P.J. GORADIA, A.M. This appeal filed by assessee is directed against order of Commissioner (A), Surat and only ground taken by assessee is as under: "The Commissioner (A) erred in not holding that assessee is liable to capital gains tax in respect of amount of Rs. 1,15,000 received from Dr. Sorabji Laskari in respect of surrender of rights arising out of agreement of purchase." facts contained in statement of facts accompanying appeal filed before CIT (A) are reproduced below: appellant is registered firm having been brought into existence with object of dealing in land and properties, constructing properties, getting constructed flats and blocks shops etc., and of estate brokers. Accordingly, it entered into agreement to purchase property in its first year i.e., 1974-75 assessment year (S.Y. 2029) and incurred expenditure on land survey on obtaining copies of field book, in preparing perspective and several other items aggregating to Rs. 1,453 during that year. In next year, it further incurred expenditure in payment of Rs. 9,006 to architect for preparing plans and other expenses for making application for steel, etc. Preparing sign-board for new premises and other small items aggregating to Rs. 10,924. appellant's intention was to purchase building, demolish it, construct another building with modern facilities and amenities and to make profit out of whole transaction. operations in respect of this single composite transaction began from year in which firm came into existence and were finalised during assessment year under appeal. During assessment year under appeal, on account of dispute regarding sale of property, appellant firm relinquished its rights over property in consideration of Rs. 11,5,001. In determining this consideration, expenditure incurred by appellant till such relinquishment and efforts put up by firm were obviously main factors for consideration." ITO assessed income of Rs. 1,15,001 as business income and further rejected claim of assessee in respect of expenses on ground that they related to earlier assessment years. On further appeal CIT (A) confirmed decision of ITO in respect of taxing sum of Rs. 1,15,001 as income from business and allowed deduction in respect of expenditure as claimed before ITO. CIT (A) held that firm was established with object of dealing in lands and properties and, therefore, transactions were carried out as part of ordinary business activity and profit arising from relinquishment of right was included in net profit of firm. At time of hearing ld. counsel for assessee attacked order of CIT (A) on two grounds. Firstly, it was stated that receipt was not income at all because in absence of business having been carried on, there cannot be any income by way of business. Secondly it was stated that receipts was in nature of capital gain and, therefore, it should have been treated as exempt on basis of Supreme Court decision in case of CIT vs. B.C,. Srinivasa Setty (1981) 21 CTR (SC) 138: (1981) 128 ITR 294 (SC). Reliance was also placed on decisions of Gujarat High Court in case of CIT vs. Hiralal Manilal Mody (1981) 25 CTR (Guj) 275: (1981) 131 ITR 421 (Guj) and Bombay High Court in case of Rattanchand Hirachand vs. CIT (1960) 38 ITR 76 (Bom) and Delhi High Court in case of Addl. CIT vs. Indian Drugs and Pharmaceuticals Ltd. (1983) 141 ITR 134 (Del). Our attention was also brought to pp. 16,17, & 18, of compilation in support of submission that income assessed as business income only consisted interest income. ld. Departmental Representative drew our attention to deed of Satakat dt.. 28th April, 1973 in support of claim that partnership was entered into with intention of developing and dealing in properties. amount received was treated as business income and turn was also filed as such. Since it was business activity, expenditure incurred on development of land was rightly claimed by assessee as deduction from business income as held by CIT(A). business does not mean that unless first sales is effected, sale cannot be said to have commenced. Reliance was placed on decisions of Gujarat High Court in case of CIT vs. Saurashtra Cement Chemical Industries Ltd. (1973) 91 ITR 170 (Guj) as also Sarbahai Management Corporation Ltd. vs. CIT (1976) 102 ITR 25 (Guj). it was further Management Corporation Ltd. vs. CIT (1976) 102 ITR 25 (Guj). it was further submitted that as per ratio of decision of Gujarat High Court even there may not be intention of business for purpose of taxing receipt as business income. In reply, ld. Counsel submitted that decision of Sarabhai Management Corporation Ltd's case (supra), actually supports case of assessee because acquiring of immovable property was not carried out. We have considered submission and materials to which our attention was drawn. It is admitted fact that partnership was formed with soled intention of dealing in properties. This being undisputed basis, we do not find any infirmity in decision of we do not find any infirmity in decision of CIT(A) we therefore, uphold his order in toto. We would further add following para. It is seen on copies of assessment orders that not only income was returned as business income, but firm has been granted registration u/ss 184 and 185 of Act. Therefore, very fact of claiming of benefit of registration controvert submission of ld. Counsel that Satakat was intended only for purpose of investment or that unless property was acquired there could not be business. reliance placed on various decisions by ld. Counsel does not support case of assessee, because facts and issues involved were neither identical not similar. In case of Indian Drugs and Pharmaceuticals Ltd. (Supra) (Delhi High Court) assessee company was promoted to start manufacture of drugs and pharmaceutical. For this purpose construction of building etc. was in process of completion and business had not been set up. Therefore, receipts before starting of business activity from sale of timber by removing trees for clearing site etc. were treated as receipts from activity which was part and parcel of constructional activities of of assessee and, therefore, source of income not independent work. facts under appeal are wide different. In case of Ratanchand Hirachand (supra) issue was in respect of claim of assessee for deducting sum of Rs. 55,000 when assessee wanted to avoid obligation to purchase property which was ultimately sold to third party thus relieving assessee form obligation to purchase property originally agreed to. It was held that payment was not loss falling under head capital gains and therefore, same would not be set of against other capital gains brought to charge under s. 24 of IT Act, 1922. In yet another case relied upon by assessee in case of Hrialal Manilal (supra), Gujarat High Court was concerned with interpretation of agreement for purchase of property so as to determine whether assessee was dealer in immovable property or not. It was held by their Lordships of Gujarat High Court that ordinarily when person purchases immovable property it is treated as investment and it is only in rare cases that purchase and sale of immovable property is treated as business or adventure in nature of trade and in such cases burden of proving that particular transaction was adventure in nature of is on Revenue. facts under appeal wholly support stand of Revenue and in fact reliance was against assessee. In result, appeal is dismissed. *** RENUKA LANDS CORPORATION v. INCOME TAX OFFICER