TMI Blog1969 (2) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... olated dealing in capital asset giving rise to capital gain. The assessee, who happened to be the wife of one of the directors of a private limited company by name Murugan Transports (P.) Limited, purchased from her husband's brother on August 6, 1960, 37 shares in that company and sold the same at a profit on December 5, 1960, to the brother-in-law and wife of one Chinnaswami Pillai, the managing director of the very same company. Two of this gentleman's daughters were also directors, all the three of whom together held 200 shares as on August 5, 1960. His son possessed 42 shares which he had purchased from one Sundaralinga Asari. On August 6, 1960, one L. G. Varadarajulu, the brother-in-law of the assessee, transferred 45 shares to his br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principles. Commissioner of Income-tax v. Kasturi Estates (P.) Ltd. and Sarojini Rajah v. Commissioner of Income-tax, to each of which one of us was a party, deal with the general aspects to be borne in mind in deciding a question of this kind. We do not think it necessary, therefore, to deal with them at any length. So far as we are aware, nobody has defined trade exhaustively or precisely, nor is it wise or possible to do it. But, at the same time, it is a term well understood by the mind and so too is the case with an adventure in the nature of trade. In Sarojini Rajah v. Commissioner of income-tax, reference was made to the considerations that bear upon the identification of badges of trade, to wit, the subject-matter of the realisation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifferent kinds of trade or businesses. But whether these legal requisites are satisfied or are present will themselves, in their turn, be a mixed question of law and fact. The character of the motive or intention with reference to a transaction is a matter of inference from the other facts. It is here the badges of trade indicated by the Royal Commission earlier referred to be of assistance. The subject-matter of a transaction may be such as is commonly or usually dealt with in trade or commerce. For instance, often stocks and shares by their nature are transacted as a commercial deal, though occasionally there may be investment as such in shares and stocks. The length of their holding may perhaps be suggestive of the character of the holdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a company ; (3) their purchase was on August 6, 1960, and they were sold so soon thereafter on December 5, 1960 ; (4) the transaction brought a sizable profit ; (5) the assessee, as circumstances showed, clearly anticipated that the managing director and his group of shareholders attempted or would attempt to acquire all the available shares in order to concentrate the power of the private company as much as possible in their hands and thus there would be a demand for the shares held by other shareholders. Taking all these facts into account, the cumulative effect of them, to our minds, is that the transaction of sale cannot be said to be merely a conversion of one form of asset into another giving rise to capital gain. At any ra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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