and produced in substantial part of the impugned land. The Ld. AR with reference to para 4.1 of the CIT (A) order submitted that another observation of the CIT (A) that the assessee was not engaged in actual agricultural activity and thus not an agriculturist is again contrary to the material on record. He submitted that admittedly a sum of Rs. 1,01,845/- was declared in the return of income under assessment towards the agricultural income. With reference to para 4.1.2 of the CIT (A) order, the Ld. AR for the assessee pointed out that the CIT (A) has wrongly observed that a permission for a non-agricultural use of land has been obtained. He stressed that no such permission has been obtained. He next submitted that no activity of development was carried out on the land in question. He thereafter controverted another observations of the CIT (A) that the assessee has never used any land for agricultural purposes. The Ld. AR submitted that in the context of the fact that land was barely held for a period of one month or so, such adverse inference for not putting the land for agricultural use is unwarranted. He extended his submission that there is no basis for such an observation that the land held by the assessee were not put to agricultural operations. He thereafter contended that the impugned land sold was rural agricultural land and not an urban agricultural land as wrongly observed by the CIT (A). He next submitted that the CIT (A) proceeded on yet another incorrect assumption of fact that the land has already been plotted and roads and others facilities are provided.

5.4 He, thus, in nutshell submitted that the order of the CIT (A) is marred with grave factual errors and therefore deserves to be set-aside and reversed. The Ld. AR also relied on certain judicial precedents to prop up his case which we shall deal with at appropriate place.

6. The Ld. Departmental Representative (DR) for the Revenue, on the other hand, referred to and relied upon the orders of the authorities below and contended that it is a glaring case for chargeability of income to tax in the facts of the case. The Ld. DR noted that the profits on sale of land in question by the assessee along with his wife is apparently a business activity and thus liable to be taxed under head ‘business income’. The Ld. DR thus contended that no interference with the order of the CIT (A) is called for.

7. We have heard the parties and perused the materials on record as well as the orders of the revenue authorities. We have also applied our mind to the decisions placed before us. The assessee acquired certain parcel of land at Annapur villege, Tal. Shirpur, Dist. Pune and thereafter re-sold within a very short span of above one and half months or so. The transaction of impugned purchase and sale has given rise to profits of Rs. 35,86,980/- which was brought to tax by the revenue as an ‘adventure in the nature of trade’ under section 28 r.w.s 2(13) of the Income Tax Act, 1961. The Assessee has disputed the aforesaid action of the revenue before us on various counts. Firstly, it is the case of the assessee that the purchase and sale transaction of impugned land is a transaction of capital nature and consequently, gain arising therefrom is chargeable under S. 45 under the head ‘capital gains’ in contrast to stand of the revenue seeking to treat the land so acquired as a ‘trading asset’ and thus taxing resultant profits on its sale as ‘business income’ under S. 28 of the Act. Secondly, it is the case of the Assessee that the impugned land is an agricultural land. Thirdly, the impugned agricultural land is situated in rural area outside the jurisdiction of municipality or cantonment board etc. is thus outside the purview of definition of ‘capital asset’ defined under S 2(14) of the Act in view of the exclusions provided in sub-clause (iii) therein. Fourthly, there being no transfer of ‘capital asset’ per se in view of the exclusions for rural agricultural land as noted above, gain arising therefrom is not taxable under S. 45 at all. In essence, the Assessee claims that the gain arising on sale of agricultural property not being a capital asset is not subject to tax at all in view of the mandate of law in this regard.

7.1 Under section 45 of the Act, there cannot be any levy of capital gains unless the asset transferred is a ‘capital asset’ as defined under S. 2(14) of the Act. It is the case of the assessee that the transaction is capital in nature and the impugned land not being a ‘capital asset’, the gain arising on sale of property not being a capital asset is not chargeable to tax all. The revenue on the other hand disputes capital nature of transaction as claimed by the Assessee. It is the case of the revenue that the sequence of events in the impugned transaction lends credence to the impression of an adventure in the nature of trade referred to in S. 2(13) of the Act and therefore it is in the akin to ‘business’ giving rise to its taxability under S. 28 of the Act.

7.2 The question of determination of other issues namely whether the land is agricultural land and if so whether the impugned land is outside the definition of ‘capital asset’ to claim exemption from applicability of S. 45 will arise only if the impugned transaction do not bear the trappings of adventure in the nature of trade or commerce etc. Thus, in the context of case in hand, first and foremost controversy that calls for our adjudication is whether the impugned transaction is a business transaction or a capital transaction.

