Investment transaction in land upheld where solitary purchase and supporting evidence defeated claim of trading adventure.

The Bombay High Court accepted that the Tribunal's finding was supported by evidence that the assessee's solitary land purchase was an investment transaction, not an adventure in the nature of trade. The land had been acquired for staff quarters and related facilities, and the Tribunal relied on the absence of any pattern of repeated land dealings, together with the material showing the later sale occurred when business fortunes declined. On those facts, the Court held that the finding was neither perverse nor unsupported by evidence, so no reference under section 256(2) of the Income-tax Act, 1961 was warranted.

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Issues: Whether the Tribunal's finding that the purchase and subsequent sale of land was not an adventure in the nature of trade, but an investment transaction, was unsupported by evidence or perverse so as to justify reference under section 256(2) of the Income-tax Act, 1961.

Analysis: The land was purchased under a resolution, developed with roads and plots, and later sold in part when the assessee's business fortunes declined. The Tribunal found that the land had been acquired to provide staff quarters and related facilities, and that this was the only land purchase by the assessee. On those facts, the Tribunal concluded that the transaction was an investment rather than a trading adventure. A solitary purchase placed the burden on the Revenue to establish a trading character. The finding was supported by material on record and could not be characterised as perverse or as one made without evidence.

Conclusion: The Tribunal's finding was upheld and the question sought to be raised did not warrant interference.

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