- (1.) The original assessee in this appeal was an officer of the Indian Revenue Service, attached to the Income Tax department itself. He had acquired a piece of land covering an area of 800 square yards by perpetual sub-lease from a Government Servants Cooperative Society. The superior landlord thereof was the Delhi Administration. The land was acquired through an instrument of perpetual sub-lease in the year 1971. He had entered into an agreement on 9th January, 2001 for developing the land with one Indra Mohan Thapar. The broad arrangement between the original assessee and the developer appears from the order of the Tribunal and this arrangement has been specified as:- "Builder's share - (a) Entire second floor. (b) 50% of the entire driveway adjacent to Plot No. 39, Vasant Vihar, New Delhi and proportionate rear courtyard to provide spiral staircase for the servants to go up and for installation of a generator set for the use of servants to go up and for installation of a generator set for the use of 2nd and 3rd floor only. Owner's Share - (a) Entire basement; (b) Entire ground floor with front lawn and proportionate courtyard. (c) Entire first floor. (d) Entire third floor with terrace. (e) Independent driveway adjacent to plot No. 41 Poorvi Marg. (f) 50% of entire driveway adjacent to Plot No. 39 Poorvi Marg for use of the third floor with terrace."
(2.) During the assessment proceeding for the assessment year 2003-04, the original assessee passed away. His widow, who is the respondent before us as legal representative of his estate continued to conduct the assessment proceeding on behalf of estate of the deceased. The dispute in this appeal is primarily concerned with the sale proceeds of Rs. 80 lakh in respect of the third floor of the building along with roof rights developed on the aforesaid land. This transaction was undertaken by the respondent in this appeal. The aforesaid sale was executed on 29th May, 2002. Prior to that date, an agreement for sale was entered into by the original assessee on 11th June, 2001 and advance thereof was received, which constituted a sum of Rs. 45 lakh. One Jaspreet Thapar was the other party to that prior agreement. The aforesaid agreement for sale as well as subsequent receipt of consideration thereof were both undertaken prior to handing over possession of the third floor of the building.
(3.) The Assessing Officer treated the said sum of Rs. 80 lakh as business income. In the opinion of the Assessing Officer, this transaction constituted adventure in the nature of trade. The respondent, however, wants the said sum to be taxed as long term capital gains after the indexing exercise. She failed in her appeal before the Commissioner of Income Tax, who agreed with the view of the Assessing Officer as regards treatment of the said sum. She appealed against the Commissioner's order before the Income Tax Appellate Tribunal. The Tribunal invalidated the order of the Assessing Officer as well as the First Appellate forum and sustained the assessee's stand that the consideration money of Rs. 80 lakh ought to be treated as long term capital gain. The decision of the Tribunal was delivered on 18th January, 2008. ;