7.3 In this context, we note that there is a qualitative difference between profits arising from sale of capital assets and that of trading assets under the Act. Section 2(13) defining ‘business’ and S. 2(14) defining capital assets operates in mutual exclusion. To put it differently, capital assets and trading assets or stock in trade are treated differently under the scheme of the Act. They can not be compared on par with each other as a similar class of assets. Section 2(13) of the Act defines the expression ‘business’ in an inclusive manner and further embraces any adventure in the nature of trade or commerce etc. within its sweep. Sec. 2(13) reads as under:

“Business’ includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture.” (Emphasis supplied)

7.4 Before we proceed to deal with the objective facts of the present case in appeal, it would be pertinent to refer to the decision of Hon’ble Bombay High Court in the Gopal Ramnarayan Kasat (supra) 328 ITR 556 relied upon by the AO where nuanced understanding of expression ‘adventure in the nature of trade’ has been provided as under:

’20. In this background, let us examine the observations of the Tribunal while affirming the findings of the AO and the CIT (A), that the transactions, which are subject-matter of the proceedings, amounted to “adventure in the nature of trade”. The Tribunal has found thus :

“21. We have also examined the meaning of the term ‘adventure in the nature of trade’ mentioned in s. 2(13) of the Act. It has no where been defined in the IT Act. As far as the dictionary meaning of the word ‘adventure’ is concerned, it implies a pecuniary risk, a venture, a commercial enterprise. The work ‘venture’ in its turn is defined as a commercial activity in which there is a risk of loss as well as a chance of gain. During the course of hearing before us, this question has also been cropped up whether the impugned activity had fallen under the terminology ‘trade’. A ‘trade’ in the context of the definition of the expression ‘business’ is a wider concept and once this term is associated with the term ‘adventure’ the scope has further enlarged. The adventure in the nature of trade is allowed to transaction that constitutes a trade or business but may not be a business itself. We are saying so because the business has characterized by some of the essential ventures such as respective transactions, holding of stock-in-trade, dealing with the customers and implied intention between the parties etc. But, contrary to this even an isolated transaction can satisfy the description of an adventure in the nature of trade. For an adventure, it is not necessary that there should be a series of transactions i.e. both of purchase and of sales. To our humble understanding based upon the above discussion, a single transaction of purchase and sale may be outside the assessee’s line of business, can constitute an adventure in the nature of trade. Therefore, neither respective nor continuity of similar transaction is necessary to constitute a transaction as an adventure in the nature of trade. Once there is a continuity of transaction then it is nothing but carrying on a business and in such situation, the question of adventure in the nature of trade can hardly arise. To supplement as also to further elaborate this discussion, it can be added that the word ‘adventure’ may be in the realms of travel, voyage, hunting, etc. but it is attached with other words i.e. adventure in the nature of trade, then the motive of adventure is attached with the motive of trade. In the face of its own evidence a case has to be decided but the motive can never be irrelevant to be inferred by surrounding circumstances and the intention behind the said activity. The motive of the seller, his intention behind sale, his overall activity of accomplish, the desired goal are all in conjunction with the conduct of the assessee so as to establish that the adventure as taken by him was within the sphere of trade activity. Though these facts can also not be ruled out that not one of the consideration mentioned in the foregoing paras by itself really is a conclusive criteria, hence the decision in each case must rest on the totality of the facts and the combined effect of all the circumstances. Our endeavor in deciding these appeals was in this direction only.’

Thus, among others, the scope of expression ‘business’ stood widened by the expression any adventure akin to trade or commerce etc. An adventure in the nature of trade need not be business itself. Any activity akin to business may also be taken to be an adventure in the nature of trade.

