Adventure in the nature of trade fails where an isolated purchase shows no trading intention and later transfer is only change in enjoyment.

An isolated purchase was held not to constitute an adventure in the nature of trade where it was not shown to form part of the assessee's business activity. Mere plantation interests and the use of borrowed funds were insufficient to establish a trading intention at the time of acquisition. The subsequent conduct, including working the estate for several years and applying the income to discharge the bank loan, negatived any intention to resell for profit. The later transfer to a company controlled by the owners was treated as a change in the mode of enjoyment of the property, not a commercial sale generating taxable profit. The amount was therefore not assessable as trading profit.

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Issues: Whether the sum of Rs. 1,75,000 was assessable as profit arising from an adventure in the nature of trade.

Analysis: The purchase was found to be an isolated transaction, not shown to be part of the assessee's business or trading activity. Mere association with plantation interests and the use of borrowed capital were held insufficient, by themselves, to establish trading intention. The conduct after purchase showed working of the estate for several years and application of the income to discharge the bank loan, which negatived any intention to resell at the time of acquisition. The transfer to a company in which the assessee and his co-owner were shareholders was viewed as a change in the mode of enjoyment of the property rather than a commercial sale producing real profit.

Conclusion: The amount of Rs. 1,75,000 was not assessable as profit from an adventure in the nature of trade and the answer was in favour of the assessee.

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