An isolated transaction of purchase and sale of shares can be held to be an adventure in the nature of trade if the intention was to make a quick profit and not to hold the shares as an investment.

DIPAK KUMAR SEN, J.

( 1 ) THIS reference is under Section 256 (1) of the Income-tax Act, 1961, is at the instance of the revenue, the relevant assessment year is 1963-64, the corresponding previous year ending is 31st December, 1962. The assessee is one M/s. Central Kurkhend Coal Co. Ltd. The facts which have been found and/or are matters of record may be shortly set out as follows :

( 2 ) ON the 17th January, 1962, the 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.

( 3 ) 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. 6,61,485, thus incurring a loss of Rs. 56,402. Taking into account the dividend received, a profit of Rs. 96,800 was made by the assessee in the entire transaction.

( 4 ) IN the relevant assessment the Income-tax Officer considered the income received as dividend under the head " Other sources " and treated the loss of Rs. 56,402 as a capital loss as according to him the business of the assessee did not consist in purchase and sale of shares and the shares had never been the stock-in-trade of the assessee.

( 5 ) BEING aggrieved by the assessment the assessee preferred an appeal before the Appellate Assistant Commissioner who upheld the contentions of the assessee and directed the loss suffered by the assessee arising out of the safe of the shares as revenue loss.

( 6 ) FROM this order of the Appellate Assistant Commissioner there was a further appeal by the revenue before the Tribunal. The Tribunal agreed with the finding of the Appellate Assistant Commissioner and held that the loss on the sale of shares was of a revenue nature. The Tribunal dismissed the appeal preferred by the revenue. From this order of the Tribunal the following question has been referred for our consideration : " Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the loss of Rs. 56,402 arising from the sale of shares was of revenue nature ? "

( 7 ) NO one appeared on behalf of the assessee at the hearing. Mr. Suhas Sen, learned counsel for the revenue, has contended before us that 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, namely, Sahu Jain concern. (d) The ostensible object for the sale of the shares was to pay off the dues of the company. (e) At no time the shares were transferred in the name of the assessee but stood registered in the name of the Punjab National Bank.

( 8 ) IN support of his contentions Mr. Sen has cited several decisions which we shall consider in their chronological order.

( 9 ) THE first cited was Radha Debi Jalan v. Commissioner of Income-tax [1951] 20 ITR 176 (Cal ). Here the question posed before the Division Bench of this court was whether a

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