Now a days business person making more income from plotting business, but non-taxpayee having ancestral property and decide to selling it as plotting business and get more income from them, then how to decide this income is capital gain or Business Income.
Whether selling of own land after plotting it out in order to secure better prices, in an advantage of trade or business?
Facts of the case: - the assessee received certain agricultural land by way of gift-deed. Therefore, the assessee got the said land diverted for non-agricultural purposes.
The land was converted into plots. The assessee tool development work of the colony such as leveling of the land, construction of the roads and drainage system etc. and thereafter sold the plots. The assessing officer proposes to assess the income from sale of plots as business income, being adventure in the nature of trade.
Held: - the earning from the sale of land is from capital gain and not from business. The selling of own land after plotting it out in order to secure better prices is not an adventure in the nature of trade. An isolated transaction or activity cannot be a part of the business.
To consider the question of business, there must be regular activities of purchase and sale. In this case, there was nothing on record to show that the land was purchased for the purpose of selling into plots. Basically, it was gifted land which was developed into plots to secure better prices. The isolated activities could not come within the preview of adventure in the nature of trade or business.
Whether selling of own land after plotting it out in order to secure better prices, in an advantage of trade or business?
Facts of the case: - the assessee received certain agricultural land by way of gift-deed. Therefore, the assessee got the said land diverted for non-agricultural purposes.
The land was converted into plots. The assessee tool development work of the colony such as leveling of the land, construction of the roads and drainage system etc. and thereafter sold the plots. The assessing officer proposes to assess the income from sale of plots as business income, being adventure in the nature of trade.
Held: - the earning from the sale of land is from capital gain and not from business. The selling of own land after plotting it out in order to secure better prices is not an adventure in the nature of trade. An isolated transaction or activity cannot be a part of the business.
To consider the question of business, there must be regular activities of purchase and sale. In this case, there was nothing on record to show that the land was purchased for the purpose of selling into plots. Basically, it was gifted land which was developed into plots to secure better prices. The isolated activities could not come within the preview of adventure in the nature of trade or business.
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