2001 PLP 1534 (PTD)

NASIM SIKANDAR, J.

This is a case stated by the Lahore Bench of the Income-tax Appellate Tribunal. The Revenue prayed for reference of two questions while the Tribunal itself. framed another two questions for our opinion and answer. The four questions so framed are as under:-- (1) Whether on the facts and circumstances of the case learned ITAT was justified in holding that at the time of purchase of land assessee had no intention of selling the land by making plots? (2) Whether on the facts and circumstances of the case, learned ITAT was justified to holding that sale of plots by the assessee was not liable to tax? (3) Whether in the facts and circumstances of the case and on the basis of evidence available with the ITO, sale of plots of Farooq Colony undertaken by the assessee was a venture in the nature of the trade? (4) Whether in the facts and circumstances of the case, the Tribunal was justified in deleting additions made under section 13(l)(aa) of the Ordinance?

2. The respondent an individual, on receipt of an information from another wing of the Revenue was served with a notice under section 62 of the income 'Tax Ordinance. In compliance returns were filed disclosing "nil" income. The Assessing Officer, however, found that the assessee was deriving income from developing a colony and from sale of plots as will as from interest. The assessee in reply to show-cause notice alleged that he was transferred 309 Kanal, 10 Marla of land by his father in the year 1970 for consideration and that at that time they had no idea to develop a Housing Colony. Also that till 1974, he has been cultivating the land. However, in the year 1974 due to proximity of the land to the Cantonment area, its cultivation did not remain- possible and in the year 1974 he obtained permission to make a Housing Colony which was granted. Further that the total area of the Housing Scheme named on his name as "Farooq Colony was 224. 25 Kanals out of which 56 Kanals were earmarked for parks, roads and services. The rest of the land was sold in small parcels at different times over the years and in the meanwhile part of the land under the Colony still remained under cultivation. The Assessing Officer as said earlier, rejected the submissions and proceeded to treat the difference between the purchase and sale price of the plots as business income. Also in some of the assessments, various additions under section 13(1)(aa) of the Income Tax Ordinance were made on account of unexplained accretion in wealth.

3. The learned first appellate authority, in principle maintained the assessment of the aforesaid amounts as business income. However, in view of the fact that after framing of the assessment order, the District Collector had imposed heavy conversion charges for change of use of land from agricultural to residential, the case was remanded to the Assessing Officer. The assessment orders for the years 1975-76 to 1980-81 were accordingly set aside for fresh proceedings. Also the addition under section 13(1)(aa) of the Ordinance in the first assessment year was reduced to Rs.60,000 while in the rest of the years the additions with reference to that provision were deleted on account of their being covered by business income.

4. On further appeal a Division Bench of the Tribunal agreed with the contention put forth by the assessee that the, profit motive at the time of transfer of land by the father in favour of his son the assessee was in no way established. The Tribunal also concluded that admittedly even during the sale of land in small parcels, the unsold portion remained under cultivation; that the assessee as well as his father all along remained agriculturist and, therefore, the department had failed in its duty to establish that the establishment of "Farooq Colony" was in fact a venture in nature of trade. Also the learned Members appeared convinced that for all practical purposes, the sale of land by the assessee could safely be treated as sale of land by his father who had acquired the same as agricultural land in the year, 1939 with obviously no business motive. The aforesaid additions under section 13(1)(aa) for the assessment years 1971-72 to 1975-76 were also found totally unjustified, and therefore, directed to be deleted.

5. Heard the counsel for the Revenue. He claims that the facts investigated and the evidence brought on record by the Assessing officer clearly indicated that the petitioner engaged himself in a business activity and therefore, the income accrued therefrom had to be brought to the tax net. Similarly he supports the' addition under section 13(1)(aa) of the Ordinance for the reasons which earlier prevailed with the Assessing Officer.

6. After-consideration the arguments put forth at the bar we are not persuaded to reply the questions as framed by the Tribunal. In the first instance, the question if a venture is in the nature of trade is predomintly a question of fact, and therefore, can hardly be a subject-matter of reference to this Court. Secondly it is not the case of the Revenue that the Tribunal had either ignored some material on record or had misconstrued the same in the light of a specific provision of law to claim that a question of law in the circumstances had arisen out of its order. In absence of the said two factors, a question of fact cannot be converted into one of law merely because the Revenue or the assessee disagreed with the order of the Tribunal. By now it is well-settled that even a single transaction can be a venture in the nature of trade while a number of them may not. Therefore, a transaction has to be seen in the totality of facts which would determine if the transaction was actually in the nature of business. The learned Tribunal having considered the facts and having come to a conclusion that the profit motive at the time of transfer of land from father to the assessee-son was never established by the Assessing Officer, no question of law can be said to have arisen but of their order.

7. As far as, the additions under section 13(1) (aa) are concerned, again no question of law can be seen arising out of the order of the Tribunal. Whether any accretion in wealth over the years had actually come into being is a question of fact to be determined in the light of the claim of the assessee of his income and other sources. As against the findings recorded by the Assessing Officer, the learned Tribunal expressed the view that the aforesaid additions were totally uncalled for inasmuch as admittedly in the year 1974-75, the assessee was purely an agriculturist. Therefore, framing of assessments in these years on notional income under section 13(1)(aa) was contrary to the letter and spirit of law. It was also noted that the provisions under section 13(1) (aa) were introduced through Finance Ordinance, 1980 and that these provisions could not have been given retrospective effect to make additions in the years 1971-72 to 1975-76. These findings having not been challenged either as a fact or on legal plane.

8. Therefore, we decline to answer all the questions on the ground that these do not give rise to any legal controversy. M.B.A./C-73/L Answer declined.