COMMISSIONER OF INCOME-TAX Vs. SHAHSI KUMAR AGRAWAL

JUDGEMENT

(1.) Under Section 256(2) of the Income-tax Act, 1961, the following question has been referred to us :

(2.) The assessee's father gifted a piece of land to the assessee under a gift deed dated March 4, 1968. Some time thereafter, the assessee proposed to sell the same but evidently with a view to get a better price, he got a lay out plan prepared. According to this lay out plan, the land was carved out into several plots and roads. He sold the plots through a broker. He filed a return in which he declared the surplus as his capital gain. The Income-tax Officer, however, was of the opinion that the assessee must be deemed to have undertaken an adventure in the nature of trade, and, therefore, the surplus must be assessed as income from business. The Income-tax Officer was of the opinion that the assessee did not sell the land as received by him but only after developing it on scientific lines and after preparing a lay out plan. This order of the Income-tax Officer was affirmed in appeal by the Appellate Assistant Commissioner. On further appeal, the Tribunal took the view that the activity undertaken by the assessee is so minimal that it cannot be said, in the circumstances, that the assessee had embarked upon an adventure in the nature of trade. The Tribunal pointed out that the land in question was not purchased by the assessee but was received by him from his father under a deed of gift. Only with a view to get a better price and also because he was staying elsewhere in connection with his official duties and was not in a position to carry on agricultural operations, he sold the land. On these facts, the Tribunal concluded that no intention to embark upon an adventure in the nature of trade can be attributed to the assessee. This is essentially a finding of fact. It is true that finding of this nature is held to be a mixed question of fact and law. But, in this case, it appears to be essentially a question of fact. We have seen the order of the Income-tax Officer as well. Though he says that the assessee developed the land, he has not specified what precise development was undertaken by the assessee except preparing the lay out plan. It has not shown that the assessee had laid roads or provided any other amenities before selling the plots. In the circumstances, we are of the opinion that the finding of the Tribunal is a correct one and there are no grounds to interfere with the said findings.

(3.) It is evident that, the surplus will be assessed as capital gain as declared by the assesee himself. Accordingly, the reference is answered in the affirmative, i.e., in favour of the assessee and against the Revenue.