HARBANS SINGH Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) THIS judgment will dispose of three Income-tax References Nos. 87 of 1976, 56 and 57 of 1978 as all of them involve identical questions of law and relate to the same assessee.

(2.) THE assessee purchased 35 kanals of agricultural land for Rs. 25,500 in three lots during the financial year 1962-63, and 48 kanals 13 marlas, in four lots for Rs. 43,150 during the year 1963-64. Soon after the purchase, he developed the said land into plots and started selling them in the year 1964, the first sale having been made on March 2, 1964.

(3.) DURING the assessment year 1970-71, the subject-matter of I. T. R. No. 87 of 1976, the assessee sold two plots measuring 266. 6 square yards each and one plot of 600 square yards for an amount of Rs. 18,733 and earned a profit of Rs. 13,939 thereon. Similarly, in the assessment years 1971-72 and 1972-73, the subject-matter of I. T. References Nos. 56 and 57 of 1978, he sold 3,474. 5 square yards for Rs. 55,730 and 1,807 square yards for Rs. 33,270, respectively. The profits from the sales were shown by the assessee in the returns as capital gains but the ITO being of the view that the assessee was carrying on business of sale and purchase of land assessed them as business income. The order of the ITO was confirmed, on appeal, by the AAC as well as the Income-tax Tribunal. On applications by the assessee under Section 256 (1), the I. T. Act, the following questions have been referred to this court : Assessment year 1970-71 " (i) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the transactions in question were an adventure in the nature of trade ? (ii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the profits in question of Rs. 13,939 were assessable in the hands of the assessee as 'business income' ?" Assessment year 1971-72 "whether, on the facts and in the circumstances of the case, income resulting from the sale proceeds of Rs. 55,730 of land measuring 3,474. 5 square yards of land during the accounting year 1970-71, out of 17 kanals 12 marlas of agricultural land purchased by the assessee constitute business income of the assessee ?" Assessment year 1973-74 "whether, on the facts and in the circumstances of the case, income resulting from the sale proceeds of Rs. 33,270 of land measuring 1,807 sq. yards of land during the accounting year 1972-73 out of 87 kanals 12 marlas of agricultural land purchased by the assessee constitutes business income of the assessee?"