Adventure in the nature of trade requires trade indicia; isolated property resale with profit expectation is not enough.

A surplus from sale of a jute press and appurtenant property was held not taxable as business income because the transaction was not an adventure in the nature of trade. Applying section 10 of the Indian Income-tax Act, 1922, read with the definition of "business", the SC treated the inquiry as one of mixed law and fact and required the revenue to show trade-like indicia from the whole factual setting. An isolated purchase and resale, even with profit motive or expectation of gain, was insufficient. On the facts, the property was not part of the regular business and no trading venture was established.

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Issues: Whether the surplus arising from the sale of the jute press and appurtenant property was taxable as profits of business because the transaction was an adventure in the nature of trade.

Analysis: The statutory test under section 10 of the Indian Income-tax Act, 1922, read with the inclusive definition of "business" in section 2(4), requires examination of the whole factual setting to determine whether the transaction bears the character of trade. The relevant inquiry is one of mixed law and fact, and the revenue must establish that the transaction falls within the taxing provision. An isolated purchase and resale of land or premises does not by itself constitute a trading venture. Profit motive, expectation of resale at a gain, or a profitable bargain are not conclusive. The surrounding circumstances must show that the property was acquired and dealt with as a commercial venture rather than as a capital asset. On the facts, the property was not part of the assessee's regular business, no jute pressing business was commenced, and the circumstances did not justify the inference that the sole intention of purchase was resale as trading stock.

Conclusion: The surplus did not arise from an adventure in the nature of trade and was not taxable as business income under section 10.

Final Conclusion: The question referred was answered in the negative and the assessee succeeded in the appeal.

Ratio Decidendi: To constitute an adventure in the nature of trade, the transaction must, on a consideration of all the relevant facts, exhibit the essential indicia of trade; a mere isolated purchase and sale made with an expectation of profit is not enough.

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