TMI Blog1971 (8) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... fly, are that the assessee-family owned a building at Uttariya Marg, New Delhi, and resided in part of it while its remaining portion was in the occupation of tenants. On January 9, 1959, it purchased one plot of land bearing No. C-28, Defence Colony, New Delhi, for Rs. 9,465. On January 18, 1959, it purchased another plot bearing No. C-215 also in Defence Colony for Rs. 9,250. On April 8, 1961, the first plot was sold by it for Rs. 27,000 and on June 9, 1961, it sold the second plot also for Rs. 27,000 thereby earning a substantial profit. During the assessment for the year 1962-63 the assessee contended before the Income-tax Officer that this profit was a capital gain. The Income-tax Officer repelled this contention and held that this profit amounting to Rs. 35,319 was business profit earned by "adventure in the nature of a trade". The amount was, therefore, added to the income of the assessee and assessment was framed accordingly. Aggrieved by this, the assessee filed an appeal before the Appellate Assistant Commissioner but the same was dismissed. In second appeal before the Tribunal, however, the contention of the assessee was accepted and the Tribunal held that the plots had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own that there was no evidence before the Tribunal upon which they as reasonable men could have come to the conclusion at which they arrived. In Sree Meenakshi Mills Ltd. v. Commissioner of Income-tax, the Supreme Court held that this would be so even if the High Court on the evidence relied upon by the Tribunal was inclined to a conclusion different from that of the Tribunal. It is not the case of the revenue that there was no evidence in this case before the Tribunal in support of the findings recorded by them. The question, therefore, has to be answered on the basis of facts as found by the Tribunal. Section 28(1) of the Act provides that profits and gains of any business or profession which was carried on by the assessee at any time during the previous year shall be chargeable to income-tax. "Business" is defined in section 2(13) of the Act to include any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. The case of the revenue is that the sale of these two plots by the assessee was an adventure in the nature of trade or business. No hard and fast test had been laid down for the determination of this question. The deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business of warehouseman purchasing a number of houses with a view to resale, and selling them at a profit some years after the purchase: Commissioners of Inland Revenue v. Reinhold, a person carrying on business in various lines, including an engineering works, purchasing land which was under requisition by the Government, negotiating sale thereof before the land was de-requisitioned, and selling it after the land was released: Saroj Kumar Majamdar v. Commissioner of Income-tax, and a syndicate formed to acquire an option over a rubber estate with a view to earn profit, and finding the estate acquired too small acquiring another estate and selling the two estates at a profit: Leeming v. Jones may not be regarded as commencing a venture in the nature of trade. These are cases in which the commodity purchased and sold is not ordinarily commercial, and the manner of dealing with the commodity does not stamp the transaction as trading venture." The profit motive, it was observed by the learned judge, in entering into a transaction is not decisive because in the normal course an accretion to capital does not become taxable income merely because an asset was acquired in the expect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r single instance of the transaction the onus was on the department to prove that the transaction was an adventure in the nature of trade. The court also observed that to sustain the conclusion of the Tribunal there ought to have been clear evidence to show that the land was purchased by the appellant with the sole intention of selling it later at profit. In this case the fact that the appellant, at the time when he entered into the agreement with the society, was doing good business otherwise was also taken to be a relevant consideration. It was, in the result, held that, in the circumstances of the case, it was not unnatural for the appellant to look forward to continue his business in as prosperous a way as he had been doing in the recent past and to raise sufficient funds to build his own residential house or to construct a workshop for his own engineering business. The probability that the site might also appreciate in value was held not necessarily to lend itself to the inference that the transaction was a venture in the nature of trade as distinguished from capital investment. Then further in G. Venkataswami Naidu Co. v. Commissioner of tax, Gajendragadkar J. (as be then w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of selling them later on. The fact that the assessee-family was committed to acquire shares worth Rs. 25,00,000 in Bharat Tubes fully explained the sale of the plots in question at the time they were sold. These are primary facts found by the Tribunal and we have no hesitation in confirming the conclusion drawn from them that the sale of the plots in these circumstances was not by way of adventure in the nature of trade. Shri G. C. Sharma, appearing for the revenue urged that, in the background that land prices in Delhi were continually rising, the fact that the assessee-family acquired as many as three plots within a short span of nearly 1 1/2 months showed that its intention was to acquire them by way of commodity for sale and this fact is borne out by its subsequent conduct in selling the two plots. This inference would not be legitimate in the facts of the Tribunal's findings of fact that the assessee-family wanted to acquire status and stability by making permanent investments in immovable properties and by building a permanent source of property income. Further, even if it be assumed that the plots were purchased as they were considered to be profitable as their price w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Commissioner of Income-tax and Khan Bahadur Ahmed Alladin Sons v. Commissioner of Income-tax and submitted that as per the ratio of decision in those cases the two sales in the instant case should be held to be an adventure in the nature of trade. We have carefully gone through those cases. The facts of these cases and the circumstances attending the transactions in question in those cases were wholly different and do not help the revenue. In Dalmia Cement's case, the question related to the transaction of sale of machinery. The assessee supplied these machineries to Orissa Cement Limited floated by it and the Orissa Government. The cost of the machinery was debited in the books of the assessee to Orissa Cement Limited and credited to the suppliers at the invoice price. At some later stage, the assessee asked for revaluation of the price owing to rise in price after the machinery had been ordered. The matter was referred to an expert who was of the opinion that the Orissa Cement Limited benefited to the extent of about Rs. 21 lakhs. The Orissa Government had no objection to the Orissa Cement Limited paying the assessee some extra amount. Orissa Cement Limited accordingly pass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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