7.5 The claim of the Assessee is that the intention at the time of purchase of land was to hold it for his enjoyment and to earn regular yield thereon and thus is a capital transaction. Needless to say, these intentions are incapable of any proof. These can only be inferred on the basis of facts and circumstances of each case. We find the facts of the case as narrated above to be quite peculiar. As noted, the assessee has purchased large tracts of land for a substantial consideration of Rs. 93,36,000/-. Simultaneously, the wife of the assessee has also purchased some parcels of adjacent land for a consideration of Rs. 46,64,000/- on 17.10.2008. The combined land area is stated to be nearly 18 hectares and 45 R equivalent to 45 acres and 28 gunthas. The aforesaid land were sold altogether by the assessee jointly with his wife for a combined consideration of Rs. 2,00,00,000. The share of profit of the assessee is stated to be Rs. 35,86,980/- on account of transaction of such purchase and sale. Immediately after the impugned purchase, a sale deed was executed on 26.11.2008 between Porwals and the assessee and his wife jointly. The land is claimed to be an agricultural land by the assessee. Pertinently, the buyer (Porwals) had earlier advanced a sum Rs. 1,00,00,000/- to the Assessee through Demand Draft (DD) dated 13.08.2008 i.e. two months before assessee had purchased the property i.e. on 17.10.2008. Evidently, assessee did not possess any own liquid funds at his disposal to enable him to acquire the impugned land. The entire purchase cost is funded by the Porwals. Thus, apparently, the entire money towards purchase of land has been financed by the persons to whom the land was ultimately sold in a very short span of time. The purchase and subsequent sale of the land has quickly happened within a marginal time gap of about 1 ½ (one and half) months. We are alive to the contention on behalf of the assessee that assessee intended to sale other agricultural land in his possession to return the money borrowed from Porwals which did not fructify. For this purpose, some Memorandum agreement was referred to by way of an additional evidence. However, there is nothing on record to show justify the circumstances which prevented the assessee to produce the impugned agreement before revenue authorities. No perceptible reasons have been assigned. Notwithstanding, we were informed at the bar that purported agreement for sale of other agricultural land was not acted upon at all. No advance was received against such purported agreement either. The entire explanation for initial intention to return borrowed money which failed is thus bald and unverifiable. It also does not coincide with a normal behavior of a person of ordinary prudence. The entire explanation based on a dumb document not acted upon, thus, has no rational probative value of the purported intention to return friendly borrowals. Whether the value of existing land recorded in the purported agreement was capable of matching the borrowals is also not available on record. The relevant financial data proving the financial capacity of the Assessee is not available to justify the stand. Mere averments of generic nature based on some documents which were neither verified by the revenue nor acted upon in any manner cannot in our view be taken as source of explanation for transaction of such magnitude. The assessee has made out a case that owning to the pressure from the Porwals brothers to return their loan amount which was not immediately possible due to financial constraints, it was reluctantly proposed to sell the impugned land so purchased by the assessee. It was thus made out that the compelling circumstances propelled the assessee to enter into such unintended resale. It was thus insisted that there was no intention to earn immediate profits by its sale. The land was thus claimed to be purchased with a view to hold it for exploitation in agriculture and for its capital appreciation and therefore the transactions cannot be regarded as an ‘adventure in the nature of trade’ as held by the Assessing Officer. We find such explanation to be shallow and superficial. The return of income filed by the assessee shows that the source of regular income is not commensurate with the magnitude of the land transaction. A person intending to hold a land of this value for its own exploitation and enjoyment and not investing any money of his own are quite contradictory conduct. The assessee seeks to explain that he was wholly dependent of sale of existing agricultural land to substitute the money financed by the lender by his own is without any tangible evidence showcasing the aforesaid intention. On the other hand, here is a financier who has given money of formidable amount purportedly on a friendly consideration without any corresponding commercial benefit and then suddenly turns heat for return of money and thereafter conveniently agrees to acquire the same land without any demur which was purchased from the aforesaid money and that too at a very large differentials in such a very short span. These facts when combined together gives a common thread to belief that entire transaction was systematic and pre ordained one, ventured into with a clear trappings of commercial spirit where the assessee identified the land on behalf of the existing and known buyer and transferred it to him as soon as the title of the land was obtained and in the process, abnormal and exorbitant gains were earned. The pattern of sequential events clearly suggests that the fund received in advance for such purchase served as an assurance for the transaction to sail through. Notably, initial funds of Rs. 1 crore were provided to the assessee by Porwals by way of a demand draft unlike cheque transactions. Reasons for friendly loan given by way of a demand draft without any discernible emergency is best known to the parties involved. The governing factors in the form of purchase financed entirely by the ultimate buyer and consequent transfer of land to the ultimate buyer almost immediately on its acquisition cannot be simply brushed aside. Clearly, the assessee was interested in exploiting commercial opportunity for quick gains in a very short time horizon. The attendant facts also points out that the purchase of land was far beyond the earning capacity of the assessee and thus claim of the Assessee that the land was intended for personal use and its exploitation and for appreciation with efflux of time is utterly improbable and thus is devoid of merits. A combined reading of all connected facts warrant for an inescapable conclusion that the motive for purchase itself was for embarking in an adventure in the nature of trade.

7.6 We also note the contentions of the assessee that the assessee owns other tract of agricultural land apart from the impugned land and is holding these lands with a view to carry out agricultural operations. It was therefore contended that adverse inference against the assessee is not justified. We are not impressed by this argument either. The mere presence of other holdings of agricultural land would not grant any indefeasible right to claim any and every transaction of land to be of capital nature. Similarly, solitary transaction of such nature is also of no bearing for determination of the nature of transaction. The issue for determination depends on totality of facts of each case. As noted, the impugned transaction giving rise to the dispute is beset with uncharacteristic features which are akin to adventure in the nature of trade rather than a capital transaction.

