1. The Revenue sought the Tribunal to draw up a statement of the case and refer the following three questions for adjudication by the High Court:
' 1. Whether, on the facts and in the circumstances of the case, the Tribunal is correct in holding that the assessee-company purchased lands at different places for agricultural farming and that the same was used for agricultural purposes ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal is correct in holding that the sale of land by the assessee-company did not constitute an adventure in the nature of trade ?
3. Whether, on the facts and in the circumstances of the case, the Tribunal is correct in holding that the Department has failed to discharge the onus to prove that the sale transaction tantamounted to an adventure in the nature of trade '
2. The Tribunal took the view that out of the aforesaid three questions, only question No. 2 was a question of law that arose from its order dated August 7, 1976, and it, therefore, referred only the said question No. 2 for the opinion of this court, vide order dated January 31, 1977.
3. After perusing the statement of the case and the relevant material along with the order of reference dated January 31, 1977, we are of the opinion that no such question of law arises from the order of the Tribunal dated August 7, 1976, and this question referred for the opinion of this court is not a question of law for the reasons hereinafter mentioned.
4. As to whether the referred question is a question of fact or law, it would be necessary to make reference to a few relevant facts. The assessee-company at the relevant time was engaged in the business of financing of purchase of trucks. It bought three plots of land and after some time sold the same at a profit, as detailed below :
Land near By-passLndhiana.
Land near HukamchandNagar, Jullundur.
Land near IndustrialArea, Jullundur.
(major portion sold in 1966 and remaining land sold on 28-6-69)
5. The ITO held that the investment of the assessee constituted an adventure in the nature of trade and, therefore, taxed accordingly the profits accruing to the assessee from the sale transactions of the given plots of land.
6. The stand of the assessee-company before the ITO was that the said plots of land were purchased for agricultural purposes. The plea of the assessee, on appeal, prevailed with the AAC who expressly held that the land was purchased for agricultural purposes and the same had been used for that purpose by the assessee. The Tribunal, to which the matter was taken by the Revenue, upheld the decision of the AAC and found as a fact that the said three plots had been purchased by the assessee for agricultural purposes. The Tribunal in coming to the above conclusion was greatly impressed by the fact that in one of the plots situated in Jullundur a tubewell was installed on November 8, 1967. It also observed that the assessee had incurred considerable expenses for levelling the land and for making the same fit for agricultural purposes.
7. The Tribunal also accepted the reason advanced on behalf of the assessee for effecting quick sales of the said plots after their purchase. The given reason was that the assessee had come to know that the said plots were likely to be pre-empted.
8. Mr. Ashok Bhan, learned counsel appearing for the Revenue, sought to contend that the finding of fact of the Tribunal regarding the initial intention of the assessee in buying the said plots of land was not well founded in that the same had been based on incorrect inferences. Mr. Ashok Bhan emphasised that it was not necessary that the tubewell could be used only for carrying on agricultural operations on the land. He also contended that the fear of pre-emption that is said to have goaded the assessee to effect the sale of the said plots was ill-founded in that by the time the sales came to be effected, limitation for filing pre-emption suit had already expired.
9. In our opinion, there is no merit in the contention that the tubewell in question in one of the said three plots could have been installed for some other purpose. Even if for the sake of argument it is accepted that the tubewell could serve some other purpose also in addition to the purpose of putting the land to agricultural use, the Tribunal cannot be faulted in drawing support for its finding from the factum of installation of the tube-well on the land that the land was initially intended by the assessee, when it bought the same, to put it to agricultural use.
10. The initial intention with which the land was purchased by the assessee is alone relevant. That intention can be either one which the assessee is asserting or that which the Revenue is mentioning. These two intentions are mutually exclusive. If one is present, the other is out. Once the Tribunal held, and with some justification, that the assessee purchased the land with the intention of putting it to agricultural use, then this excludes the other intention. In the light of such a finding, question of purchase of the plots with any other intention does not arise for consideration. The departmental authority and the Tribunal, while judging the matter, could either hold that the investment was by way of adventure in the trade or that the investment was meant for the purpose of buying land for using it for agricultural purposes. Both are findings of fact and one finding excludes the other.
11. For the reasons aforementioned, we hold that no question of law arises for the opinion of this court and we answer the reference, accordingly, in favour of the assessee and against the Revenue. There is, however, no order as to costs.