A single transaction of purchase and sale of land, which is not in the line of the assessee's business and is an isolated or a single instance of a transaction like that, is not an adventure in the nature of trade unless the Revenue can bring the case within the words of the statute, namely, that it was an adventure in the nature of trade.

Judgement

B. P. SINHA J. : (On behalf of BHAGWATI and SINHA JJ.) The only question for determination in this appeal by special leave, is whether the solitary transaction in respect of about three quarters of an acre of land in the suburbs of Calcutta, was an adventure in the nature of trade and, therefore, liable to income-tax. The assessee is the appellant. He challenges the correctness of the order of the Income-tax Appellate Tribunal, Calcutta Bench, Calcutta, dated 26-3-1954, passed in I. T. A. 5263 of 1953-54, in respect of the Assessment year 1948-49, reversing that of the Appellate Assistant Commissioner of Income-tax, Range "C", Calcutta, dated 5-9-1953.

2. The facts of this case leading up to this appeal are as follows: The appellant is engaged in various types of business activities, being a share-holder and Director or Managing Director of several limited liability concerns, and is also a partner in the firm known as Pioneer Engineering Works". In respect of his income during the previous two assessment years, the appellant was assessed to income-tax on the sums of Rs. 53,000 (1946-47) and Rs.59,000 (1947-48). The appellant holds investments in shares of the value of Rs. 2,45,000, out of which, according to the assessee, shares of the value of Rs. 1,95,000, though standing in his name, belong to other members of his family, including his father and his wife.

3. The Hindusthan Co-operative Insurance Society Limited, of Calcutta, (hereinafter referred to as "the Society"), acquired a block of about 578 bighas of land lying between Diamond Harbour Road and Tolly s Nullah, within the Municipal limits of the Corporation of Calcutta, between the years 1940 and 1942. The Society decided to level the land thus acquired and to open out roads; and after developing the same, it sub-divided it into small plots and sites in different blocks suitable for residential purposes under its scheme called The New Alipore Land Development Scheme No. XV". The Society offered such plots for sale. One such plot, being plot No. 77 in block "E" of the said Scheme, was agreed, by an agreement dated 10-1-1946, to be sold to the assessee at the rate of Rs. 2,550 per katha . In pursuance of the said agreement, the assessee paid to the Society, a sum of Rs. 13,099 being 10 per cent. of the estimated price of the plot with an approximate area of 51 kathas , which subsequently, on exact measurement, was found to be 45. 56 kathas . Subsequently, on the acceptance of his offer, the appellant paid another sum of Rs. 19,649 (omitting annas), being 15 per cent. of the estimated price. Thus, in all, a sum of Rs. 32,748 being 25 per cent. of the estimated total price of the land, was paid by the assessee to the Society. All this area which the Society had undertaken to develop and sell to different purchasers in small plots, was in occupation of the Government, which had requisitioned it for purposes connected with the prosecution of the Second World War. Hence, one of the terms of the transaction between the assessee and the Society, was that the transaction of purchase would be completed within six months of the lands being released from Government occupation. It was further stipulated that the assessee would be entitled to apply, within three months of the receipt of the notice of de-requisition, for extension of time not exceeding one year, for the completion of the transaction on the condition that he paid interest at the rate of 7 per cent. per annum on the outstanding amount, during the extended period. If the assessee, as purchaser, paid to the Society another sum which, together with Rs. 32,748, already paid, would amount to 50 per cent of the total price of the plot in question (within six months of the notice of de-requisition), he could get a conveyance of the property on his executing an English Mortgage for the remaining 50 per cent. of the price carrying interest at the rate of 7 per cent. on the expiry of these aforesaid six months.