Ram Iswara V. Commissioner Of Inland Revenue

1962  Present : L. B. de Silva, J., and Sri Skanda Rajah, J.

H. V. RAM ISWARA,  Appellant, and COMMISSIONER 
 OF INLAND REVENUE, Respondent

S. C. 3 of 1962-Income Tar, Case Stated BRA/303

Income Tax Ordinance-Section 6 (1) (a)-Case stated-Power of Supreme Court to examine questions of mixed law and fact-Meaning of" an adventure or concern in the nature of trade ".

In a case stated by the Board of Review under section 78 of the Income Tax Ordinance it is open to the Supreme Court to reject a conclusion reached by the Board on a question of mixed law and fact. In such a case, the Court would have to accept the findings of the Board on the primary questions of fact, but it can examine whether the Board has applied the relevant legal principles correctly or not.

The assessee's wife bought a land ostensibly for the purpose of building on it a house for her own use and occupation. She divided the land into 14 separate lots and disposed of 13 of them at such prices that she was able to get the 14th lot (70 perches in extent) for her own self for only Rs. 15,275 when its market value was Rs. 87,040, Before the authorised adjudicator it was agreed that the nett profit made by her out of the transaction was Rs. 66,331. The Board of Review decided, on the evidence, that the transaction was an adventure or concern in the 'nature of trade within the meaning of section 6 (1) (a) of the Income Tax Ordinance.

Held, that, as a question of mixed law and fact was involved, it was open to the Supreme Court to examine whether the Board of Review applied the relevant legal principles correctly or not. Even an isolated transaction can satisfy the description of an adventure in the nature of trade. Each case must, however, be determined on the total impression created on the mind of the Court by all the facts and circumstances disclosed in the particular case.

CASE stated under section 78 of the Income Tax Ordinance.

H. V. Perera, Q. C., with S. Ambalavanar and M. Amarasingham, for the assessee-appellant.

A. C. Atte.1, Solicitor-General, with H. L. de Silva, Crown Counsel, and Khiva Pasupati, Crown Counsel, for the Commissioner of Inland Revenue, respondent.

Cur. adv. vult.

November 13,1962. SRI SKANDA RAJAH, J.-

This is a Case Stated by the Board of Review under Section 78 of the Income Tax Ordinance at the request of the Assessee-appellant, whose communication is mentioned in the reference as X2. This communica­tion does not correctly set out the question submitted for the opinion of this Court. The actual question we are called upon to consider is " whether, on the facts and circumstances proved in the case, the in­ference that the transaction in question was an adventure or concern in the nature of trade is in law justified."
 

The facts as found by the Board of Review are : the assessee, who is a Proctor and Notary, was at one time living with his wife and five daughters in a rented house at Hultsdorf. Four of their five daughters were attending the St. Bridget's Convent. His wife made inquiries from brokers, who came to the assessee's office, for the purchase of a building site close to St. Bridget's Convent. A broker named Boteju offered for sale a land in extent 433 perches situated in Alexandra Place and adjoining St. Bridget's Convent. The owner of the land Mrs. Thambyah was willing to sell this land only to a person buying the entirety. This offer was, however, turned down as the land was very much in excess of her requirements and she did not have the money to pay the price demanded. Sometime later, by deed No. 3684 of 3.3.51, attested by the assessee himself, his wife, whose address is given in this deed as " Soma Siri", Kalubowila Road, Dehiwala, an agreement was entered into between the Assessee's wife and Mrs. Thambyah for the former to purchase the land for Rs. 450,000 and the former deposited a. a sum of Rs. 45,00

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