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TMI Blog1954 (11) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assesse e: N. L. Untwalia For the Commissioner : R. J. Bahadur JUDGMENT Ramaswami, J. In this case the assessment year is 1947-48 and the accounting year is the financial year ending with 31st of March, 1947. On the 1st of March, 1947, the assessee was appointed as a grain stockist at Begusarai. The assessee carried on the grain business till December, 1947. He maintained account books which showed that for the period from March to December, 1947, the income from the grain business was ₹ 1,838. On 12th of March, 1947, the Commissioner of Excise had granted two permits for molasses in the name of the assessee. One permit was for 1,400 maunds from Hussainpur Sugar Mills and the other permit was for 4,000 maunds from Sasamusa Sugar Works. The Income-tax Officer learnt this fact in consequence of the statement made by the Minister of Revenue in the Bihar Legislative Assembly on the 13th of October, 1947. The Minister disclosed in the course of his statement that persons to whom molasses permits had been given had made huge profits. The Income-tax Officer issued a notice upon the assessee under section 22(2) of the Income-tax Act. The Income-tax Officer also issued a noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the grain business the Tribunal held that the income from 1st of March, 1947, to 31st March, 1947, was ₹ 498. The Tribunal therefore held that the assessee was liable to pay income- tax on a total income of ₹ 37,998. As ordered by the High Court the Tribunal has stated a case on the following questions of law: "(1) Whether in the circumstances of the case the assessee, Sri Bisheshwar Singh, was liable to be assessed in the year 1947-48? and (2) Whether the profit from molasses permits to the extent of ₹ 37,500 was a casual and non-recurring income within the meaning of section 4(3)(vii) of the Income-tax Act, and therefore not liable to be taxed in the hands of the assessee?" As regards the first question Mr. Untwalia submitted on behalf of the assessee that the previous year for the grain business was the period from 1st of March, 1947, to December, 1947, and there was no justification for the Tribunal to hold that the previous year of the assessee corresponded to the period from 1st of March, 1947 to the close of the financial year. The argument of Mr. Untwalia is based upon section 2(11)(c) of the Act. Section 2(11)(c) is in the following terms: "'pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xercised any option and the Income-tax authorities were therefore right in treating the period from 1st of March, 1947, to 31st of March, 1947, as the "previous year" for the business of the assessee. As regards the second question Mr. R.J. Bahadur took the objection that the question of law was not taken on behalf of the assessee before the Tribunal and the question has not been discussed or answered by the Tribunal in its appellate order, Mr. Bahadur put forward the contention that the question was not argued before the Tribunal and the Tribunal had no opportunity to discuss the point or to pronounce upon its validity. Counsel said therefore that the question of law did not "arise out of the order" of the Tribunal within the meaning of sections 66(1) and 66(2) of the Income-tax Act. In support of his submission counsel referred to Maharaj Kumar Kamal Singh's case [1954] 26 I.T.R. 79 in which a Bench of this Court observed that the correct interpretation of section 66(1) was that the question of law which the assessee seeks to refer must be a question of law which has actually been raised before the Tribunal or actually dealt with by it in its order. On behalf of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is therefore taxable under section 10. Section 4 deals with the total income of an assessee and enumerates the categories to be included or excluded. Section 4(3) provides for a number of exceptions, one of which is contained in clause (vii). That clause, read with the opening words of sub-section (3), enacts that "any receipts not being receipts arising from business...which are of a casual and nonrecurring nature............ shall not be included in the total income of the person receiving them". This clause therefore provides for the exclusion of receipts of a casual and non-recurring nature, but at the same time enacts that if such receipts are receipts from business they will be treated as taxable income. The clause therefore provides by implication that any casual receipt from trade or from an adventure in. the nature of trade should be regarded as income and should be assessable to tax. The question at issue in this case is therefore whether the profits made by the assessee from the sale of molasses permits to the extent of ₹ 37,500 are receipts from business, that is to say, are receipts from an adventure in the nature of trade. What are the tests for determining wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the fact that the Minister of Excise has stated in the Bihar Legislative Assembly that the persons to whom molasses permits were given had made huge profits. The Tribunal has also found that "trafficking in permits was common". All these facts suggest that there was an organised exploiting of the molasses permits, that there was regular operation and scheme of profit making on the basis of the molasses permits. It is clear that the transaction of the assessee constituted an activity in the nature of trade and the profit derived by the assessee from the transaction is therefore liable to be taxed by the Income-tax Department. Mr. Untwalia on behalf of the assessee stressed the point that the assessee had taken part only in an isolated transaction of sale of permits to Mr. Sabir Ali. But an isolated transaction is sufficient in itself to constitute an adventure in the nature of trade. It is not necessary for the Department to prove a course of multiple dealings on the part of the assessee. To quote the language of Lord President Clyde in Balgownie Land Trust Ltd. v. Commissioners of Inland Revenue [1929] 14 Tax Cas. 684 at 691, "a single plunge may be enough provided it is show ..... 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