Adventure in the nature of trade can arise from a single transaction where resale intention and trade indicia are shown.

A single isolated transfer can amount to an adventure in the nature of trade if the surrounding facts show a dominant intention to resell at a profit and the transaction bears clear trade indicia. Relevant factors include the original acquisition, subsequent diversion of the asset, negotiations for resale, and later conduct supporting an intention to sell to advantage. The fact that the transaction was outside the assessee's ordinary business does not, by itself, prevent business character. The discussion also notes that a later claim and receipt of additional consideration may reinforce the inference of a trading venture rather than capital investment.

---

---

Issues: Whether the sum of Rs. 7 lakhs received on transfer of machinery was taxable as income arising from an adventure in the nature of trade under the Indian Income-tax Act, 1922.

Analysis: The transaction was examined in the light of the surrounding circumstances, including the original purchase of the machinery, the diversion of the machinery to Orissa after partition, the negotiations with the Orissa Government, the decision not to cancel the order, and the subsequent conduct showing an intention to resell the machinery to advantage. The Court held that even a single and isolated transaction may amount to an adventure in the nature of trade if it bears clear indicia of trade. The fact that the transaction was not part of the assessee's ordinary business did not alter its character. The Court further held that the later claim and receipt of an additional amount supported the inference that the dominant intention was resale at a profit and not capital investment.

Conclusion: The receipt was taxable as business income from an adventure in the nature of trade, and the answer to the referred question was in the affirmative.

Ratio Decidendi: A single isolated transaction may constitute an adventure in the nature of trade where the surrounding facts show a dominant intention to resell to advantage and the transaction bears the indicia of trade.

---