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TMI Blog1961 (2) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... date of sale, nothing was done 'to mature the goods to make them marketable' nor was any expenditure incurred to maintain them intact. (4) That in the computation of the capital for the Excess Profits Tax Act, the price of silver bars was excluded. (5) That the instrument of partnership restricted the partners to carry on only the sole selling agency business of J.K. Cotton Mills Ltd. The Income-tax Officer met the above contentions by the finding that Japan had declared war only in December, 1942, and there was no panic as alleged by the assessee. The Income-tax Officer further found that it was admitted by the assessee that it had ₹ 1,50,000 in bank. He referred to the fact that the investment in silver bars was only to the extent of ₹ 30,700. Regarding the contentions (2) and (3) above, he referred to the observation of Mr. Justice Munir in In re Beharilal Jhandu Mal(1) which is to the following effect(2) : There is no substance in this contention because it has been repeatedly laid down that a single transaction of purchase and sale outside the assessee's line of business may constitute an adventure in the nature of trade even if the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rently it was with the idea of making profits, the market for silver continuously rising. The above statement was placed before the parties. Mr. S.J. Singh and Mr. Satish Chandra appearing on behalf of the assessee were heard as also the departmental representative. The assessee's learned counsel suggested some minor modifications by way of addition of certain passages from the Income-tax Officer's order itself. We have done this wheresoever necessary. It was further submitted by him that the figures of interest given by the Appellate Assistant Commissioner in the passage extracted by us in paragraph 5 were not correct. No such objection appears to have been taken at the time of the original hearing before the Tribunal, nor is there is to be found any ground of appeal. Paragraph 3 of the Tribunal's order was required to be extracted. We have not though it necessary to do so as that order itself had been made part of the case. The departmental representative on behalf of the respondent has no suggestion. The statement is finalised. Satish Chandra, for the assessee Gopal Behari, for the Commissioner JUDGMENT The judgment of the court was delivered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which have been made part of the statements of the case, we find that the following relevant facts have to be taken into consideration in order to answer the question referred to us: 1. That the transaction of purchase and sale of silver by the assessee was outside the line of regular business of the assessee. 2. That it was a solitary transaction of purchase and sale and no regular business in purchase and sale of silver was carried on until some time after this transaction had been completed by resale of the silver bars in September, 1944. 3. That the silver bars were purchased at the end of December, 1941, and in the beginning of January, 1942, when there was a rising market in silver and the prices were going up, so that anyone purchasing silver at that time could be expected to make a profit on its re-sale. 4. That the assessee was unable to establish any other motive for the purchase of 15 silver bars in December, 1941, and January, 1942, apart from the motive of making a profit by subsequent resale. A different motive was suggested on behalf of the assessee which was to the effect that, at that time, there was war and panic due to war as Japan had also joined in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings for the chargeable accounting periods during which this money remained invested in silver bars. 7. That a separate silver khata was being maintained in the books of account of the assessee relating to the selling agency business. These are, it appears to us, the only facts and circumstances which have to be taken into account in order to determine whether this transaction of purchase and sale of silver bars was or was not an adventure in the nature of trade. One more fact was mentioned by the Income- tax Appellate Tribunal and the income-tax authorities which was used as an argument against the assessee's point of view but which learned counsel for the assessee before us tried to use as an argument in favour of the assessee. This point was that, according to the finding recorded this sum of ₹ 30,000 and odd was used for purchase of silver bars at a time when there was a balance of about one and a half lakhs of rupee with the assessee. The Income-tax Officer mentioned that this balance was in the bank whereas the Tribunal has mentioned that this sum of one and a half lakhs of rupees or so represented the capital of the assessee. Both the Income-tax Officer and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsaction and the third is that it was treated as an excluded amount in the computation of the excess profits tax assessment. These three circumstances are, no doubt, in favour of the assessee, but where other and much stronger circumstances exist, they cannot be decisive of the matter, particularly because these circumstances can co-exist with the transaction being in the nature of trade. Even one solitary transaction outside the line of business can be entered into by a businessman with the sole and exclusive object of earning a profit and not at all with the object of making an investment for keeping his money safe or getting earnings from that investment or using the property in which the money is invested. In such a case, as indicated by the Supreme Court in Venkataswami Naidu and Co v. Commissioner of Income-tax [1958] 33 I.T.R. 594 (S.C.), a very strong presumption arises that the transaction was an adventure in the nature of trade and such a presumption can only be displaced by other cogent circumstances. In the present case, there was the fact that the purchase was made at a time when the market was a rising market and good profit could be expected from the resale of the si ..... X X X X Extracts X X X X X X X X Extracts X X X X
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