9911796707
TMI Blog1977 (11) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... obtained about 17 bighas of land situated at 83, 84 and 86/2, Ultadanga Main Road, Calcutta. The cost of the property was Rs. 1,06,335 and with the expenses incurred in connection with the purchase added, the total came to a figure of Rs. 1,10,805. This value of the property was shown in the balance-sheet of the assessee up to the previous year ending on the 30th June, 1958. On the 27th August, 1958, the land was acquired on behalf of the Calcutta Improvement Trust and an award of Rs. 7,00,822 was made in favour of the assessee by way of compensation. The assessee contended in its assessment that the value of the said property on the 1st April, 1954, on the basis of an engineer's report was Rs. 7,63,780 and, taking into question the cost of transfer and the value awarded, the assessee had suffered a capital loss of Rs. 64,158 in the transaction. The difference in value between the cost of purchase by the assessee and the amount of compensation did not arise from an adventure in the nature of trade. The Income-tax Officer found that the property was purchased by the assessee with borrowed capital and that the property was not an income-yielding asset. It was further found tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (d) The resolution framing the scheme of the Calcutta Improvement Trust was passed only in January, 1948, almost two years after the purchase of this land; the scheme was sanctioned by the Government in 1950, i.e., after another two years. The notice of intention to acquire the property was published in August, 1954, i.e., eight years after the purchase. On these facts, the Tribunal concluded that the assessee had not developed the property nor was there any evidence to indicate that the assessee had any intention to effect sale of the property by parcelling out the same. The property was in the possession of the assessee over a large number of years and eventually came to be acquired and it could not be said that there was even an element of certainty that the property would definitely be acquired at a future date. The Tribunal considered several decisions including a decision of the Supreme Court in the case of Janki Ram Bahadur Ram v. Commissioner of Income-tax [1965] 57 ITR 21. The Tribunal gathered the total impression from the facts to be that the property was held by the assessee only as an investment and that the transaction was not an adventure in the nature of trade. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es in the latter as also for recurring annual payments in cash for a fixed stipulated period. It was held that the amounts received by the assessee were the price paid upon a transfer of property and were not in the nature of rent or royalty or other profit arising from the property. It was further held that, as the company carried on a trade and the amounts in question were received in course of that trade, the said amounts should not be segregated from the other business earnings of the assessee. It was held that the amounts received were not capital receipts but income derived from business. The facts in this case appear to be materially different from the facts with which we are concerned and this decision, in our opinion, does not advance the matter any further. Next cited was a decision of the Supreme Court in the case of G.Venkataswami Naidu Co. v. Commissioner of Income-tax [1959] 35 ITR 594. In this case, the facts were that the assessee-firm which was a managing agent purchased four continuous plots of land adjacent to its managed companies. The assessee never made any effort to cultivate the plots or erect any structure on the same but allowed them to remain unutilis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of pride of possession come into the picture ? ......... These and other considerations are set out and discussed in judicial decisions which deal with the character of transactions alleged to be in the nature of trade. In considering these decisions it would be necessary to remember that they do not purport to lay down any general or universal test. The presence of all the relevant circumstances mentioned in any one of them may help the court to draw a similar inference; but it is not a matter of merely counting the number of facts and circumstances pro and con; what is important to consider is their distinctive character. In each case, it is the total effect of all relevant factors and circumstances that determines the character of the transaction ; ...... 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 re-sell it at a profit ? It is often said that a transaction of purchase followed by re-sale can either be an investment or an adventure in the nature of trade. There is no middle course and no half-way house. This statement may be broadly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 336. The facts in this case were that the assessee, an Indian, went to Ceylon on a short holiday. He purchased an extensive plantation in Ceylon for a sum of Rs. 1,10,000 in a closing down sale of the properties of a bank, by borrowing the entire amount. For the first year, the assessee worked the estate which yielded a net income of Rs. 16,485 but no part of the debt was repaid. In the next year, the property was sold for a sum of Rs. 1,50,000 and the sum borrowed was paid off by the assessee. The question arose whether the transaction was an adventure in the nature of trade or an investment. On the facts it was held that the transaction was in the nature of trade. The High Court held that in deciding whether a transaction was an adventure in the nature of trade or not the intention with which the assessee purchased the property was relevant and this intention could be gathered from the consideration of the entire circumstances and that in the facts on record there was material to come to the conclusion that the intention was to undertake a trading adventure. Last cited was a decision of this court in the case of Mayfair Estates Private Ltd. v. Commissioner of Income-tax [1963] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the transaction was of a trading nature. The other facts found by the Tribunal are that the company, since its incorporation in 1937, had never sold any property and the loan which was obtained by the assessee in acquiring this property was repaid by increasing the share capital. It is amply clear that the authorities below had sufficient material to hold that the assessee had no intention to undertake an adventure in the nature of trade when if originally purchased the land and that the property was held by the assessee only as an investment. As laid down by the Supreme Court in the case of G. Venkataswami Naidu Co. [1959] 35 ITR 594, in such cases, any one particular fact would not be conclusive; even the original intention of the assessee would only be a relevant factor and it is the total impression gathered from all the relevant facts and circumstances which would govern the position. This has been taken into account in the instant case by the Tribunal and it appears to us that the Tribunal has drawn a correct conclusion from the same. For the reasons given above we answer the question referred to us in the negative and against the revenue. There will be no order as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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