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TMI Blog1977 (10) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee purchased 7,000 unquoted shares of one Parshva Properties Ltd. for a consideration of Rs. 7,17,500 at the rate of Rs. 102.50 per share. Bank charges amounting to Rs. 387 were incurred in the process, the total cost amounting to Rs. 7,17,887. Dividend was declared shortly after the purchase by the said company at the rate of Rs. 31.20 per share and the assessee received from its purchase a gross dividend of Rs. 2,18,400. Tax amounting to Rs. 65,520 was deducted from this gross dividend and accordingly the net dividend amounted to Rs. 1,52,880. Between 3rd March and 19th March, 1962, the assessee sold all the 7,000 shares at prices varying from Rs. 95 to Rs. 96. The total amount realised by the assessee on such sale was Rs. 6,61 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in the facts and circumstances of this case the transaction by the assessee in respect of the said shares cannot be held to be an adventure in the nature of trade and, therefore, the loss arising therefrom cannot be treated as a revenue loss. Mr. Sen relied on the following facts which according to him would go to show that the transaction in question was a transaction other than a transaction in the nature of business or trade: (a). The assessee is a colliery company and it cannot be the regular or usual business of the assessee to deal in shares. (b) The transaction in question was an isolated transaction on unquoted shares. (c) The company whose shares were purchased and the assessee both belong to the same group of companies, n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e difficult to decide whether a given transaction is an adventure in the nature of trade or not. It is the cases on the border line that cause difficulty. If a person invests money in land intending to hold it, enjoys its income for some time, and then sells it at a profit, it would be a clear case of capital accretion and not profit derived from an adventure in the nature of trade. Cases of realisation of investments consisting of purchase and resale, though profitable, are clearly outside the domain of adventures in the nature of trade. In deciding the character of such transactions several factors are treated as relevant. Was the purchaser a trader and were the purchase of the commodity and its resale allied to his usual trade or busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d mechanically apply it to the facts before us. In this connection it would be relevant to refer to another test which is sometimes applied in determining the character of the transaction. Was the purchase made with the intention to resell it at a profit ? It is often said that a transaction of purchase followed by resale can either be an investment or an adventure in the nature of trade. There is no middle course and no half-way house ...... Cases may, however, arise where the purchase has been made solely and exclusively with the intention to resell at a profit and the purchaser has no intention of holding the property for himself or otherwise enjoying or using it. The presence of such an intention is no doubt a relevant factor and, unl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... embark on a venture in the nature of trade, when he entered into the agreement which resulted in the profits sought to be taxed. " Last cited was Raja Bahadur Kamakhya Narain Singh v. Commissioner of Income-tax [1970] 77 ITR 253. In this case, the Supreme Court again considered the expression "adventure in the nature of trade" and observed as follows: " Since the expression 'adventure in the nature of trade' implies the existence of certain elements in the transactions which in law would invest them with the character of trade or business and the question on that account becomes a mixed question of law and fact, the court can review the Tribunal's finding if it has misdirected itself in law. It is fairly clear that where a person in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... render the investment a transaction in the nature of trade. The test often applied is, has the assessee made his shares and securities the stock-in-trade of a business." From the law as cited above it appears to us that whether an isolated transaction will be held to be an adventure in the nature of trade or not will depend upon the facts and circumstances of each case. Apart from the points of fact which have been emphasised by Mr. Sen on behalf of the revenue, the following factual aspects of this case are necessary to be considered in order to answer the question referred. The assessee is a limited company incorporated under the Companies Act. As an artificial juristic person, the assessee can only have one of the two objects in respec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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