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TMI Blog1965 (10) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... what is called Thombai Estate in Malaya acquired by the Government of that country on December 31, 1954. This amount was brought to tax on the view of the revenue, with whom the Tribunal concurred, that it was a revenue receipt. The question referred to us is : " Whether, on the facts and in the circumstances of the case, there was no material to support the finding of the Tribunal that the sum of Rs. 19,673 constituted a revenue receipt assessable to income-tax ?" A Presbyterian Church of England in Malaya had a 999 years lease from the Sultan of Johore Baru in Thomboi Estate and from the church Chidambaram Chettiar and his divided brother purchased the leasehold interest for a consideration of 30,900 dollars on June 25, 1940, of whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of a sale of a certain other immovable property. On April 18, 1952, the account of the firm was credited, and the two assessees before us were debited with the proportionate cost of 1/3rd share in the estate. It was explained that this was done because this asset was set apart for a charity to be performed in India. But, in spite of the division by book entries, the estate continued to be worked out jointly by the sharers as usual, and the income divided between them inter se. As we mentioned, the Government of Malaya took over the estate and paid compensation therefor, and the amount that was included in the chargeable income of each of the assessees was derived from the compensation so paid. The Income-tax Officer considered that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l properties and that, independent of this, it was not possible to say that the acquisition and the subsequent alienation of the lease constituted an adventure in the nature of a trade. We are of the view that the approach made by the Tribunal to the problem is not correct. When a transaction relates to a land, there is no presumption as to whether it is in the nature of capital investment or is a stock-in-trade. When the Tribunal said that " there is no evidence to show that this was held as an investment ", it is apparent that in the absence of evidence it was prepared to assume that the asset was a stock-in-trade. Instead, the Tribunal should have asked itself the question : " What material was there to regard the asset as a capital inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew to get adequate income, but this need not necessarily be so. But, in this case, the negligible income derived subsequent to 1942 is explained and it does not assist in deciding the character of the asset. The question then is : what is the material on which the conclusion reached by the revenue as well as the Tribunal as to the nature of the estate is rested. The facts relevant to this matter are these. As we said, the leasehold interest was acquired in 1940 and it may be taken that it was part of the the stock-in-trade prior to 1950, but when Chidambaram Chettiar and his sons became divided on April 30, 1950, and 1/3rd share in the estate belonging to the family was allotted to the sharers, the allotment so made could no longer conti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of lands, it will be more readily assumed that a particular asset is possibly a stock-in-trade. But that assumption must be based on some material at least. Once we know that the asset was capital in the hands of the assessees from May 1, 1950, and after the family got divided, one should look for facts and circumstances which bear on the treatment of that asset and which should lead to the inference that, by such treatment, what was a capital asset was converted into stock-in-trade. How this process will be applied cannot be generalised, for, in the very nature of things, each case will have to be decided on the particular facts, and the conclusion must be arrived at on the cumulative effect of their evidentiary value. We have no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... geable to tax as a revenue receipt. We are confirmed in that view by the further fact that, though the leasehold interest was acquired in 1940, it has been held by the original purchasers and subsequently by the joint family and the firm for a long number of years and they have derived income from it. It is contended for the revenue that inasmuch as the assessees had knowledge of the anticipated acquisition by the Government of the asset from a letter of certain solicitors dated October 21, 1952, the entries in the books of the firm transferring the asset to the assessees were made with an intention that the assessees might take advantage of it and make a profit. That was how the Tribunal also was inclined to view it in a portion of its o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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