Adventure in the nature of trade not established where isolated land sale lacks dominant intention; proceeds treated as capital.

Where an isolated purchase and later sale of land occurred outside the assessee's ordinary business, the revenue must prove a dominant intention to resell for it to constitute an adventure in the nature of trade; the Tribunal erred by relying on uncorroborated statements and ignoring material evidence, so the transaction was held a capital investment and proceeds were not taxable as trading income. Separately, receipts realised on March 18, 1949 were attributable to the prior year relevant to assessment year 1949-50, and an appellate body hearing an appeal for a later year lacks power to direct assessment of an earlier year. Both questions resolved for the assessee.

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Issues: (i) Whether the purchase and sale of the lands was an adventure in the nature of trade; (ii) Whether the profits from the sale related to assessment year 1949-50 or 1950-51 and whether the Appellate Tribunal had jurisdiction to direct assessment for 1949-50.

Issue (i): Whether the purchase and sale of the lands was an adventure in the nature of trade.

Analysis: The transaction was an isolated purchase and subsequent sale of land by the assessee outside his ordinary line of business. Factors considered include the assessee's occupation, source of funds, the nature and use of the land, steps taken to cultivate and develop it, documentary requests for agricultural implements and electrical connection, the lease to a third party, and the surrounding civil and criminal litigation which led to the sale. The Appellate Tribunal relied on the uncorroborated statement of a broker and on surmises about financial means and nearby firm transactions. The department bears the onus to prove that an isolated transaction was entered into with the dominant intention of resale as an adventure in the nature of trade. The Tribunal failed to consider material evidence favourable to the assessee and based its inference on inconsistent or unsupported facts.

Conclusion: The transaction was not an adventure in the nature of trade; it was a capital investment and the profits were not taxable as income under the trading/adventure head.

Issue (ii): Whether the profits related to assessment year 1949-50 or 1950-51 and whether the Appellate Tribunal had jurisdiction to direct assessment for 1949-50.

Analysis: The sale occurred on March 18, 1949, placing the receipts in the previous year relevant to assessment year 1949-50. The appeal before the Tribunal related to assessment year 1950-51. Under the authoritative construction of the appellate provisions, a Tribunal's finding and direction in an appeal are limited to the assessment year under appeal and it has no power under the relevant statutory provision to direct assessment of an earlier year.

Conclusion: The profits (realised on March 18, 1949) relate to assessment year 1949-50; the Appellate Tribunal had no jurisdiction in the appeal before it to direct assessment for 1949-50.

Final Conclusion: On the questions referred, the purchase and sale are held not to be an adventure in the nature of trade and the Tribunal lacked power to direct taxation of the earlier assessment year; the references are answered in favour of the assessee.

Ratio Decidendi: Where an isolated non-business transaction is in issue, the revenue bears the onus of proving a dominant intention to trade; material evidence must be weighed and an appellate tribunal's directions are limited to the assessment year before it and cannot lawfully direct assessment for an earlier year.

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