Adventure in the nature of trade requires cumulative facts; mere borrowing and profit potential did not make land acquisition taxable as business income.

Surplus on compulsory acquisition of land was not taxable as business profit under section 10 of the Indian Income-tax Act, 1922 because the property was held as an investment and not as an adventure in the nature of trade. The character of the transaction had to be determined from the totality of surrounding facts, including the purchaser's intention, development or trading-style dealing with the property, any repeated course of property transactions, and whether the facts showed a commercial venture rather than mere investment. Here, the land was not developed or parcelled for sale, there was no established pattern of property trading, and borrowing for purchase did not by itself make the holding a trading venture.

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Issues: Whether the surplus realised on compulsory acquisition of land was taxable as business profit under section 10 of the Indian Income-tax Act, 1922 on the footing that the transaction was an adventure in the nature of trade.

Analysis: The character of such a transaction has to be decided on the total effect of all relevant facts and circumstances, and no single factor is conclusive. Relevant considerations include the assessee's intention at the time of purchase, whether the property was developed or dealt with in a manner consistent with trading, whether there was any repeated course of dealing in properties, and whether the facts show a mere investment or a commercial venture. On the findings recorded, the assessee had not developed the property, had not embarked upon any scheme of parceling it out for sale, had no established course of property trading, and the eventual acquisition by public authority was uncertain at the time of purchase. The borrowing used for purchase, by itself, did not convert the holding into a trading venture.

Conclusion: The surplus was not taxable as business profit under section 10, because the property was held as an investment and not as an adventure in the nature of trade.

Final Conclusion: The reference was answered against the revenue and in favour of the assessee, with the surplus treated as arising from investment rather than trading activity.

Ratio Decidendi: Whether a property transaction is an adventure in the nature of trade depends on the cumulative assessment of all surrounding facts and circumstances, and a mere intention or possibility of profit does not by itself render the transaction a trading venture.

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