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TMI Blog1965 (3) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... October 31, 1942, the appellant agreed to purchase all the rights of the company in the factory and the appurtenant premises for Rs. 2,45,000. On November 14, 1942, the company delivered to the appellant possession of the property agreed to be sold, save and except the factory demised under the lease to Ramnath Bajoria and the machinery included in the lease. On February 26, 1943, the company executed a conveyance in favour of the appellant conveying the factory and the appurtenant premises. On June 12, 1943, the appellant agreed to sell to one Ranada Prasad Saha the property purchased from the company for Rs. 4,73,364-3-6 free from all encumbrances. On August 10, 1943, the appellant was substituted as a plaintiff in the suit filed by the company against Ramnath Bajoria, and obtained possession of the factory premises. By a deed of conveyance dated September 30, 1943, the appellant conveyed to Ranada Prasad Saha the factory and the appurtenant premises and delivered possession thereof. In the deed of conveyance the property sold was described in three separate Schedules. Schedule I : Press house, office, residential buildings and three warehouses on land owned by the company; Sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liest opportunity, and, therefore, the transaction was in the nature of a trading venture. The High Court substantially agreed with this view. Section 10 of the Indian Income-tax Act, 1922, makes profits and gains of business, profession or vocation carried on by an assessee taxable. The expression "business" is defined in section 2(4) as inclusive of "any trade, commerce, or manufacture or any adventure or concern in the nature of trade, commerce or manufacture". It is common ground that the transaction of purchase and sale of the factory and appurtenant premises was an isolated venture. To reiterate the sequence of material events : the appellant agreed to purchase the jute press from the company on October 31, 1942, subject to litigation pending in the High Court of Calcutta : possession of the property except the promises in the occupation of the tenant was obtained on November 14, 1942, and the sale deed was obtained on February 26, 1943: on June 12, 1943, the appellant agreed to sell the press to Ranada Prasad Saha: on August 10, 1943, the appellant was substituted as plaintiff in the suit filed by the company against Ramnath Bajoria, and after obtaining possession of the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh not directly part of it, an intention to launch upon an adventure in the nature of trade may readily be inferred. A similar inference would arise where a commodity is purchased and sub-divided, altered, treated or repaired and sold, or is converted into a different commodity and then sold. Magnitude of the transaction of purchase, the nature of the commodity, subsequent dealings and the manner of disposal may be such that the transaction may be stamped with the character of a trading venture : for instance, a man who purchases a large quantity of aeroplane linen and sells it in different lots, and, for the purpose of selling starts an advertising campaign, rents offices, engages an advertising manager, a linen expert and a staff of clerks, maintains account books normally used by a trader, and passes receipts and payments in connection with the linen through a separate banking account : Martin v. Lowry : a person who carries on a money-lending business purchases very cheaply a vast quantity of toilet paper and within a short time thereafter sells the whole consignment at a considerable profit : Rutledge v. Commissioners of Inland Revenue : and a person, even though he has no sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tember 30, 1943, definitely indicate that the rights of the company without any reservation was purchased by the appellant, and the appellant sold its entire rights in the properties in Schedules I, II and III without any reservation. It is true that the appellant had put the factory in a working condition, but had not organized a jute pressing business, had not obtained a licence for working the factory, had not attempted to secure orders for pressing jute, and had not employed labourers. The appellant's claim that it was not so done because the appellant could not secure labourers has not been accepted. But that is not a decisive circumstance. The factory was in the occupation of the lessee, Ramnath Bajoria, and possession was obtained after August 10, 1943. But before the 10th of August, an agreement of sale was executed by the appellant in favour of Ranada Prasad Saha. In the light of the sequence of events, the inference that the appellant had no intention to commence doing jute pressing business does not necessarily follow. Even if that inference be regarded as binding upon the court, it cannot be presumed that the sole intention of the appellant was to start a venture in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead to no positive inference. There is nothing to show that the appellant desired to convert the property to some other use. No workers were employed for entering into a transaction of sale. It appears that Ranada Prasad Saha on coming to learn that the factory was for sale approached the company after the sale deed was executed in favour of the appellant and he was informed that it had already been sold to the appellant. Thereafter Saha contacted the appellant and agreed to purchase the property. The property purchased was not such that an inference that a venture in the nature of trade must have been intended by the appellant in respect thereof may be raised. A person purchasing a jute press may intend to start his own business even if he is not already in that business, or he may let it out on favourable terms. The property purchased by the appellant was capable of being let out and it had in fact been let out by the company before the date of sale in favour of the appellant. It was capable of fetching annual income, and there is no evidence that at the material time it could not be reasonably let out. We therefore discharge the answer given by the High Court in respect of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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