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TMI Blog1968 (8) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... of two arc furnaces which had been purchased in 1952 and sold in 1958. The respondent-company carried on business at 38, Mount Road, Madras, its main business being the manufacture and sale of machinery and parts of machinery and accessories. For manufacturing parts of the machinery, the company maintained a foundry and in 1952 it purchased two arc furnaces for a sum of Rs. 2,13,512.81 for the purpose of using the same in its foundry. In the account books and the balance sheet of the company these furnaces were shown under the heading "workshop equipment". According to the company the furnaces were found to be unsuitable for the purpose for which they had been purchased and therefore they were disposed of in 1958 to a purchaser in Calcutta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as part of the stock-in-trade. At the time of purchase the assessee had no idea of selling the furnaces and there was no intention of making any profit. The business which was carried on by the assessee was entirely different, namely, production of machinery and parts and the sale of the furnaces, when they were found to be unserviceable, was not made in the course of the normal business activity of the assessee. The position taken up on behalf of the State was that when the assessee carried on the business of selling machinery of various kinds the sale of are furnaces must be regarded as sale of machinery in the normal course of its business activity. The learned judges of the High Court referred to a large number of decided cases includi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the assessee had admittedly made a profit of Rs. 2,07,000 from the aforesaid transaction and in addition collected sales tax from the Calcutta dealer. He has called attention to the finding of the Appellate Assistant Commissioner of Commercial Taxes that the sale in the present case was not one of used assets and that whatever the intention at the time of the purchase might be, once the machinery was found not usable, the assessee "has got necessarily to get into a business venture of selling it and in point of fact sold it at good profit". It is further urged that the are furnaces became a part of stock of machinery for sale because the assessee was dealing in manufacture and sale of heavy machinery and it must be deemed to have put th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umption in the process of manufacturing an article to be sold by him. This view was reversed and it was observed as follows: "A person to be a dealer must be engaged in the business of buying or selling or supplying goods. The expression 'business' though extensively used is a word of indefinite import. In taxing statutes it is used in the sense of an occupation, or profession which occupies the time, attention and labour of a person, normally with the object of making profit. To regard an activity as business there must be a course of dealings, either actually continued or contemplated to be continued with a profit motive, and not for sport or pleasure." Mr. Sen has laid stress on what has been said further at pages 647 and 648: "The Le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged to collect unserviceable articles in the course of manufacture of cloth which were sold, sales of these articles must be regarded as part of the business of the textile mill if the transactions of sale were large and frequent. After referring to the definition and the expression "dealer " in section 2(6) of the Bombay Sales Tax Act, 1953, and the other relevant provisions of that Act as also the law laid down in The State of Andhra Pradesh v. Abdul Bakshi and Bros. [1964] 15 S.T.C. 644., it was observed that by the use of the expression "profit motive" it was not intended that profit must, in fact, be earned nor did the expression cover a mere desire to make some monetary gain out of the transaction or even a series of transactions. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing up of funds, it could not be inferred that the assessee had sold the goods with the intention to carry on the business of selling cotton and the sales were not liable to tax. It was clear from the supplemental statement of the case which had been submitted that though the assessee had been selling cotton from the year 1946 onwards except for three intervening years the sales were in respect of goods purchased for the business of manufacturing cotton cloth and the sales had been effected either because the cotton was surplus or the assessee had to accommodate its sister concern or with the view that the finances were not blocked up by detaining cotton which the assessee did not need for its business. The facts and circumstances w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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