INCOME TAX OFFICER Vs. RANI RATNESH KUMARI

JUDGEMENT

(1.) THIS reference under Section 256(1) of the Income-tax Act, 1961 (hereafter "the Act"), relates to the assessment year 1971-72. The Income-tax Appellate Tribunal, Allahabad Bench, has referred the following question for the opinion of this court.

(2.) THE brief facts are that the assessee, an individual, had purchased a house property of an area of about 20,000 sq. yards comprising of two bungalows, servant quarters and a vast piece of vacant land, in the city of Jaipur, on February 12, 1968. THE consideration was Rs. 87,999. Later on, the assessee divided a portion of the vacant land in sub-plots and made some improvements therein and sold a total area of 10,830.75 sq. yards by means of six sale deeds executed between the assessment years 1961-62 and 1972-73. It may be noted that the previous year of the assessee ends on 31st of October. In other words, these sale deeds were executed in between 1959-60 and 1970-71. THE total consideration received was Rs. 1,74, 145. In the previous year, relevant to the year under consideration, the assessee had sold 1,842 sq. yards for a sum of Rs. 21,990. THE ITO being of the opinion, that the activity of the assessee amounted to an adventure in the nature of trade, brought to tax Rs. 14,354 in respect of the aforesaid transaction. He did not accept the assessee's contention that this profit amounted to a capital gain only.

(3.) IT was submitted before us by the learned counsel for the revenue that on the facts and circumstances found by the authorities below what could be inferred was that the intention of the assessee at the time of the purchase of this property was to bring it to her own use. However, soon after she changed her mind and developed a portion of the vacant land by carving out small plots and by laying out roads and then she sold as much as 10,830 sq. yards of land by means of six sale deeds during the period of about a decade. The land sold represented almost half of the total area of the property purchased. Further, she constructed a building on a portion of the vacant land and leased it out to the bank. Now, the AAC and the Appellate Tribunal, both decided the nature of the transactions on the basis of the initial intention of the assessee. They did not refer to the subsequent change in the conduct of the assessee. IT was, further, urged that the question is to be decided on a consideration of all the facts and circumstances obtaining in a case and hence the case might be remitted to the Appellate Tribunal for fresh consideration.