| Case ID |
3096fd7b-b446-4415-b8da-16e26ce3c65e |
| Body |
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| Case Number |
IT REFERENCE No. 26 OF 1967 |
| Decision Date |
Aug 19, 1971 |
| Hearing Date |
|
| Decision |
The court held that the excess price realized by the assessee from the sale of two plots of land could not be regarded as profit accruing from an adventure in the nature of trade. The Tribunal found that the assessee's intention was to invest in shares rather than engage in the business of buying and selling land. The court emphasized that profit-making does not automatically categorize a transaction as a business venture and highlighted the need for evidence of intention to sell for profit at the time of purchase. The decision was in favor of the assessee. |
| Summary |
In the landmark case of Commissioner of Income Tax v. Raunaq Singh Swaran Singh, the Delhi High Court addressed the issue of whether the profit from the sale of two plots of land constituted income from business under the Income-tax Act, 1961. The case centered around the definition of 'business' and what constitutes an 'adventure in the nature of trade'. The assessee, a Hindu undivided family, purchased the plots as a form of investment, intending to raise funds for a significant share purchase. The court underscored that the mere intention to profit does not transform a capital investment into a trading venture. This case serves as a critical reference for understanding capital gains versus business income, especially in real estate transactions. Key phrases include 'adventure in the nature of trade', 'income from business', and 'capital gains'. The court's decision reaffirms the necessity of clear evidence regarding the intent behind property acquisitions, making it a significant case for tax law practitioners and real estate investors alike. |
| Court |
Delhi High Court
|
| Entities Involved |
Raunaq Singh Swaran Singh,
Bharat Tubes
|
| Judges |
H.R. Khanna, C.J.,
S.N. Shankar, J.
|
| Lawyers |
G.C. Sharma,
B.R. Dewan,
Randhir Chowla,
Ravinder Narain,
Mrs. Anjali Verma
|
| Petitioners |
Commissioner of Income Tax
|
| Respondents |
Raunaq Singh Swaran Singh
|
| Citations |
1972 SLD 490,
(1972) 85 ITR 220
|
| Other Citations |
Ahmed Alladin (Khan Bahadur) & Sons v. Commissioner of Income-tax [1968] 68 I.T.R. 573,
Commissioner of Inland Revenue v. Franser [1942] 24 T.C. 498,
Commissioner of Inland Revenue v. Reinhold [1953] 34 T.C. 389,
Dalmia Cement Ltd. v. Commissioner of Income-tax [1971] 79 I.T.R. 196,
Janki Ram Bahadur Ram v. Commissioner of Income-tax [1965] 57 I.T.R. 21,
Leeming v. Jones [1930] 15 T.C. 333,
Martin v. Lowry [1926] 11 T.C. 297,
P.M. Mohammed Meerakhan v. Commissioner of Income-tax [1969] 73 I.T.R. 735,
Rutledge v. Commissioners of Inland Revenue [1929] 14 T.C. 490,
Saroj Kumar Majumdar v. Commissioner of Income-tax [1959] 37 I.T.R. 242,
A.N. Seth v. Commissioner of income-tax [1969] 74 I.T.R. 852,
Sri Meenakshi Mills Ltd. v. Commissioner of Income-tax [1957] 31 I.T.R. 28,
G. Venkataswami Naidu and Co. v. Commissioner of Income-tax [1959] 35 I.T.R. 594
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
2(13)
|