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TMI Blog1967 (2) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... nd on January 1, 1942, he was possessed of over Rs. 21 lakhs. It is not in dispute also that this amount was not connected with his business and was merely his own personal wealth outside the business. He had kept this money intact in various Indian and foreign banks in current account and as call money and fixed deposits. The cash on hand alone was over Rs. 6 lakhs. During his lifetime F. Racek purchased a large number of gold bars commencing from November 15, 1933, and until a few days before he passed away on March 15, 1943. These bars have been subsequently sold and a composite statement of purchases and sales has been given in the statement of the case which for convenience may be reproduced here. -------------------------------------------------------------------------------------------------------------------------------------------------- Date of No. of Cost Date of No. of Sale proceeds purchase bars Rs. sale bars Rs. -------------------------------------------------------------------------------------------------------------------------------------------------- 1 2 3 4 5 6 ---------------------------------------------------------------------------------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... those investments, she did so, and at no time was there any profit motive. Now the principles on which transactions of this kind fall to be judged are well settled. In Tribhuvandas Vallabhdas v. Commissioner of Income-tax this court had occasion to deal with purchases and sales of a similar nature in silver bars and the Division Bench, to which my learned brother was a party, referred to the decision of the Supreme Court in G. Venkataswami Naidu and Co. v. Commissioner of Income-tax. It was pointed out that the question whether a transaction was an adventure in the nature of trade will depend upon the facts and circumstances of each case and, in order to determine whether the transaction was an adventure in the nature of trade, there are laid down no general or absolute tests which may apply to all or even a large number of cases. They referred to the decision of the Supreme Court and to a number of circumstances there recounted and followed the principle that " The presence of all these relevant factors may help the court to draw an inference that a transaction is in the nature of trade ; but it is not a matter of merely counting the number of facts and circumstances pro and con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of trade. And whether the purchase of silver with a view to reselling it at a profit is called a speculation, or whether it is called an adventure, is of no account ; the dividing line between assessability and exemption depends on whether what is done is done in the nature of trade or not ". The enquiry, therefore, would primarily be directed to determining what was the motive or intention of the assessee in undertaking those transactions ; was it the true intention to trade or do business or was it merely to invest moneys and safeguard investments ? In the light of these principles, we turn to examine the facts as they confirm in the present case and it would be convenient to consider the application of these principles to the facts in two parts, firstly, as to the conduct of the husband vis-a-vis the gold bars and, secondly, the activities of the wife after the death of F. Racek vis-a-vis the gold bars. Now, it seems to us that, so far as the husband's dealings are concerned, there can be no manner of doubt that he did not undertake the purchase of the gold bars as a business activity. We have already pointed out that all that he did during his lifetime was to purchase gold bar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is solitary circumstance can lead to that inference. Though, no doubt, the amount was large and all of it was invested in a month, considered in the context of the deceased's total wealth, it was not large. A man worth about Rs. 21 lakhs could certainly make an investment of about Rs. 31 lakhs in gold bars without his being charged with the intention to do business or trade in them. We can understand transactions where large amounts are invested by an assessee far in excess of his capital, for instance, if a man possessed of one lakh of rupees wants to buy gold bars worth Rs. 20 lakhs, one can well say that he is trying merely to speculate and, since he could not afford to buy so much gold, it must be with the intention of reselling the whole or part of it at a profit at a later date. But that is not the case here. Having regard to the total wealth of the deceased and all the other circumstances, these purchases were clearly in the nature of an investment. At any rate, even if two conclusions can be drawn from the facts (which is not the case here), we think that the conclusion that is favourable to the assessee must be accepted. We, therefore, think that so far as the dealings of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom her and, therefore, the circumstances under which these two transactions were made have not been clarified. It may be that the order for the first purchase was placed during the lifetime of her husband. Even the second purchase is within a month and 18 days after the demise of her husband. The circumstances are not decisive enough to suggest a business. On behalf of the department a statement showing the lowest and highest rates which gold touched during each of the months between March, 1942, and March, 1947, has been appended to the statement of the case and if one looks to this list of the prices, one finds that on March 31, 1943, 15 days after F. Racek passed away, the price of gold was 71-10-0, the highest which it had reached from March, 1942. Yet, we are asked to hold that when the lady made this purchase on March 25, 1943, she did it as a business transaction. Few businessmen buy when the prices are high. What is worse is that on May 3, 1943, the price of gold had further sharply risen by about Rs. 26 per tola. The price on that day was Rs. 97 and yet once again we are asked to hold that the lady was making those purchases as a business proposition. We cannot, conceive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his motive in buying the gold bars was a profit motive. To say that he died before " he could dispose of any " is to assume that he intended to do so. In our opinion, therefore, it was upon this fallacious reasoning that the Tribunal came to the conclusion that the deceased was trading in gold bars. As to the assessee the Tribunal observed : " The nature and quantity of the subject-matter of these transactions, the frequency with which they were repeated from time to time, depending on the market conditions, even selling at a loss occasionally when funds were not otherwise required would certainly exclude any suggestion that the transactions could be otherwise than as business ". The last words " exclude any suggestion that the transactions could be otherwise than as business " show that the Tribunal placed a wrong burden on the assessee to establish that she was not doing business. We have shown upon the authorities that, since the assessee was not engaged in any business previously, it was for the department to show that her transactions were in the nature of a business. Apart from that we have shown that neither the nature nor the quantity of the subject-matter of these transact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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