Adventure in the nature of trade: profits from resale of accumulated silver bars treated as taxable due to intention to resell.

Profits from sale of silver bars were treated as arising from an adventure in the nature of trade: applying established tests - purchaser's commercial status, nature and quantity of the commodity, manner and timing of purchases and sales, repetition, contemporaneous records, and the totality of facts - the court found large instalment purchases made when prices were expected to rise, absence of income except on resale, successive higher sales, and inconsistent unsubstantiated explanations; on this factual matrix the consistent inference was intention to resell and the profits are taxable.

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Issues: Whether the profits realised from the sale of 45 and 29 silver bars respectively arose from an adventure in the nature of trade within the meaning of section 2(4) of the Income-tax Act, 1922.

Analysis: The determination turns on the facts and circumstances applying established tests: whether the purchaser was a businessman; the nature and quantity of the commodity; the manner and timing of purchases and sales; any prior or subsequent acts indicating a design to resell; repetition; and the total effect of all relevant factors. The transaction was not in the ordinary line of business but was not wholly disconnected from the assessee's commercial activities. The purchases comprised a considerable quantity acquired in six instalments at the outset of an event expected to raise prices; the commodity yielded no income except on resale; sales were effected later at successive higher prices; explanations for purchase and sale (investment, conversion from coinage, or sale to meet tax liabilities) were inconsistent and not substantiated by contemporaneous records; and available account extracts did not reliably support the asserted motive of conserving capital. On the whole evidence, the only consistent inference is that the purchase was made with the intention to resell at a profit and the subsequent sales were not necessitated by pressing need.

Conclusion: The profits realised from the sale of the silver bars arose from an adventure in the nature of trade and are taxable.

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