7.7 An incidental point may arise that the land was registered prior to its sale and thus be viewed a capital transaction. We observe that nothing turns on this act of the assessee either. The purchase in a pre-ordained transaction could be registered with a motive to gain proximity to and for overriding control over the sale transaction. The encumbrance if any, thereon can also be weighed by the ultimate buyer for his comfort in purchase. Also, by registration prior to sale, the huge potential of gain can be harnessed without any possible interference. This has all been done with the money of the ultimate buyer without any commitment of his own. The transaction is clearly driven by commerce. The intention to exploit the land for its own agricultural use is not borne out on these facts. As per records, the assessee has reflected meager income from cultivation of existing land. The occupation of the assessee as noted by the revenue is pre dominantly leaned towards legal profession.

7.8 Pertinent to note here that the Hon’ble Supreme Court in the case of Dalmia Cement Ltd. v. CIT [1976] 105 ITR 633held that it is not possible to evolve any single legal test or formula which could be applied in determining whether a transaction is an adventure in the nature of trade and that the answer to the question must depend in each case on the total impression and effect of all the relevant factors and circumstances proved therein and which determine the character of the transaction.

7.9 Thus, the cumulative facts and circumstances seen holistically and read in conjunction the tests or parameters laid down by judicial precedents provides sound basis to infer the intention of commercial gain in the impugned transaction.

8. Having regard to the totality of facts and circumstances, we have no hesitation to hold that the impugned land was purchased with an intention to sell the same to the identified buyers to achieve commercial objectives outright. As noted earlier, section 2(13) of the Act seek to explain the term of ‘business’ by way of inclusive definition. As per section 2(13) expression ‘business’ include not only trade or commerce, etc. but definition further extends to encompass within its ambit an ‘adventure in the nature of trade’. The entire gamut of action of the assessee in engaging in such big ticket land purchase without employing any fund of his own and almost immediate re-sale thereof clearly demonstrates the implicit intention of the assessee that the transaction entered was nothing but an ‘adventure in the nature of trade’ i.e. a business transaction under extended definition of S. 2(13) of the Act. Consequently, profits arising therefrom acquires the character of ‘business income’ chargeable under S. 28 of the Act.

9. Several judicial precedents were quoted on behalf of the assessee to support his case. As already noted, the issue is essentially factual and thus inference would vary from case to case depending on its own facts. The decision of co-ordinate bench of Tribunal in Anil R. Bihani v. ITO [IT Appeal No. 2502 (PN) of 2012, dated 11-4-2016] relied upon by assessee was rendered in its own set of facts and is clearly distinguishable. There is no reference to any borrowed funds for acquisition of asset in that case. The purchase was thus out of its own resources which fact serves as one of the crucial indicators of the intention read in conjunction with other facts in the present case. Similarly, decisions in the case of Marigold Merchanise (P.) Ltd. v. Dy. CIT [2015] 55 taxmann.com 358 (Delhi – Trib.); Surendra Keshavlal Shah v. Dy. CIT [IT Appeal No. 1308 (PN) of 2011, dated 24-7-2015] & ACIT v. Alpana Surendra Sancheti [IT Appeal No. 1081 (PN) of 2011 order dated 22/03/2013] referred to and relied upon at the time of hearing were perused and found to be materially different in facts quathe facts of this case in terms of borrowals, capacity to hold the property acquired, time horizon of holding, exploitation for cultivation of crop etc. where each of these facts may have material bearing in the determination of intention at the time of acquisition of a property. Thus, we are unable to reconcile the facts of the present appeal with the precedents quoted at the bar. Suffice it to say that in none of these judgments cited, the action of purchase of land were found to be in concert with the ultimate and identified buyers and ownership were transferred in such a short span of time without putting the purported agricultural land for its use at any point of time. It is settled position in law that the decision of the Court has to be read in the context of the facts involved therein and not on the basis of what logically flows therefrom as held by the Supreme Court in Ambica Quarry Works v. State of Gujarat [1987] 1 SCC 213. In this view of the matter, we concur with the view of the Assessing Officer and the CIT (A) in bringing the income arising on sale of land under the head ‘business income’.

10. In view of the aforesaid discussion, we do not consider it necessary to go into the other aspects of controversy as to whether the impugned land was agricultural land or otherwise as these aspects are relevant only for the purpose of taxability under the head ‘capital gain’ in the light of section 2(14) of the Act.

11. In the result, the appeal of the assessee is dismissed.

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