The determination of whether a transaction is an 'adventure in the nature of trade' or a transfer of capital asset depends on the appreciation of facts and circumstances of each case, and the regularity of transaction of purchase and sale, intention at the time of purchase, and subsequent conduct of the purchaser are considered as relevant factors.

1. These two appeals arise in identical circumstances, and have been admitted vide different orders dated 21.4.2006 and 10.5.2006, by framing the same substantial question of law, and are being closely interconnected, consequently, they are being decided by this common order.The substantial question of law, as framed reads as under:-

"Whether taking into consideration the various factors discussed by the learned Assessing Officer and other appellate authorities, the true nature of Nagnechi Scheme and Vallabhgarden land is an adventure in the nature of trade or it is merely a transaction of transfer of capital asset?"

2. The facts of the case, as appear from the Assessing Officer's order are, that the assessee submitted returns declaring particular income as capital gain. The cases were taken up for scrutiny, and ultimately, it was found that certain number of plots were sold, and the assessee had shown the income therefrom, as long term capital gain. It is found that the assessees purchased the big chunk of land measuring few lacks square feets, somewhere in 1970, under a valid document, and the land was lying fellow, during all this time. It also appears that the land was under the cloud of ceiling laws, and after it got cleared therefrom, the assessees picked up the idea of disposing it of by making the best profit, i.e. by ensuring that it fetches the best price, and accordingly, the site plan was prepared, showing the land to be divided into different plots, and the plots were accordingly sold. The different assessees sold different plots during different period of time, inasmuch as, Sohan Khan had sold certain plots during the relevant year for the assessment year 1993-94, 1994-95 and 1995-96 and some plots still continued to remain, while the assessee Mohan Khan had also sold certain plots during the relevant year for the assessment year 1994-95. These appeals relate to the assessment year 1994-95.

3. The Assessing Officer found the sale to be not taxable as capital gain, but it was found to be a business income, and for that, the Assessing Officer found, that the original land is surrounded by many lands of his near relatives and family members, and if the plots would have been carved out from his land alone, they could not have been sold for want of network of roads being available upto the adjoining lands only, and that, at some distance there is Government road measuring 200 ft. Then the other circumstance is, that all the land owners had planned the sale of plots, in Nagnechi Scheme, and Vallabh Garden, together, and no land could be sold for residential purposes. Then the next ground considered is, that the purchasers were impressed by the fact that all the land belong to same family, and is being planned, and sold together, at no stage the huge property of the assessee or his family members was used for personal purposes, and the intention was to gain profit only. Inter alia with this, it was concluded, that the transaction was in the nature of trade.

4. In appeals, the learned Commissioner found, that the learned Assessing Officer was not justified in taxing the profit earned by sale of the plots under the head "profits and gains by business", and they were liable to be taxed only under the head "capital gains", as the appellants were not found to be regular dealer, in purchase and sale of land. It was also found, that nothing contrary has been brought on record to establish, that the appellant had any intention to deal in the property, and with that intention, any development or improvement had been made before affecting the sale. In case of Sohan Khan various judgments of different High Courts were also relied upon.

5. It may also be observed, that the question about the amount of profit, i.e. depending on the price of the land, was also gone into, which aspect is not a subject matter of appeal before us, therefore, we need not go into that.

6. Aggrieved of the order of the learned Commissioner, the Revenue