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TMI Blog1963 (8) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... ontractor. He also maintained palace buildings. The assessment year is 1959-60 and the accounting year ends on March 31, 1959. On 25th of April, 1958, he entered into a contract with one J. M. Sawyer, for the purchase of land, 92 cents in extent, the buildings thereon fetching a rent of Rs. 677 per mensem and a ground rent of Rs. 85 per mensem, opposite the Kerala Government Secretariat at Trivandrum, for a consideration of Rs. 1,40,000 and paid an advance of Rs. 5,000, the transaction to be completed by the 30th of August, 1958. Actually, the sale was effected by a deed dated 23rd of August, 1958. In the meanwhile, the assessee had entered into the following transactions : (a) He had agreed with one N. G. Raghavan Nair to sell 7 cents. wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shed and the profits made by the assessee in the transaction is taxable under section 10 as profits from an adventure in the nature of trade. " After making adjustments for values, having regard to the frontage and side, he found that the assessee had made a profit of Rs. 58,187 and brought the profit to tax under section 10. 5. The Appellate Assistant Commissioner, on appeal, wrote : "The Income-tax Officer observed that the appellant being a P. W. D. contractor was in the knowledge of the value of properties which he had purchased from Mr. J. M. Sawyer. He also observed that the appellant knew that the property could be sold at a very high rate when he entered into the contract. This was why he was even prepared to purchase the land by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f New India Ltd. was the assessee's banker and their request could not be refused and so also Dr. Balakrishna Pillai's who was the family doctor ; and so there was no intention at all to make a profit in these ; (iii) that out of 92 cents purchased, only 22+ cents had been parted with and the balance of 69+ cents remained ; (iv) that no business in the purchase and sale of plot was carried on and not even a venture in the nature of trade ; (v) that so far as the quantum was concerned, it was stated that the plot was an oblong one with only 160 feet frontage on the main road and that the department had erred in valuing the plot at an average rate of Rs. 4,000 per cent for the land facing the main road and Rs. 1,900 on the rest ; (vi) tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te knowledge of the Trivandrum City, it may well be presumed he had good knowledge of the potential value of the property ; (iii) that there had been no proof of the assessee getting money from the P. W. D. which could form the source for the investments ; (iv) that the assessee had taken the considered risk in entering into the transactions with those people who had stayed in the land for 25 years and 17 years respectively and who stood to lose by such eviction from a prominent business locality ; (v) that the elements of foresight, forethought, risk and calculation that all go to characterise the venture in the nature of trade were present in the case ; and, lastly, (vi) that it was unnecessary to wait till the business was completed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1958. The sale was completed and the balance of the consideration was paid to the assessee on September 13, 1958. (b) He agreed to sell 3+ cents from the area to the Bank of New India Limited for Rs. 14,000 on August 23, 1958, and received an advance of Rs. 13,900. The sale was completed and the balance of the consideration was paid to the assessee on August 26, 1958. (c) He agreed to sell 5 cents from the area to one Yoonis Sait on August 23, 1958, with the building thereon, for Rs. 20,000 and received the whole amount on that date. (d) He sold 7 cents from the area to one Dr. P. R. Balakrishna Pillai for Rs. 13,300 on September 13, 1958. It would appear that Raghavan Nair and Yoonis Sait were in occupation of portions of the property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is undertaken, and in the realms of intention the factors for detection depend on the facts of each case. The element of repetition has been stressed in many cases. The leading case stressing its importance in deciding whether a trade was carried on is Pickford v. Quirke [1928] 138 L. T. R. 500. The absence of repetition, however, is by no means conclusive. As stated by F. E. LaBrio in his book The Meaning of Income in the Law of Income Tax : "Even an isolated transaction in a commodity which is as stable a form of investment as land will still give rise to income where other circumstances show that the intention throughout is clearly to purchase and re-sell for gain " (page 89). The difficulty in the way of the department in this c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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