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TMI Blog1973 (12) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... nd relates to an assessment proceeding against B. K. Worah of Dhanbad (hereinafter referred to as " the assessee "), relating to the assessment year 1962-63. The facts leading to the reference, stated briefly, are as follows : The assessee is an individual. He has income from house property, dividends and interest. On the 4th August, 1961, the assessee entered into a forward contract for sale of 3,000 shares of Indian Iron Steel Co. at the rate of Rs. 26.55 per share. He entered into another contract for sale of 12,000 shares of the said company on the 9th August, 1961, at the rate of Rs. 26.22 per share. On the 30th August, 1961, the contracts were settled by payment of the difference. The ruling price on that day was Rs. 25.50 per share. This resulted in receipt of a sum of Rs. 19,485 by the assessee. The Income-tax Officer treated the aforesaid sum as speculation profit and included it in the assessment of the assessee. The assessee challenged the inclusion of the said amount in appeal before the Appellate Assistant Commissioner on the ground that the said profit was not as a result of an adventure in the nature of trade so as to bring it within the definition of " business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P. Sinha J. (as he then was), in the aforesaid case of Saroj Kumar Mazumdar, who observed as follows : " It is not disputed on behalf of the respondent that the question now before us is a question of law, or a mixed question of fact and law, as has been recently laid down by this court in the case of G. Venkataswami Naidu Co. v. Commissioner of Income-tax. Speaking for the court, Gajendragadkar J., after a detailed discussion of the decisions of this court in Sree Meenakshi Mills v. Commissioner of Income-tax and Oriental Investment Co. Ltd. v. Commissioner of Income-tax and of the House of Lords in Edwards v. Bairstow, came to the conclusion that the question arising in the case is a mixed question of law and fact, and, therefore, open to examination by this court. " The same view was reiterated in the case of Khan Bahadur Ahmed Alladin and Sons and their Lordships observed that the decision of the Appellate Tribunal on this issue was open to challenge. Applying the aforesaid principles, I will now examine as to whether, on the facts and in the circumstances of this case, the inference drawn by the Appellate Tribunal that the transaction was casual in nature is valid and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show, nor he appears to have made out such a case, that at the time of forward sale he was holding 15,000 or more shares of Indian Iron and that he had entered into the transactions of forward sales with the intention of disposing of those shares, but, later on, when he found that the market had gone down, he squared up the transactions by earning a profit. Although the onus to prove that the sum in question was chargeable to income-tax was on the department, facts within the special knowledge of the assessee had to be placed and proved by him. If such facts could have been shown or proved, one could say that the profit derived from the transaction was an accidental one and not a profit from an adventure in the nature of trade. In most of the decided cases, the initial transaction is one of purchase of properties, shares or other commodities which may prima facie be with the object or intention of investment of money. But, in the instant case, the transactions of forward sales by the assessee, who was a big investor in shares, could not be for the purpose of further investment. Surely, they could be for the purpose of release of a portion of the invested money. Nothing was shown b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an isolated transaction can be an adventure in the nature of trade, if the necessary ingredients are there. The expression " adventure in nature of trade " presupposes some isolated transactions speculative in nature. Learned counsel for the assessee has drawn our attention to a decision of the Delhi High Court, in Commissioner of Income-tax v. Raunaq Singh Swaran Singh, in support of his contention that the finding arrived at by the Tribunal regarding the nature of the transaction is binding on the High Court. As I have already pointed out, the question regarding the nature of a transaction is a mixed question of law and fact. In that view of the matter, it is open to this court to arrive at its own conclusion drawn from the facts of the case ; of course, the primary facts need not be questioned before the High Court. Learned counsel has also referred in this connection to the case of Mrs. Sooniram Poddar v. Commissioner of Income-tax, in support of his contention that every speculation is an adventure, but not necessarily an adventure in the nature of trade. This proposition cannot be disputed and every adventure made by an assessee has to be judged on the facts and the circum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orse race cannot be held to be at par with the profit derived by sale of shares after having entered into forward contract for sale. Learned counsel has also relied on a decision of the Rangoon High Court in Commissioner of Income-tax v. J. I. Milne, where in consideration of a sum of Rs. 10,000 having been advanced by the assessee to a mining engineer for working certain mines the latter promised to the assessee, in the event of the mines, being sold, a sum equal to one-third of the total consideration which might be received by the sale of the mining areas held by him. The mines were sold, and, under a forward agreement, the assessee received pound 6,000 in cash. The income-tax department claimed from the assessee tax on the aforesaid amount of pound 6,000. A Full Bench of the Rangoon High Court, on a consideration of the facts and the circumstances of that case, held that it was not a profit or gain derived from other sources within the meaning of section 12 of the 1922 Act, and it was a receipt of a casual and non-recurring nature which had been exempted under section 4(3)(vii) of the Act. In my opinion, the facts of that case and the instant case are entirely different. In t ..... 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