Land sale profit as business income depends on overall conduct, and a mere difference in reasoning need not trigger a third Member reference.

Profit from the sale of land was treated as taxable business income because the character of the transaction depended on the whole course of conduct, surrounding circumstances, and organised commercial dealing, not initial intention at purchase alone. The land was acquired in a business-linked setting, developed into plots, and sold in an organised manner at profit, showing an adventure in the nature of trade. The Tribunal's order was not vitiated by the Members' difference in reasoning on initial intention, because a third Member reference is required only where they are equally divided on the final conclusion; here both agreed the profits were taxable.

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Issues: (i) whether the profit from the sale of lands was liable to income-tax as arising from transactions in the nature of business; (ii) whether the Tribunal's order was vitiated because the Members differed on the assessee's intention at the time of purchase but did not refer the matter to a third Member.

Issue (i): whether the profit from the sale of lands was liable to income-tax as arising from transactions in the nature of business.

Analysis: The character of a transaction is not determined by the initial intention at the time of purchase alone. The whole course of conduct from acquisition to sale, the surrounding circumstances, and the organised manner in which the property is dealt with are material. On the facts, the land was acquired in a setting connected with the assessee's business arrangements, later developed into plots, and sold in an organised manner at a profit. The conduct disclosed a scheme to deal with the land commercially rather than to hold it as a mere capital investment.

Conclusion: The surplus was assessable as revenue income from an adventure in the nature of trade, against the assessee.

Issue (ii): whether the Tribunal's order was vitiated because the Members differed on the assessee's intention at the time of purchase but did not refer the matter to a third Member.

Analysis: The statutory mechanism for reference to another Member is attracted only where Members are equally divided on the conclusion on a point. A divergence only in reasoning, where both Members ultimately agree on the result, does not require a third Member. Here, the Members differed on the basis of the assessee's initial intention but concurred that the sales produced taxable profits and that the appeals should succeed.

Conclusion: The omission to refer the difference in reasoning to a third Member did not vitiate the Tribunal's order, against the assessee.

Final Conclusion: The reference was answered in favour of the Revenue on both questions, and the Tribunal's view that the profits were taxable was upheld.

Ratio Decidendi: Whether a land transaction is an adventure in the nature of trade must be decided on the total effect of all relevant facts and conduct, and a difference only in reasoning between Tribunal Members does not require a third Member where they are agreed on the final conclusion.

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