Adventure in the nature of trade requires proof of trading intent; mere land appreciation does not make capital gain taxable income.

A solitary purchase and assignment of land rights is taxable as an adventure in the nature of trade only if the transaction, viewed as a whole, shows the essential characteristics of trading activity. The decisive enquiry is the total impression from the facts, including the assessee's position, the nature and acquisition of the property, the commercial setting, and whether the Revenue proves a dominant intention at purchase to resell at a profit rather than hold as capital investment. Mere expectation of appreciation, or later profitable realisation, does not by itself turn capital accretion into income. On the stated facts, the transaction was consistent with capital investment, and the profit was not taxable as business income.

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Issues: Whether the profit arising from the solitary transaction of purchase and assignment of rights in the plot of land was assessable to income-tax as an adventure in the nature of trade.

Analysis: The decisive enquiry was whether the transaction, viewed as a whole, bore the essential characteristics of trade or business, notwithstanding that it was a single and isolated transaction. The relevant approach was to examine the total impression created by the facts and circumstances, including the assessee's position, the nature of the property, the manner of acquisition, the surrounding commercial context, and whether the Revenue had proved that the dominant intention at the time of purchase was resale at a profit rather than capital investment. Mere expectation of appreciation in value, or a later profitable realisation, was not by itself sufficient to convert an accretion to capital into income. On the facts, the transaction was capable of being viewed as a capital investment in land intended for residential or business use, and the Revenue had not established that it was entered into as a trading venture.

Conclusion: The profit was not taxable as income from an adventure in the nature of trade, and the appeal succeeded.

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