Adventure in the nature of trade: payment to buy off competition was held taxable as revenue income.

Material on record supported the finding that the assessee had no real basis for saying it intended to buy the mills, given its financial incapacity, the involvement of other professionals, the eventual purchase by another group, and the absence of contemporaneous written evidence. The receipt was also held to be taxable as revenue income: the assessee had treated it as brokerage and commission, part of the sum was paid as remuneration, and the payment was made to buy off competition in a commercial transaction involving offer, bargaining, and acceptance. It was therefore an adventure in the nature of trade, not a casual and non-recurring capital receipt exempt under section 4(3)(vii).

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Issues: (i) Whether there was material on record to support the finding that the assessee's contention that it intended to buy the mills was without basis; (ii) whether the sum received by the assessee was a revenue receipt arising from an adventure in the nature of trade and was taxable, or a casual and non-recurring capital receipt exempt under section 4(3)(vii) of the Income-tax Act.

Issue (i): Whether there was material on record to support the finding that the assessee's contention that it intended to buy the mills was without basis.

Analysis: The assessment year facts, the financial incapacity of the assessee to acquire the mills, the association of two other professionals in the transaction, the eventual purchase by a different group, and the absence of any contemporaneous written material supporting an intention to buy the mills furnished sufficient material to sustain the finding.

Conclusion: The finding was supported by material on record and was upheld against the assessee.

Issue (ii): Whether the sum received by the assessee was a revenue receipt arising from an adventure in the nature of trade and was taxable, or a casual and non-recurring capital receipt exempt under section 4(3)(vii) of the Income-tax Act.

Analysis: The assessee treated the amount as brokerage and commission in its accounts and original return, paid part of it as remuneration for services, and offered no satisfactory explanation for its later retraction. The payment was made to buy off competition in a business transaction, there was offer, bargaining, and acceptance, and the transaction fell within the inclusive concept of business as an adventure in the nature of trade. The receipt was therefore not casual, not non-recurring in the statutory sense, and not a capital receipt.

Conclusion: The receipt was a revenue receipt from an adventure in the nature of trade and was rightly brought to tax.

Final Conclusion: The reference was answered against the assessee, and the taxable character of the receipt was affirmed.

Ratio Decidendi: Money received to buy off business competition in the course of a commercial venture, where the recipient acts as part of a trading arrangement and treats the amount as business income, is a revenue receipt arising from an adventure in the nature of trade and is not exempt as a casual and non-recurring receipt.

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