Adventure in the nature of trade depends on proven profit motive; separable gold sales may be assessed independently.

Profits from the sale of gold bars were treated as taxable as an adventure in the nature of trade only if the department established, on the proved facts, a dominant profit-making purpose; on the material recorded, that inference was not compelled and the assessee's explanation of the gold as a store of value and for family use remained plausible. The article also states that where a commercial commodity is held in separable lots, profits on one lot may be computed and assessed without waiting for disposal of the remaining lots, because the whole holding is not necessarily one indivisible transaction. The reference was therefore answered partly for the assessee and partly for the revenue.

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Issues: (i) Whether the profits from the sale of three gold bars arose from an adventure in the nature of trade within the meaning of Section 2(4) of the Indian Income-tax Act. (ii) Whether the profits from the sale of the gold bars on 27 April 1943 could be taxed before the entire profits from the sale of all the gold bars became determinable.

Issue (i): Whether the profits from the sale of three gold bars arose from an adventure in the nature of trade within the meaning of Section 2(4) of the Indian Income-tax Act.

Analysis: The decisive question was whether the purchase of the gold bars was motivated by a dominant intention to make profit. The Tribunal's recorded circumstances did not compel that inference. The facts relied upon were consistent with the assessee's explanation that the gold was acquired as a portable store of value and for family use, and the department did not establish that the purchase was undertaken with the sole or dominant object of trading profit. A legal inference that the transaction was an adventure in the nature of trade could not therefore be sustained on the material found.

Conclusion: The answer was in favour of the assessee. The profits from the sale of the three gold bars were not proved to have arisen from an adventure in the nature of trade and were not liable to income-tax.

Issue (ii): Whether the profits from the sale of the gold bars on 27 April 1943 could be taxed before the entire profits from the sale of all the gold bars became determinable.

Analysis: The rule that profits cannot be ascertained until an entire integrated venture is completed applied only where the whole property or unit was truly one transaction and its profit or loss could not be separately determined. On the facts found, the purchase of the eight gold bars was not one indivisible transaction. Gold is a commercial commodity capable of being dealt with in separate lots, and the profits on the lot sold in April 1943 were capable of being computed on ordinary commercial principles without waiting for the disposal of the remaining bars.

Conclusion: The answer was against the assessee. If the sale profits had otherwise arisen from an adventure in the nature of trade, they could be taxed before the profits from all the bars became determinable.

Final Conclusion: The reference was answered partly in favour of the assessee and partly in favour of the revenue, with costs awarded to the assessee.

Ratio Decidendi: A transaction is taxable as an adventure in the nature of trade only if the department establishes a profit-making purpose on the proved facts, and profits from a separable sale of commercial goods may be assessed without awaiting completion of every related disposal.

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