TMI Blog1965 (3) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... e it could not be reasonably let out. Appeal allowed. - - - - - Dated:- 31-3-1965 - Judge(s) : K. SUBBA RAO., J. C. SHAH., S. M. SIKRI JUDGMENT The judgment of the court was delivered by SHAH J.---The appellant is a Hindu undivided family and carries on business as a dealer in "iron scrap and hardware". Messrs. Hoare Miller and Company Ltd.---hereinafter called "the company"---were owners of a jute pressing factory installed on a piece of land belonging to the company. Adjacent to that land were two pieces of land : one was leasehold, and the other held by the company as a licensee from the Government of West Bengal. On January 21, 1941, the company leased out to one Ramnath Bajoria the jute pressing factory together with the machinery standing on the land owned by the company for ten months commencing from January 10, 1941. Ramnath Bajoria failed to vacate and deliver up possession of the premises demised to him, after the expiry of the period of the lease, and the company instituted a suit in ejectment against him. By an agreement dated October 31, 1942, the appellant agreed to purchase all the rights of the company in the factory and the appurtenant premises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act. The Tribunal found the following facts provided. The appellant was carrying on business in iron scrap and hardware and never carried on any business in jute or in pressing jute. At the material time when the purchase of the jute press was made, the appellant had, because of abnormal conditions prevailing in the town of Calcutta, closed its business in iron scrap and hardware. The appellant purchased the jute press and the premises appurtenant thereto subject to litigation pending in the High Court, effected certain repairs and kept the factory in running condition, but made no attempt to start or organise the business of pressing jute, and his plea that he was not able to secure labour for working the press was not true. Soon after he bought the factory, the appellant received an offer from Ranada Prasad Saha to buy the factory and be immediately accepted the offer to sell it to him. These facts in the view of the Tribunal indicated that the appellant purchased the jute press, subject to litigation, with the sole object of reselling at profit at the earliest opportunity, and, therefore, the transaction was in the nature of a trading venture. The High Court substantiall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concept of trade or business. Such a question is one of mixed law and fact and the decision of the Tribunal thereon is open to consideration under section 66(1) of the Act : see also Saroj Kumar Majumdar v. Commissioner of Income-tax. A large number of cases were cited at the Bar in support of the respective contentions of the Commissioner and the assessee. Passages from judgments in the same case were often cited claiming support for the respective contentions. No useful purpose would be served by entering upon a detailed analysis and review of the observations made in the light of the relevant facts, for no single fact has decisive significance, and the question whether a transaction is an adventure in the nature of trade must depend upon the collective effect of all the relevant materials brought on the record. But general criteria indicating that certain facts have dominant significance in the context of other facts have been adopted in the decided cases. If, for instance, a transaction is related to the business which is normally carried on by the assessee, though not directly part of it, an intention to launch upon an adventure in the nature of trade may readily be inferr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncing 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 a trading venture. It may be emphasized from an analysis of these cases that a profit motive in entering into a transaction is not decisive, for, an accretion to capital does not become taxable income, merely because an asset was acquired in the expectation that it may be sold at profit. Purchase of the property by the appellant was an isolated transaction not related to the business of the appellant. The Tribunal and the High Court were, in our judgment, in error in holding that the right of the company was not sold to the appellant in the lands in Schedule II and Schedule III properties. The land in Schedule II was leasehold, and on it was constructed a warehouse and the land in Schedule III was held as a licensee and two warehouses were standing thereon. The conveyance by the company to the appellant is not on the record, but the recitals in the deed dated September 30, 1943, definitely indicate that the rights of the company without any reservation was purchased by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing on the business of jute pressing : nor is there any evidence that the warehouse or warehouses which were demolished were in a serviceable condition. The only fact which may be taken to be established is that a warehouse or warehouses were demolished by the appellant and the materials were sold as part of the property sold under the deed dated September 30, 1943. From this circumstance, an inference that the entire property was purchased with intent to demolish and dispose of as scrap cannot be raised. Granting that the appellant made a profitable bargain when he purchased the property, and granting further that the appellant had when he purchased it a desire to sell the property, if a favourable offer as forthcoming, these could not without other circumstances justify an inference that the appellant intended by purchasing the property to start a venture in the nature of trade. Absence of advertisement inviting offers for purchasing the property, and absence of brokers in the negotiations for sale between the appellant and Ranada Prasad Saha, are circumstances which lead to no positive inference. There is nothing to show that the appellant desired to convert the property to s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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