TMI Blog1954 (11) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... osed in the course of his statement that persons to whom molasses permits had been given had made huge profits. The Income-tax Officer issued a notice upon the assessee under section 22(2) of the Income-tax Act. The Income-tax Officer also issued a notice under section 22(4) of the Act requiring the assessee to produce all the accounts maintained for its business. The assessee did not comply with the terms of these notices, but on 15th of June, 1949, the manager of the Hindu undivided family, Bisheshwar Singh, appeared before the Income-tax Officer and produced the following letter: To The Income-tax Officer, Monghyr. Dear Sir, I did secure two recommendation letters for molasses from the Excise Commissioner's Office, Patna, but as I was unable to obtain molasses from the Sugar Mills, I gave both the recommendation letters to Mr. Sabir Ali, brother-in-law of Mr. A.F.A. Hamid, I.G. of Police. I do not know till to date for what price he sold the molasses, but I learnt as a rumour only that one of the recommendation letters in the name of Hussainpur Sugar Mills was not honoured by the management. This is the correct statement of fact, but if I must be inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification for the Tribunal to hold that the previous year of the assessee corresponded to the period from 1st of March, 1947 to the close of the financial year. The argument of Mr. Untwalia is based upon section 2(11)(c) of the Act. Section 2(11)(c) is in the following terms: 'previous year' means in respect of any separate source of income, profits and gains where a business, profession or vocation has been newly set up in the financial year preceding the year for which assessment is to be made, the period from the date of the setting up of the business, profession or vocation to the 31st day of March next following or to the last day of the period determined under sub-clause (b), or, if the accounts of the assessee are made up to some other date than the 31st day of March and the case is not one for which a period has been determined by the Central Board of Revenue under sub-clause (b), then at the option of the assessee, the period from the date of the setting up of the business, profession or vocation to such other date............................ The contention of Mr. Untwalia is that the account of the assessee for the grain business was kept from 1st of Mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which a Bench of this Court observed that the correct interpretation of section 66(1) was that the question of law which the assessee seeks to refer must be a question of law which has actually been raised before the Tribunal or actually dealt with by it in its order. On behalf of the assessee Mr. Untwalia however pointed out that the order under section 66(2) was passed by a Bench of this Court after hearing counsel for both the parties and it was not open to this Bench to say that the order passed by the previous Bench was erroneous and ought to be overruled. In support of his submission counsel referred to the decision of the Calcutta High Court in Chainrup Sampatram's case [1951] 20 I.T.R. 484. In my opinion the contention of Mr. Untwalia has great force. It is manifest that the question of law does not arise out of the order of the Tribunal within the meaning or section 66(1) of 66(2) of the Act and the Bench of the High Court ought not to have called for a statement of the case op this question. But the assessee has succeeded in persuading the previous Bench to call for a statement. The question is whether at this stage we should say that the reference should never have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax. The question at issue in this case is therefore whether the profits made by the assessee from the sale of molasses permits to the extent of ₹ 37,500 are receipts from business, that is to say, are receipts from an adventure in the nature of trade. What are the tests for determining whether a transaction is to be taken as an adventure in the nature of trade? It is not possible to give a categorical answer to this question. The answer depends very much upon the facts and circumstances of each case. If a person purchases a commodity with the intention of reselling it at a profit, the transaction would possibly be in the nature of a trading transaction. As Lord President Clyde observed in the case of Rutledge v. Commissioners of Inland Revenue [1929] 14 Tax Cas. 490 when the assessee makes a purchase for no purpose except that of resale at profit , an intention to trade can properly be inferred. It is true that the intention of reselling at a profit is not a conclusive test but it is certainly an important element to be taken into consideration. Another test is to find out whether the bulk of commodity purchased is so much that in order to sell it the purchaser must have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. It is not necessary for the Department to prove a course of multiple dealings on the part of the assessee. To quote the language of Lord President Clyde in Balgownie Land Trust Ltd. v. Commissioners of Inland Revenue [1929] 14 Tax Cas. 684 at 691, a single plunge may be enough provided it is shown to the satisfaction of the Court that the plunge is made in the waters of trade. In the present case I am satisfied from the circumstances proved that the assessee had obtained profit from an adventure in the nature of trade and that the amount of ₹ 37,500 was rightly taxed in his hands by the Income-tax authorities. An argument was presented by Mr. Untwalia on behalf of the assessee that the profits made from the molasses permits were of a casual and non-recurring nature and so the exemption provided in section 4(3)(vii) of the Act would be applicable. I have already said in the earlier part of this judgment that the exemption provided by section 4(3)(vii) does not apply to receipts arising from business. In other words, the phrase not being receipts arising from business in section 4(3) (vii) is an exemption from an exemption. I have already held, for the reasons I have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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