Adventure in the nature of trade depends on trading indicia; isolated share sales held as investment were not business income.

Profits from an isolated purchase and sale of shares are taxable as business income only if the transaction is shown to have been entered into and carried through as a trading adventure rather than a mere realisation of investment. A single transaction may still constitute an adventure in the nature of trade, but the surrounding facts must show trading activity or trading indicia. On the facts, the assessees were not share dealers, had no prior or subsequent share dealings, and held the shares for several years; the circumstances relied on by the Department were insufficient to prove a trading venture. The surplus was therefore a casual receipt from a source other than business and not taxable as business income.

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Issues: Whether the surplus arising from the isolated purchase and sale of shares by non-trading assessees constituted income from an adventure in the nature of trade and was therefore taxable as business income.

Analysis: The statutory scheme treats profits of business as taxable under Section 10 of the Indian Income-tax Act, while Section 2(4) extends the concept of business to an adventure in the nature of trade and Section 4(3)(vii) excludes only casual and non-recurring receipts not arising from business. A single transaction may still amount to an adventure in the nature of trade, but there must be some trading activity or indicia showing that the transaction was entered into as a trading operation and not merely as an investment followed by a later realization. The facts showed that the assessees were not share dealers, had no prior or subsequent dealings in shares, held the shares for several years, and the circumstances relied upon by the Department, including the blank transfers and the common family transaction, were insufficient to establish that the purchases and sales themselves were trading adventures.

Conclusion: The surplus was not income from business or from an adventure in the nature of trade, but a casual receipt from a source other than business, and was not taxable as business income.

Ratio Decidendi: An isolated purchase and sale of property yields taxable business income only where the facts establish that the transaction itself was entered into and carried through as a trading adventure, not merely as a realization of an investment.

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