COMMISSIONER OF INCOME TAX, ZONE-A, LAHORE VS Mst. KHAIR-UN-NISA, 2006 PTD-LAHORE-HIGH-COURT-LAHORE 2691 (2006)

Income Tax Ordinance (XXXI of 1979)---

----Ss.13(1)(d) & 136---Appeal---Maintainability---Factual controversy---Re-assessment---Addition under S.13 (1)(d) of Income Tax Ordinance, 1979---Sale proceeds from a house was relied upon by assessee in his income tax return---Assessing officer in re-assessment of the case made addition under S.13 (1)(d) of Income Tax Ordinance, 1979--Income Tax Appellate Tribunal set aside such addition under S.13(1)(d) of Income Tax Ordinance, 1979, being illegal and unjustified---Validity---Findings of Income Tax Appellate Tribunal were on factual premises and did not call for any interference---To ascertain and hold a transaction to be one of the nature of trade it was required to resort to basic ingredients of the transaction i.e. motive or intention to make profit and frequency of. transactions---When no systematic business activity was involved a single transaction of sale of land was not required to be assessed as business---Finding whether a single transaction of sale amounted to an adventure in the nature of trade was purely a question of fact, which had to be ascertained on the basis of factual inquiry to such effect---Sale and purchase of land was one among the business objects of assessee---In sale and purchase of property systematic business activity was involved---Assessee entered into frequent transactions in such respect, gained profits and utilized in same in further purchase of assets---Such property formed part of business assets of the assessee---Determination of such facts and findings were based on appreciation of evidence---No question of law arose in such matters, therefore, High Court declined to interfere in the judgment passed by Income Tax Appellate Tribunal---Appeal was dismissed in circumstances.

Muhammad Ilyas Khan for Appellant.

ORDER

Assessee had sold her properties during the period of assessment year 1990-91. The properties included Shop No. 25/245 bearing No.F/1228/A to Muhammad Arshad against a consideration of Rs.50,000 shop 25/249/F/1228 to Shaheen Kausar against a consideration of Rs.50,000 and Property No.F/1228 against consideration of Rs.3,09,000. Assessing Officer, on the basis of disclosure of purchase in her tax return showed Rs.7,40,000 as purchase price of the property, computed the value of property at Rs.37 lacs. Notice in this respect was issued for concealment of information and for treating the sale of property as stock in trade being business venture. The notice was replied and the sale was denied being business venture on the ground that husband of the petitioner intended to shift to Karachi by relinquishing his business of cloth merchant and for that matter the properties were sold. The assessee held the property over a period of two decades after its acquisition. The sale of the property being single transaction cannot be described as business venture. The Assessing Officer did not agree and made an addition under section 13(1)(d). The appeal against the order met the same fate, which was dismissed, vide order, dated 11-2-1998. Learned Appellate Tribunal in its order, dated 21-9-1998, declared the addition under section 13(1)(d) as illegal and unjustified on the grounds that assessee before it disposed of only one property, though in three separate parcels, which was constructed in the year, 1969-70 and rented out to three different tenants. Three different sale-deeds were necessitated, due to the fact that the property was rented out in portions to three different tenants. The sale of a single property after almost two decades of its acquisition, could not be treated as an adventure in the nature of trade.

2. The following question in the instant appeal was proposed:---

Whether under the circumstance and on the facts of the case, the learned ITAT was justified in holding that the re-opening of the assessment, addition under section 13(1)(D) and treatment of surplus as income assessed as an adventure in nature of trade are illegal and unjustified and to set these at naught?

?

3. The above finding of the learned Tribunal are on factual premises and do not call for any interference. To ascertain and hold a transaction to be one of the nature of trade it is required to resort to the basic ingredients of the transaction i.e. motive or intention to make profit and the frequency of the transaction. When no systematic business activity is involved and single transaction of sale of land is not required to be assessed as business. The finding whether a single transaction of sale amounted to an adventure in the nature of trade is purely a question of fact, which has to be ascertained on the basis of factual inquiry to the effect sale and purchase of land is one among the business objects of the assessee; in sale and purchase of property systematic business activity is involved; assessee enters into frequent transactions in this respect; gains and profits are utilized in the assets of assessee and the property forms part of the business assets of the assessee. The determination of these facts and findings in this respect are based on appreciation of evidence. No question of law arises in such matters, therefore, we are not inclined to entertain the question referred.

M.H./C-39/L?????????????????????????????????????????????????????????????????????????????????????? Appeal dismissed.