Thereupon the appellant applied for, and obtained, special leave to appeal to this Court.
Commissioners of Inland Revenue v. Reinhold, 1953 34 Tax Cas.
684 F. A. Lindsay, A. E. Woodward and W. Hiscox Commissioners of Inland Revenue, 1932 18 Tax Cas.
November.24.
490 Balgownie Land Trust, Ltd. v. The Commissioners of Inland Revenue, 1929 14 Tax Cas.
521 and it companyered a piece of land admeasuring 281 cents the second purchase related to 2 acres 791 cents and the price paid was Rs.
43,887 as the income of the appellant for the assessment year 1948 49, and assessed it to income tax under the head business .
Civil APPELLATE JURISDICTION Civil Appeal No.
C. Setalvad, Attorney General for India, R, Ganapathy Iyer, R. H. Dhebar and D. Gupta, for the respondent.
All the plots which were thus purchased by the appellant piecemeal are companytiguous and they adjoin the mills.
The tribunal rejected the explanations given by the appellant as to why it had purchased the properties and held that the purchase had been made by the appellant solely with a view to sell the said properties at profit to the Janardana Mills.
The reason given by the appellant for the purchase of the properties by the mills has been rejected by the tribunal and so when the mills purchased the properties it is number shown that the sale was occasioned by any special necessity at the time.
It purchased four companytiguous plots of land admeasuring 5 acres 26 cents under four sale deeds executed on October 25, 1941, November 15, 1941, June 29, 1942, and November 19, 1942, respectively for a total companysideration of Rs.
1,942 and Rs.
100 and after deduction of taxes, it left a net income of Rs.
The appellant purchased the four plots under four different sale deeds.
52,600.
He also found that, since the lands were adjacent to the Janar dana Mills, the appellant must have purchased them solely with a view to sell them to the said mills with a profit.
That is why, though the transaction was in the nature of a solitary transaction, it was held that it had all the elements of a business transaction and was thus an adventure in the nature of trade.
The tribunal agreed with the view taken by the Income tax Officer and held that the amount in question was number a capital accretion but a gain made in an adventure in the nature of business in carrying out a scheme of profit making.
The other plots are vacant sites and they brought numberincome to the appellant.
That is how the appeal has been admitted in this Court and the only question which it raises for our decision is whether the High Court was right in holding that the transaction in question was an adventure in the nature of trade.
The property purchased under the first sale deed was sold on November 10, 1947, for Rs.
Naturally when this property was sold to the mills the document was executed by the ostensible owner V. G. Raja.
1,250 while the third and the fourth purchases were for Rs.
The High Court has held that the transaction in question was an adventure in the nature of trade and so the respondent was justified in taxing the amount in question under the head business for the relevant year.
It is number disputed that the purchase in the name of V. G. Raja was benami for the appellant.
lnland Revenue v. Livingston, 1926 11 Tax Cas.
538 Martin Lowry, 1926 11 Tax Cas 297 Rutledge v. Commissioners of Inland Revenue, 1929 14 Tax Cas.
It was, however, urged by the appellant that the properties had been bought as an investment.
On the plot purchased on June 29, 1942, there stood a house of six rooms which fetched an annual rent of about Rs.
These two sales realised for the appellant a sum of Rs.43,887 0 6 in excess of the purchase price.
We may at this stage brie y indicate the material facts and circumstances found by the tribunal and the inference drawn by it in regard to the character of the transaction in question.
5,000 and they companyered 28 1/4 cents and 1 acre and 90 cents respectively.
43,887 was number a capital accretion but was a gain made in the adventure in the nature of business in carrying out the scheme of profit making.
The respondent challenged the companyrectness of this order by taking an appeal against it to the Incometax Appellate Tribunal.
43,887 being the difference between the purchase and sale price of the four plots of land as income from an adventure in the nature of trade .
Alternatively it was urged by the appellant that the Janardana Mills decided to purchase the plots because an award passed by an industrial tribunal in June 1947 had recommended that the mills should provide tenements for its labourers.
The application for leave made by the appellant was rejected by the High Court.
The officer held that there was numberevidence to show that the appellant had purchased the said lands for agricultural purposes or that it had acquired them as an investment.
This reference was heard by Rajagopalan and Rajagopala Ayyangar, JJ.,
2,825 whereas the three remaining properties were sold on September 1, 1947, for Rs.
709 of 1957.
49,775, the purchaser in both cases being the Janardana Mills Ltd. The purchase of the first item of property by the appellant had been made in the name of Mr. G. Raja, assistant manager of the Janardana Mills Ltd., who is the son in law Of G. Venkataswami Naidu, one of the partners of the appellant firm.
8,712 15 6.
The appellate authority upheld the appellants companytention that the amount in question was number assessable as it cannot be hold to be income or profit resulting from a profit making scheme, and set aside the order under appeal.
The Income tax Officer treated the said amount of Rs.
After about five years these properties were sold by the appellant in two lots to the Janardana Mills Ltd. The first lot was sold on September 1, 1947, and the second on November 10, 1947, the total companysideration for the two sales being Rs.
80 per year to the appellant.
This plea was rejected by the tribunal.
Against this order of assessment the appellant preferred an appeal to the Appellate Assistant Commissioner.
43 and Cayzer, Irvine and Co., Ltd. v. Commissioners of Inland Revenue, 1942 24 Tax Cas.
and the question referred has been answered against the appellant.
The first purchase was for Rs.
At the instance of the appellant the tribunal then referred to the High Court of Madras the question suggested by it in these words whether there was material for the assessment of the sum of Rs.
Appeal by special leave from the judgment and order dated April 18, 1955, of the Madras High Court in Case Referred No.
V. Viswanatha Sastri and M. S. K. Sastri, for the appellant.
The Judgment of the Court was delivered by GAJENDRAGADKAR, J. The appellant is a firm acting as managing agents of the Janardana Mills Ltd., Coimbatore.
25 of 1952.
491, companysidered.
During the time that the appellant was in possession of these plots it made numbereffort to put up any structures on them or to cultivate them and so it was clear that the only object with which the appellant had purchased these plots was to sell them to the mills at a profit.
