( 1 ) THE Income-tax Appellate Tribunal, Hyderabad Bench, made the following reference in R. A. Nos. 1285, 1109 and 1110 of 1960-61 arising out of I. T. A. Nos. 6852 of 1955-56 and 2551 and 2552 of 1957-58: " Whether the purchase of the site and buildings known as brengun Factory was in the course of a profit-making scheme or an adventure in the nature of trade ?" this reference relates to the assessment years, 1358-F, 1953-54, and 1954-55, the relevant accounting periods being the years ending 30th September, 1948, 30th september, 1952 and 30th September, 1953 respectively.

( 2 ) THE assessee firm, Messrs. Khan Bahadur Ahmed Alladin and Sons, Secundera- bad (hereinafter referred to as Alladin and Sons), consists of three partners, Khan bahadur Ahmed Alladin, and his two sons, Khan Saheb Dost Mohammed Alladin and Noor Mohammed Alladin. It purchased the Brengun Factory and properties attached to it in the outskirts of the city of Hyderabad, consisting of 403 acres of land, 14 factory buildings, about one hundred residential quarters, railway sidings, furniture, etc. , in addition to the stores, from the Government of India. The price of the factory, which term would include the entire property purchased except the stores, was fixed at Rs. 27 lakhs (I. G.) while the price of the stores was fixed at Rs. 9 lakhs (I. G. ). During the relevant assessment years, and also during the assessment years, 1951-52 and 1952-53, the assessee sold portions of the factory and stores to several companies. It is not disputed that during the assessment year 1358-F. the excess over the price realised by the re-sale of the stores was Rs. 2,35,745 O. S. and the excess got over the entire purchase price of the factory by re-sale to three companies was rs. 4,50,367. It was admitted even before the Appellate Tribunal that the surplus realised by the sale of stores was not a capital accretion, but an adventure in the nature of trade. But with regard to the factory, it was argued that it was an investment, but not an adventure in the nature of business, and as such the excess amount realised represented realisations of capital asset. That contention did not find favour with the Income-tax Officers, the Appellate Assistant Commissioner, and the Income-tax Appellate Tribunal, by a majority of two against one in respect of the assessment year 1358-F. , and by both members for the assessment years 1953-54 and 1954-55. The Appellate Tribunal held that the assessee firm had planned a well-calculated scheme of profit-making, that they had the intention of exploiting the properties which they had purchased to their advantage, that the transactions in question were adventures in the nature of trade, and any surplus which they got by sale of the portions of the properties was liable to tax. It is this finding of the Appellate Tribunal that is challenged before us.

( 3 ) SRI D. Narasaraju, the learned Counsel for the assessee, has raised several contentions, which may be summarised as follows :- the partners of the assessee firm, along with Abdullah Alladin, brother of khan Bahadur Ahmed Alladin, have been carrying on business as a partnership firm under the name of Khan Bahadur Ahmed Alladin and Co. (hereinafter referred to as Alladin and Co. ). It has substantial interest in various joint stock companies and is the managing agent of several companies, and with considerable financial resources. They undertook several ventures for supplying goods to Government departments. During war they joined the Atlas Trading Corporation, and supplied trucks to the Government of Hyderabad, and several articles to the Military department on a large scale. They acquired the Brengun Factory with the intention of starting a bicycle factory or some other industry as an investment, but not with the intention of re-sale. It is no doubt true that some portions of the factory and the stores were sold by three partners of Alladin and Co. , who constituted the assessee fir