Isolated land purchase and resale not treated as trading adventure without proof of dominant profit motive.

Profit from an isolated purchase and later resale of land bought at a court auction was not treated as an adventure in the nature of trade. The court emphasised that the department had to prove, from surrounding facts, that the transaction was entered into with the dominant intention of resale at a trading profit. The assessee's money-lending business did not by itself make every land purchase a trading transaction, and a mere possibility of future appreciation was insufficient. On the facts, the land was not shown to be trading stock, so the profit was not assessable as business income.

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Issues: Whether the profit arising from the isolated purchase and later sale of land acquired at a court auction was assessable as an adventure in the nature of trade under the Indian Income-tax Act, 1922.

Analysis: The transaction was not shown by the department to have been entered into with the dominant intention of resale at a profit. The assessee's money-lending business did not, by itself, convert every purchase of land into trading stock or a business venture. In the case of an isolated transaction outside the ordinary line of business, the burden lay on the department to establish that the purchase and sale bore the characteristics of trade. On the facts found, there was no material to infer that the land was acquired as a trading adventure rather than as an investment, and a mere possibility of future appreciation was insufficient to stamp the transaction as a business venture.

Conclusion: The question was answered in the negative. The profit from the isolated court-auction purchase and sale was not assessable as an adventure in the nature of trade, and the assessee succeeded.

Ratio Decidendi: An isolated purchase and resale is taxable as an adventure in the nature of trade only if the department proves, from the surrounding facts and circumstances, that the transaction was entered into with the dominant intention of making a trading profit.

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