COMMISSIONER OF INCOME TAX Vs. SAIRAM

JUDGEMENT

(1.) THE questions referred to us at the instance of the Revenue, which questions arise out of the assessment of the respondent, which is a firm of cloth merchants, for the assessment year 1966-67, are as to whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the profit arising on account of sale of vacant lands situate at Poona should be treated as capital gains and not as profit from adventure in the nature of trade assessable under the head "Business" and as to whether the Tribunal's view that the purchase and sale of lands at Poona has been made by the partner of the assessee-firm only as an investment and not as a stock-in-trade is based on material on record and reasonable on the facts and in the circumstances of the case.

(2.) THE undisputed facts are that the assessee carries on business as cloth merchant in the city of Madras. One of the partners, on behalf of the firm, entered into an agreement for purchase of land in the city of Poona. That agreement was entered into on July 25, 1964. Under the terms of that agreement, the vendee could obtain a sale deed in his own name or in the names of his nominees. THE conveyance in favour of a nominee, if any, was to be executed by the vendors as also by the partner who had entered into the agreement to purchase. Several months after the date of that agreement, the owners of the land together with the assessee's partner, Vaswani, who had entered into the agreement on behalf of the firm, together executed a deed of conveyance dated May 25, 1965. Under that deed of conveyance, Vaswani, on behalf of the firm was to receive Rs. 41,115.62 out of the total consideration of Rs. 84,738.29. Had the asses-see-firm through its partner purchased the land, it would have been required to pay Rs. 43,622 in terms of the agreement dated July 25, 1964.