TaxTMI 
TaxTMI 
1986 (5) TMI 71
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....rounds deal with only one issue and that can be summed up as under: "Whether, on the facts and in the circumstances of the case, the difference between the purchase consideration and sale price of National defiance Gold Bonds, 1980 amounting to Rs. 31,500 is income accruing and arising from an adventure in the nature of trade and as such taxable as business income of the assessee for the assessment year 1981-82. 3. The relevant facts, which require consideration lie in a narrow compass and we bring them into focus first. 4. The assessee is private limited company having its registered office in the unionterritoryofDelhi. It is incorporated under the name Pee Raj International [P.] Ltd. Its previous year is the calendar year ending on31-1....
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.... appeal, the learned Commissioner [Appeals] held that the appellant had purchased the gold bonds with a view to selling them shortly thereafter on their maturity and with an expectation to make a profit thereby. This is surely a transaction of adventure in the nature of trade. He, therefore, justified the ITO's view and the action taken in bringing this amount of Rs. 31,500 to tax and in refusing to grant exemption to the assessee as claimed. Hence the present appeal. 7. The learned counsel for the assessee submitted that the assessee had surplus funds. Therefore, it purchased the gold bonds as an investment. These were sold on maturity. The resultant profit, as such, was not taxable as capital gains because National Defence Gold Bonds iss....
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....r the reasons given in the orders of the authorities below, the transaction was an adventure in the nature of trade, which resulted in a profit of Rs. 31,500 to the assessee and as such, it was taxable as business income for the under appeal. The appeal of the assessee may, therefore, be dismissed. 8. We have given careful consideration to the rival submissions and have also considered the relevant judicial pronouncements on the subject. Before we proceed to decide the issue, we would like to record the settled.position of law, as emerging from the judicial decisions, noted below, considered by us. In deciding the character of a transaction several factors are relevant, such as, whether the purchaser was a trader and the purchase of the co....
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....ring into a transaction is not decisive in determining the character of a transaction because an accretion to capital does not become taxable income merely because an asset was acquired in the expectation that it may be sold at a profit as held by the Supreme Court in the case of Janki Ram Bahadur Ram. 10. Now, when we apply the above law to the facts of this case, we find that the appreciation of facts by the authorities below was lopsided. The impugned order of the ITO shows that he, without bringing on record any evidence, worked on the presumption that the bounds were purchased by the assessee, 'with business motive' and the difference between the total purchase consideration and the sale amounted to profit from an adventure in the nat....