Adventure in the nature of trade turns on objective commercial character, not profit motive alone.

Purchase and resale of a tea estate was treated as an adventure in the nature of trade because the decisive test is objective commercial character, not profit motive alone. Where the assessee acquired the estate largely with borrowed funds, held it only briefly, and sold it without any realistic intention of retaining it as a long-term income-yielding investment, the surrounding circumstances supported a trading inference. The principle stated is that a transaction amounts to trade only if, judged objectively, it is carried on in the manner of ordinary trading; on those facts, the venture was capitalised as commercial rather than capital in nature.

---

---

Issues: Whether the purchase and resale of a tea estate constituted an adventure in the nature of trade.

Analysis: A transaction does not become trading merely because it is motivated by profit or involves speculation. The decisive inquiry is whether the operations are of a commercial character and are carried on in the manner of ordinary trading. Applying that test, the assessee purchased the estate almost wholly with borrowed money, held it only for a short period, and sold it without any realistic prospect of retaining it as a long-term income-yielding investment. The surrounding circumstances also supported the inference that the venture was commercial rather than capital in nature.

Conclusion: The transaction was rightly treated as an adventure in the nature of trade and the answer was against the assessee.

Ratio Decidendi: The presence of a profit motive is not decisive; a purchase and resale amounts to an adventure in the nature of trade only if, judged objectively, the transaction has the commercial character of ordinary trading.

---