G.P. Singh, C.J.
1. This is a reference made by the Income-tax Appellate Tribunal referring for our answer the following questions of law :
'(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the sale of land was an adventure in the nature of trade liable to tax and not mere sale of agricultural lands
(2) Whether, on the facts and in the circumstances, the Tribunal was justified in upholding the computation of the profit on the sale of land during the assessment year 1975-76 by deducting the actual cost from the sale proceeds ?'
2. The reference relates to the assessment year 1975-76. The facts stated are that the assessee purchased 43.18 acres of agricultural land from Moolchand and Idandas on December 16, 1970. This land was allotted to them in lieu of compensation. The assessee in the proceedings for allotment was acting as an attorney of the vendors. The land was allotted to the vendors on February 13, 1970, and sanad was granted by the Government on December 9, 1970. The assessee is not an agriculturist nor were the vendors agriculturists. The assessee had in the preceding two years purchased and sold certain properties. Shortly after the purchase of the land, the assessee proceeded to enter into agreements for sale by parcelling out the land into small portions. Thereafter, the assessee concluded the sales during the accounting period of 1.85 acres, 9.92 acres, 8.93 acres, 2 acres, 3.61 acres and 10.88 acres.
3. The principles on which the questions referred have to be answered have been discussed by this court in CIT v. Jawahar Development Association : 127ITR431(MP) and Badrilal Bholaram v. CIT : 135ITR216(MP) . The real point to be seen is whether the purchase of land by the assessee and sale thereof in different portions during the relevant account year constitutes an adventure in the nature of trade. Normally when a person purchases land, the purchase represents investment of money in land. Ordinarily, purchase of land and sale thereof with profit cannot be assumed to be an adventure in the nature of trade. But when the purchase is made solely and exclusively with the intention to resell at a profit and the purchaser has no intention of holding the property for himself or otherwise enjoying or using it, there is a strong presumption that the transaction is an adventure in the nature of trade. On the facts found, the Tribunal, in our opinion, rightly concluded that the transaction was an adventure in the nature of trade. The assessee in preceding two years had indulged in purchase and sale of properties. He is not an agriculturist. Soon after the purchase of the land, he entered into agreements for disposing of the land in small portions. All this indicates that his real intention in acquiring the land was not to retain it for himself but to resell it at profit and the adventure was in the nature of a trade.
4. The learned counsel for the assessee submitted that there was no evidence that the assessee, soon after the purchase, entered into agreements for sale by parcelling out the land into small portions. We are unable to accept this submission. The questions referred do not relate to the correctness of the finding that the assessee soon after the purchase of the land entered into agreements for its sale into different portions. This finding by the Tribunal has to be accepted by us for answering the reference. It was also pointed out that the land was agricultural land and that it was not divided into building plots. This does not make any difference, for, the material point is that the assessee purchased the land with the intention of selling it at a profit by dividing it into small portions and not to use it for himself.
5. For the reasons given above, we answer the questions referred to us in the affirmative, in favour of the department and against the assessee. There will be no order as to costs.