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Commissioner of Income-tax, Bombay City-iii Vs. Nathuram Ramnarayan Pvt. Ltd. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai High Court
Decided On
Case NumberIncome-tax Application No. 107 of 1983
Judge
Reported in[1985]151ITR767(Bom); [1984]18TAXMAN355(Bom)
ActsIncome Tax Act, 1961 - Sections 28 and 256(2)
AppellantCommissioner of Income-tax, Bombay City-iii
RespondentNathuram Ramnarayan Pvt. Ltd.
Excerpt:
- - the tribunal has found from the plans as well as from the correspondence exchanged between the assessee and the municipal corporation that the permission was for constructing staff quarters as well as staff quarters for the staff of tata group of mills, whose selling agents the assessee was......the tribunal has found that under a resolution dated march 14, 1960, the assessee purchased a plot of land at borivali admeasuring 45,533 square yards for a sum of rs. 1,21,009. though the purpose for which the land was purchased was not mentioned in the resolution, the assessee had applied to the municipal corporation of greater bombay for the plans submitted by it. the tribunal has found from the plans as well as from the correspondence exchanged between the assessee and the municipal corporation that the permission was for constructing staff quarters as well as staff quarters for the staff of tata group of mills, whose selling agents the assessee was. ultimately, permission was granted by the municipal corporation on april 20, 1971. in the meanwhile, the assessee had developed.....
Judgment:

Sujata Manohar J.

1. This is an application under s. 256(2) of the I.T. Act, 1961. The questions sought to be raised are set out in paragraph 5 of the application. The Tribunal has found that under a resolution dated March 14, 1960, the assessee purchased a plot of land at Borivali admeasuring 45,533 square yards for a sum of Rs. 1,21,009. Though the purpose for which the land was purchased was not mentioned in the resolution, the assessee had applied to the Municipal Corporation of Greater Bombay for the plans submitted by it. The Tribunal has found from the plans as well as from the correspondence exchanged between the assessee and the Municipal Corporation that the permission was for constructing staff quarters as well as staff quarters for the staff of Tata Group of Mills, whose selling agents the assessee was. Ultimately, permission was granted by the Municipal Corporation on April 20, 1971. In the meanwhile, the assessee had developed the plot in accordance with the rules and regulations of the Municipal Corporation by laying out roads, playing grounds, etc., and dividing the balance plot into 22 plots.

2. It is the case of the assessee that it suffered loss for the year 1972-73; that the income of the assessee was reduced from the profit of Rs. 6,73,225 in 1962-63 to a loss of Rs. 2,38,809 in 1972-73. This was on account of the fact that several other selling agents were appointed by the Tata Group of Mills. The assessee, therefore, sold four plots in the calendar year 1972 and two more plots in the subsequent year 1973.

3. In the order of the Commissioner of Income-tax, it is mentioned that the purpose for which the plot was acquired was to provide facilities to the staff members of the company and other staff who were vitally concerned with regard to the selling agency, namely, staff members of the Tata Group of Mills. On the basis of this finding of fact, the Tribunal has come to the conclusion that the transaction was not an adventure in the nature of trade but was an investment which had been subsequently sold. In this connection, the Tribunal also noted that though in the 'objects clause' of the company's memorandum and of articles of association, it is mentioned as one of its objects that the company can buy and sell lands, in fact, this was the only transaction of purchase of land.

4. The finding given by the Tribunal is based on the above facts as found by it. It cannot, therefore, be said that there was no evidence in support of the Tribunal's finding. Since this is a solitary transaction of purchase of land, the burden would be on the Department to show that this was an adventure in the nature of trade. In out view, the finding of the Tribunal cannot be said to be without evidence or perverse.

5. Accordingly, the rule is discharged with costs.


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