Adventure in the nature of trade can make consent-decree receipts taxable as business income, not capital gains.

Receipt of Rs. 35 lakhs under a consent decree was analysed as arising from an adventure in the nature of trade, because the agreement to purchase land, the failure to obtain possession, the vendor's dealings with a third party, and the assessee's conduct pointed to commercial intent. On that basis, the receipt was treated as business income rather than capital gains. The text also states that the matter rested on concurrent factual findings and settled legal tests, so no independent question of law was said to arise for reference.

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Issues: (i) Whether receipt of Rs. 35 lakhs under the consent decree was taxable as business income under section 28(iv) and not as capital gains; (ii) Whether the reference disclosed any question of law warranting an opinion.

Issue (i): Whether receipt of Rs. 35 lakhs under the consent decree was taxable as business income under section 28(iv) and not as capital gains.

Analysis: The transaction was found to be an adventure in the nature of trade. The assessee had entered into an agreement to purchase land, but possession was not delivered, the vendor later dealt with a third party, and the surrounding conduct showed that the rights in the property were acquired with a commercial intent. The authorities had concurrently held that the receipt under the consent decree was not a capital accretion but a business receipt falling within the charging provision applied by them.

Conclusion: The receipt was rightly treated as business income and was chargeable to tax; the assessee's claim to capital gains treatment failed.

Issue (ii): Whether the reference disclosed any question of law warranting an opinion.

Analysis: The matter turned on settled legal tests applied to concurrent findings of fact. The Tribunal had recorded factual conclusions on the nature of the land, the permissible use, the sanctioned plan, and the assessee's subsequent conduct. In that setting, no independent question of law arose for consideration.

Conclusion: No question of law arose; the reference was misconceived.

Final Conclusion: The referred question was answered against the assessee, and the reference was disposed of without further answer.

Ratio Decidendi: Where the receipt arises from a transaction found on facts to be an adventure in the nature of trade, and the controversy is governed by settled legal tests applied to concurrent factual findings, the receipt is assessable as business income and no referable question of law arises.

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