9911796707
TMI Blog1955 (4) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... was assessed to tax in the assessment year 1948-1949. The Tribunal ultimately confirmed that assessment. On the application of the assessee under section 66(1) of the Income-tax Act, the Tribunal referred to this Court the following question : "Whether there was material for the assessment of the sum of ₹ 43,887 being the difference between the purchase and sale price of the four plots of land as income from an adventure in the nature of trade ?" The real scope of the question referred to us is, whether there was material on record on which the Tribunal could come to the conclusion that the isolated transaction of purchase and sale, the two being separated by an interval of more than five years, was not an investment as pleaded by the assessee, but was an adventure in the nature of trade. That question, despite the numerous cases cited before us, has to be answered primarily with reference to the facts of this case as found by the Tribunal. The Courts in England and in India have consistently refused to evolve a formula of universal application to decide the question, when an isolated transaction of purchase and subsequent sale, with or without a substantial inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fected the determination of that question. The situs of the land, of course, was a relevant factor to be taken into account. The Tribunal was certainly entitled to rely upon the third and fourth of the factors listed above to reject the contention of the assessee, that it was as an investment that the assessee purchased these lands. With reference to item 5 of the six factors mentioned above, we have to observe that, while it was open to the Tribunal to draw an inference adverse to the assessee from the non-production of a relevant document in its possession, that is, the minutes book of the assessee company, such an inference should have been drawn only if the assessee had been directed to produce the document and had failed to comply with the direction. The learned counsel for the Commissioner could not draw our attention to anything on record which could show that there had been such a direction and a subsequent failure on the part of the assessee. We shall therefore leave out of account findings 1, 2 and 5, except to the extent of taking due note of the fact, that the lands in question were adjacent to the mill premises. The sixth of the factors taken into account by the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference to all the facts proved in that case. Of the cases cited before us by the learned counsel for the assessee we shall refer only to two, Commissioners of Inland Revenue v. Reinhold 34 TC 389 at 393 and Radha Debi v. Commissioner of Income-tax, Calcutta [1951] 20 ITR 176 . It was not such an unqualified proposition of law, as the learned counsel for the assessee urged for our acceptance, that was laid down in either of these two cases. In Reinhold's case (supra) the main fact on which the taxing authorities relied was that the assessee admitted that he had bought the property which he subsequently sold not as a residence for himself but for sale, and that he had instructed his agents to sell whenever a suitable opportunity arose. After quoting with approval the observation of Lord Dunedin in Leaning v. Jones 15 TC 333. "The fact that a man does not mean to hold an investment may be an item of evidence tending to show whether he is carrying on a trade or concern in the nature of trade in respect of his investments but per se it leads to no conclusion whatever": Lord Carmont stated: "A disclosed intention not to hold what was being bought might, as Lord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Committee can perhaps be adjusted to a casual receipt from a stray operation is by holding that while a transaction may be a single one and in that sense isolated, it must nevertheless have some width of content and must comprise some activity in the nature of operations which are ordinarily followed in respect of trade." That was the test the learned Chief Justice postulated to decide whether a given transaction was an adventure in the nature of trade. The learned Chief Justice obviously did not lay this down as an absolute and unqualified test, because he also recorded: "It is well settled now that the mere fact that a person purchases a commodity with the intention of reselling it at a profit does not by itself make the transaction of purchase and sale a trade. Such intention, however, is certainly an element to be borne in mind, but is not by itself decisive.............Perhaps it will not be incorrect to say that if a person purchases by an isolated transaction some particular commodity merely in the hope and expectation that he may some day be able to sell it at a profit, he cannot be said to be trading; but if, as Lord President Clyde observed in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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