I.T.A. No. 294 of 2009 (O&M) (1) IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.A. No. 294 of 2009 (O&M) DATE OF DECISION: 15.7.2009 The Commissioner of Income Tax, Patiala ..........Appellant Versus M/s Raj Bricks Industry, 70, Ajit Nagar, Patiala ..........Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MRS. JUSTICE DAYA CHAUDHARY Present:- Mr. Rajesh Katoach, Advocate for the appellant **** ADARSH KUMAR GOEL, J. (Oral) 1. The revenue has preferred this appeal under Section 260A of the Income Tax Act, 1961 (for short, “the Act”) against the order of Income Tax Appellate Tribunal, Chandigarh dated 31.10.2008 passed in I.T.A. No. 110/CHD/2008 in the case of ACIT, Circle, Patiala Vs. M/s Raj Bricks Industry 70, Ajit Nagar, Patiala, for the assessment year 2005-06, proposing to raise following substantial questions of law:- (i) Whether on the facts and in the circumstances of the case, the ITAT is legally correct in holding that the profit on sale of land shown by the assessee was not an adventure in the nature of trade, even when the facts of the case indicate that the transaction of land was an adventure in the nature of trade. (ii)Whether on the facts and in the circumstances of the case, the ITAT is legally justified in confirming the I.T.A. No. 294 of 2009 (O&M) (2) action of the Ld. CIT (A) regarding adoption of market value of land at Rs.200/- per sq. yard as against that of Rs. 301.42 estimated by the A.O. for the purpose of Section 45 (4) of the I.T. Act, when the estimate made by the A.O. was based on comparable case.” 2. The assessee is a partnership firm and carries on business of running brick kiln. It derived income from sale of land earlier purchased. The land was sold on winding up of the firm. The said income was claimed to be income from capital gain. The Assessing Officer, however, held the said income to be not from capital gain but from business, by treating the sale to be adventure in the nature of trade. On appeal, the CIT(A) reversed the view taken by the Assessing Officer and held that income was covered by the heading of capital gains. Reliance was also placed on the judgment of Hon'ble Suprme Court in Raja Bahadur Kamakhya Narain Singh Vs. CIT, (1970) 77 ITR 253. 3. Finding of the CIT(A) was upheld by the Tribunal. The finding of the Tribunal is as under:- “There is no dispute to the fact that the assessee is running a brick kiln and the land was acquired as a capital asset over a period and the same was shown by the assessee in the balance sheet. The part of the land was got refilled in the year 2001 with the sole intention of reusing the same but the character of the land was not changed. The assessee was forced to sell the land to pay off the tax liability. It is not the case that the assessee is in regular business of sale of land rather the assessee was doing its bricks business. In view of this fact we are in agreement with the impugned order that there was no adventure in the nature of trade specially I.T.A. No. 294 of 2009 (O&M) (3) when the filling was done in 2001 and the sale was made in the financial year 2004-05. Even otherwise it was the prerogative of the assessee to decide as to which part of the land is to be used for its brick kiln business. The contention of the revenue that the purchaser was a property dealer, therefore, it is an adventure in the nature of trade. We are not in agreement with this plea of the revenue because the assessee was not the property dealer and secondly the land was purchased for running the brick kiln and the land was sold to pay off the tax liabilities and dealing in land is not the business of the assessee or sale thereof. Therefore, we are in agreement with the conclusion drawn by the Learned First Appellate Authority. Therefore, the direction to the Assessing Officer to assess the profit under the head “capital gains” is justified, consequently, this ground of revenue fails, therefore, dismissed.” 4. On the issue of computing the capital gain, the Assessing Officer applied the ratio of Rs. 301.42 per sq. yard but the CIT (A) adopted the ratio of Rs. 200 per square yard, as claimed by the assessee, which was upheld by the Tribunal. 5. We have heard learned counsel for the appellant. 6. On question (i), we find that the CIT(A) as well as the Tribunal concurrently held that it was not business of assessee to purchase and sell the land and having regard to all the circumstances, the income of the assessee was covered by the head of capital gain. This finding of fact is not shown to be perverse. In these circumstances, the question sought to I.T.A. No. 294 of 2009 (O&M) (4) be raised cannot be held to be substantial question of law. 7. As regard question (ii), the said question can also be not held to be substantial question, as the CIT (A) as well as the Tribunal have on appreciation of evidence reached the finding of fact about the rate. 8. We, thus, do not find that any substantial question of law arises. 9. The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE July 15, 2009 (DAYA CHAUDHARY) pooja JUDGE Note:-Whether this case is to be referred to the Reporter .......Yes/No