LexKHAN BAHADUR AHMED ALLADIN & SONS versus COMMISSIONER OF INCOME-TAX, ANDHRA PRADESH
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A • B c D It F G H KHAN BAHADUR AHMED ALLADIN & SONS v. COMMISSIONER OF INCOME-TAX, ANDHRA PRADESH November 24, 1967 [J. C. SHAH, V. RAMASWAMI AND V. BHARGAVA, JJ.) Indian Income-tax Act, 1922, s. 2(4)-Adventure in the nature of trade--What is-Tests to determine-Question is mixed question of la»' ond fact-Tribunaf s duty in preparing statement of case; The assessee firm purchased a Brengun factory from the Government of India and sold the stores and pan of the lands and buildings shortlv afterwards at a higher price. It admitted before the Income-tax autho- rities that the purchase and sale in respect of the stores constituted an adventure in the nature of trade, but in respect of the land and buildings sold it contended that they had been purchased by way of investment, and the sale of a part of them did not result in assessable profit. The claim was rejected by the Income-tax Officer, by the Appellate Commis- sioner, and by the Appellate Tribunal. The High Coun in a reference un&,r s. 66( I) also rejected it. The firm appealed to this Court by special leave. HELD : (i) In reaching the conclusion that a transaction is an adventure in the nature of ttade, the Appellate Tribunal has to find the primary evidentiary facts and then apply the legal principle involved in the statutory expression "adventure in the nature of trade",_ used in s. 2(4) of the Indian Income-tax Act. A question of this description is· a mixed question of law and fact and the decision of the Appellate Tribunal thereon is open to challenge under s. 66( I) of the Act. [442 F-GJ (ii) The question whether the transaction is an adventure in the nature of trade must be decided on a consideration of a11 the relevant facts and circumstances which are proved in the particular case. The answer to the question does not depend 011 the application of any ab- stract rule, principle or formula but must depend UPQn the total im- pression and effect of all the relevant facts and circumstances established in the panicular case. [442 HJ (iii) In the present case the appe!lant firm purchased the Brengun factory from borrowed money. The income from the property was onlv about 1/6 of the interest payable by the company on the money borrow· ed. The first sale was effected by the firm within three months of the purchase. and the sums received from sale were utilised for paying off the debts as also the dues to the Government. The firm had not enough financial resources to invest the monev required to purchase the facto!"'.' and the transaction could not therefore be with a view to making a perma· nent investment, but only for making profit. It had not been established by evidence that the appellant firm purchased the Brengun factocy for the purpose of establishing a cycle factory. Having regard to the total effect of an the relevant facts and circumstances established in the case it was rightly held by the High Court that the transaction was an adventure in the nature of trade and pan of a profit making scheme. [448 B-HJ (iv) The •tatement of case is not intended to be a mere copy of the order sheet in a litigation but it must set out the ooints raised by the aggrieved party, the reply thereto, if any, and the authorities or statutory • 440 SUPREME COURT REPORTS [1968) 2 S.C.R. provisions relied upon for t~ view taken by the Appellate Tribunal to- .~ether with an intelligible summary of the factS found by the Appellate Tribunal. The Tribunal should clearly state its conclusions and findings ot fact and should not leave it r:o the lfigh Court or this C..ourt to deduce the findings or to collect facts from a large number of documents which :ire part of the record of the case. [449 A-DJ Vankataswc.n1i l'Vaidu &: Co. v. (."ommissioner of Income-tax. 35 l.T.R. 594, Californian Copper Syndicate v. Harris, 5 T.C. 159, Martin v. I.awry, 11 T.C. 297, Rutledge v. Con1missioners of Inland Revenue, 14 Tax Cases 490, Commissioners of Inland Revenue v. Fraser, tk cssess<e, 24 Tax Cases 498, Leeming v. Jones, 15 Tax Cases 333, Saro; Kumar Mazumdar v. Commissioner Income-tax, West Bt1111al, 37 l.T.R. 242 and Commissioners of Inland Revenue '" Reinhold. 34 Tax Cases 389, refer- red to. C1v1L APPEi.I.ATE JUR1smcnor; : Civil Appeals Nos. 708 to 710 of 1%6. Appeals by special leave from the judgment and order dated July 23, 1964 of the Andhra Pradesh High Court in Case Referred No. 42 of 1962. B c Suk
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