TMI Blog1973 (12) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... ehensive enough to cover the aspect "sought to be highlighted". The year of assessment is 1960-61. The facts which lead up to the sale are narrated in paragraphs 2, 3, 4 and 5 of the statement of the case, and the entire statement of the case is appended to this judgment. It is stated in paragraph 6 of the statement of the case that "the Income-tax Officer and the Appellate Assistant Commissioner viewed the several transactions as integral parts of a single venture undertaken by the assessee and which venture resulted in the taxable surplus of Rs. 1,70,175". The Tribunal too treated the various transactions as part of a single venture. This is clear from the statement of the case as well as from the order of the Tribunal. Paragraph 13 of the statement says "that the chain of facts starting from the acquisition of shares in Murphy Estates Ltd., the purchase of Yendayar estate, the acquisition of shares in Motor Transport Co. Ltd. (all made with the help of borrowings) and the disposal of the Elangad estate to Motor Transport Co. within about one year of acquisition went to show that the transactions in question were an adventure in the nature of trade". We think this is the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tribunal and on those findings of fact entered by the Tribunal there is no alternative for this court but to answer the question referred to us against the assessee. In support of this contention our attention was drawn to certain passages from the order of the Tribunal. We shall refer to them in detail and extract every one of those sentences because the main argument in the case turned on the question whether this court should consider the effect of all the relevant facts most of which are admitted and decide the question that arises; that is whether the transaction represented an adventure in the nature of trade in the light of all that transpired or whether we should answer the question against the assessee by holding that the facts found by the Tribunal oblige us to do. The following sentences and passages from the order of the Tribunal have been relied on by counsel : "The facts considered as a whole show that there is substance in the inference of the department that by a series of interlinked steps, the assessee acquired and then disposed of the Elangad estate at considerable profit as an adventure in the nature of trade. Murphy Estates Ltd. was willing to sell and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommenced in January, 1959, and an advance of Rs. 2 lakhs had been received by February, 1959. No clearer evidence is required to show that the transaction of purchase of Yendayar estate and sale of part thereof cannot be described as on investment account. (Para. 16) Most of the observations made cannot be characterised as findings on questions of fact. They are assertions arising from opinions and at best inferences drawn by the Tribunal from the proven or admitted facts. But such inferences in cases of this nature give rise to questions of law. The Supreme Court said in G.Venkataswami Naidu Co. v. Commissioner of Income-tax : "In dealing with findings on questions of mixed law and fact the High Court would no doubt have to accept the findings of the Tribunal on the primary questions of fact; but it is open to the High Court to examine whether the Tribunal had applied the relevant legal principles correctly or not ; and in that sense, the scope of enquiry and the extent of the jurisdiction of the High Court in dealing with such points is the same as in dealing with pure points of law. There is no doubt a finding that the evidence narrated indicated that the purchase of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d above and it was contended that the Tribunal having found that the sole intention of the purchase was to re-sell at a profit, the principle of the decision in G. Venkataswami Naidu Co. v. Commissioner of Income-tax would apply and that the question must be answered in favour of the revenue. The last two sentences cannot be torn from their context. Read with the whole passage and the remaining parts of the order those sentences only embody the inference drawn by the Tribunal. The sole intention to sell, it is said on the basis of the ruling in G. Venkataswami Naidu Co. v. Commissioner of Income-tax, will clinch the issue. But the question is whether there was such a sole intention and that question we consider is covered by the question referred to us. In a case of this nature we do not think that the approach to be made is by trying to find out whether there are sentences in the order of the Tribunal which can be interpreted to be findings on certain aspects all of which must be taken together in determining the question referred. When we read the Tribunal's order as a whole we only find the conclusion that the transaction did not evidence an investment but really showed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge would, of course, cover the purchase of houses as in the present case, but would not cover a situation in which a purchaser bought a commodity which from its nature can give no annual return. This comment of mine is just another way of saying that certain transactions shew inherently that they are not investments but incursions into the realm of trade or adventures of that nature. In my opinion, it is because of the character of such transactions that it can be said with additional definiteness that certain profits are income from trade and not capital accretion of an investment, the purchase and sale of, for instance, whisky, as in Fraser's case, was a trading venture and so too in regard to toilet paper : Rutledge. This means that, although in certain cases it is important to know whether a venture is isolated or not, that information is really superfluous in many cases where the commodity itself stamps the transaction as a trading venture, and the profits and gains are plainly income liable to tax. It will have been observed that Lord Dunedin in the passage quoted gives an evidential value to a man's intention not to hold an investment, which may justify the inference that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or purchasing the estate. He had more than 3 lakhs of rupees debt at the time he sold the estate. The remaining part by no means was negligible. Actually, the balance 350 acres remained with the assessee at the time the Income-tax Officer passed the order of assessment, nearly seven years after the purchase, and nearly six years after the sale of a part of the property that he purchased. The property was sold to a company in which the assessee himself held 98 per cent. of the shares. In effect, it was, therefore, only a transaction of transfer from an individual to an one-man company. It is in this background one has to view the question whether there was an adventure in the nature of trade and we feel no hesitation in these circumstances in coming to the conclusion that there was no adventure in the nature of trade. The fact that a person had the intention to sell at profit is never conclusive. In fact no person who makes an investment does so with the expectation that when he realised that investment he will realise less or only what he paid. On the other hand, every person who invests does so with the idea that if it became necessary either to change the investment or to realise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that it would be a prudent act to try and keep the entire estate without discharging the liabilities. Nobody suggested that these liabilities had not been cleared. The Tribunal took the view that a sale at the time it was made was unnecessary. That is a question which should have been left to the assessee to decide. The Income-tax Officer or the Tribunal should not in such matters substitute his or their judgment for that of the assessee. So the conclusion is irresistible that the sale was only a realisation of a part of the investment made by the assessee which was thought of by the assessee to be a necessity. There is no iota of evidence in the case to indicate or which would enable the inference being drawn that the Yendayar estate was not bought with the idea of keeping it. The assessee might have made all attempts to strike the best bargain. But these are steps any person is likely to take even when he was intending to make an investment. The fact that he indulged in borrowing for the purpose of purchasing the estate cannot conclude the question. We have not referred to the innumerable decisions on the subject because after all as has often been said the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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