TMI Blog1990 (10) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... e alleged sale. The assessee claimed it as capital gain from gold bonds and thus not liable to tax as the same was exempt. The ITO treated the transaction as an adventure in the nature of trade and thus treated the profit as revenue receipts and thereby a profit from business and computed the said income as exigible to tax. In appeal, preferred by the assessee, the learned CIT(A) confirmed the order of the ITO. The assessee being aggrieved has come up in appeal before the Tribunal. 3. The learned counsel for the assessee has very vehemently argued out that by no stretch of imagination a single transaction of purchase of gold bond can be said to be an adventure in the nature of trade and thus the finding arrived at by the ITO and confirmed by the learned CIT(A) was patently wrong. He has further pointed out that it was nothing but an investment in gold bond and any profit out of the said transaction was exempt under the Income-tax Act and thereby the said amount could not be brought to tax. He has also pointed out various decisions of the Tribunal of Allahabad Benches in which in similar circumstances the Tribunal had held that the same was not an adventure in the nature of trade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of trade and thereby the profits earned were exempt from payment of income-tax. To arrive at a correct conclusion on the alleged bond in issue, we feel that certain decisions of the Hon'ble Supreme Court and of various High Courts, relied upon by the counsel for the assessee, are worth consideration which, in fact, go to decide the issue in question :--- (1) CITv. H. Holck Larsen [1986] 160 ITR 67/26 Taxman 305 (SC) : In the said case, their Lordships of the Hon'ble Supreme Court had held as under : " In order to determine whether one was a dealer in shares or an investor, the real question was not whether the transaction of buying and selling the shares lacks the element of trading, but whether the later stages of the whole operation show that the first step-the purchase of the shares -- was not taken as, or in the course of, a trading transaction." In this case of H. Holck Larsen, the point stressed by the Hon'ble Court is that it is the first step which goes a long way in determining as to whether it was an adventure in trade or not. In the present case, it was the first and the last step that the assessee took, that is, purchase of gold bonds, and no other step was take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Hon'ble Allahabad High Court in the case of Deep Chandra Co. v. CIT [1977] 107 ITR 716 had held as under : " It is now settled that the question whether profit earned in a transaction has arisen out of adventure in the nature of trade is a mixed question of law and fact. The burden lies on the revenue to establish that the profit earned in a transaction was revenue realisation and not capital gain." 5. The above decisions clearly go to establish that it is the facts of each case which have to be looked into to arrive at a positive conclusion as to whether any transaction was an adventure in the nature of trade or not. In the present case, the assessee had only entered into one transaction of purchase on 9-9-1980. The assessee was not having the alleged trade of sarrafa or some such identical business which could alone lend support to the contention of the Revenue that it was nothing but an adventure in the nature of trade. Besides that, it was the purchase of gold bond which carries certain exemptions and thereby allurement to an individual for going for purchase of the same and make an investment in it, may be with an intent to earn certain profits by appreciation. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the single Member in the case of Kavita Kanodia which too was ex-parte. 7. The other argument advanced by the learned Departmental Representative is about the decision of the Hon'ble Supreme Court in the case of McDowell Co. Ltd. in which it has been held that the tax planning could be held to be legitimate provided it was within the framework of law. Colourful device could not be part of the tax planning and it was wrong to entertain the belief that it was honourable to avoid payment of tax by dubious means. In the present case, we find that the alleged decision of the Hon'ble Supreme Court does not apply. The assessee has put forward all the facts in straight forward manner and has not concealed anything. There was a single transaction of purchase of gold bonds which was disclosed and the amount of profit earned by part sale of the said gold bonds was also shown in the return as exempt from income-tax. The facts, in our opinion, do not bring it within the ambit of a colourful device as part of tax planning to avoid the payment of tax. In, fact, the ITO and the learned CIT(A) had mainly relied upon one fact and they had taken all the transactions of the whole group into ..... X X X X Extracts X X X X X X X X Extracts X X X X
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