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Whether the transaction of purchase and sale of a tea estate by the assessee amounts to an adventure in the nature of a trade. Analysis: The judgment in question pertains to a reference under section 66 of the Indian Income-tax Act, focusing on whether a specific transaction involving the purchase and subsequent sale of a tea estate by the assessee qualifies as an adventure in the nature of trade. The assessee, a member of the Nagarathar community and a director of Avra Ltd., purchased the Agra Oya Estate in Ceylon for Rs. 4,50,000 in 1953. The estate included mature crops and unplanted areas, with the assessee incurring a loss of Rs. 12,606 while working the estate until September 1954. Subsequently, the estate was sold for Rs. 5,33,000 to Agra Oya Tea Ltd., resulting in a profit of Rs. 38,742 for the assessee. The Income-tax Officer assessed the profit as income from an adventure in the nature of trade for the assessment year 1956-57, a decision upheld by the Appellate Assistant Commissioner and the Income-tax Appellate Tribunal. The central question raised was whether the transaction indeed constituted a venture in the nature of trade. The judgment delves into the complexities of determining such categorizations, emphasizing that not all profit-motivated activities should be labeled as trade. It highlights that the commercial character of a venture distinguishes it from a mere transaction for capital accretion. The court, concurring with the department and the Tribunal, found that the assessee's purchase and sale of the tea estate indeed constituted an adventure in the nature of trade. The judgment underscores that the assessee financed the purchase through borrowing, indicating an intention not to retain the estate for long-term profit. The financial circumstances of the assessee, coupled with the swift sale of the estate, supported the conclusion that it was not acquired as a long-term investment. Additionally, the assessee's prior attempts to purchase another estate further indicated a pattern of engaging in such activities, reinforcing the commercial nature of the transactions. Ultimately, the court upheld the decision against the assessee, emphasizing the evidence supporting the Tribunal's findings and rejecting any misdirection on points of law. The judgment concludes by ruling in favor of the department, requiring the assessee to bear the costs and counsel's fee.
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