ADDL. COMMISSIONER OF Income Tax, LUCKNOW vs BHAGAWATI PRASAD.

SATISH CHANDRA C.J. - On February 8, 1960, the assessee, Bhagawati Prasad, his brother, Mamta Prasad, his wife, and his mother jointly purchased 9 bighas 19 biswas and 8 dhoors of land along with a building situate in a village Tulsipur Mahmoorganj, District Varanasi, for a sum of Rs. 84,061. Subsequently, by two sale deeds dated June 8 and 9, 1966, a total area of 2 Bighas 9 biswas and 2 biswas was sold for a total consideration of Rs. 60,000. For the assessment year 1967-68, the Income Tax Officer estimated the original cost of the land sold at Rs. 15,000 and worked out the profit at Rs. 45,000. The assessees one-fourth share was computed at Rs. 11,250 and this was added to the income of the assessee.

The assessee appealed. He attacked the finding that the transaction of purchase and sale of land represented an adventure in the nature of trade. It was stressed that it was a solitary transaction and the assessee was not carrying on the business of buying and selling land. The firm of which the assessee was a partner carried on business in tobacco and pan masala. The Appellate Assistant Commissioner accepted the assessees plea and deleted the addition. The department went up to the Tribunal but failed. At the instance of the commissioner, the Tribunal has referred the following question of law for our opinion :

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the purchase and sale of land by the assesseee did not amount to an adventure in the nature of trade."

The test for determining whether a transaction was an adventure in the nature of trade has been laid down by the Supreme Court in the case of Janki Ram Bahadur Ram Vs. Commissioner of Income Tax, Calcutta, . It was held that the facts that the assessee had a profitable bargain when he purchased the property and that he had a desire to sell the property if a favorable offer was forthcoming could not, without other circumstances, justify an inference that the assessee intended by purchasing the property to start a venture in the nature of trade. The Tribunal has found that apart from the intention at the time of purchase of the property that the assessee had a profit motive in mind, no circumstance has been brought to conclude that the transaction was an adventure in the nature of trade. The assessee does not deal in land. The firm of which he is a partner carries on a very different kind of business. The land was purchased in 1960. A small portion was sold several years later. On these facts, we are satisfied that the Tribunal was justified in drawing the inference that the transaction did not represent an adventure in the nature of trade.

We, therefore, answer the question referred to us in the affirmative, in favour of the assessee and against the department. As no one has appeared on behalf of the assessee, there will be no order as to costs.