SAROJ KUMAR MAZURNDAR Vs. COMMISSIONER OF INCOME TAX WEST BENGAL

JUDGEMENT

(1.) J. : The only question for determination in this appeal by special leave, is whether the solitary transaction in respect of about three quarters of an 'acre' of land in the suburbs of Calcutta, was an adventure in the nature of trade and, therefore, liable to income-tax. The assessee is the appellant. He challenges the correctness of the order of the Income-tax Appellate Tribunal, Calcutta Bench, Calcutta, dated 26-3-1954, passed in I. T. A. 5263 of 1953-54, in respect of the Assessment year 1948-49, reversing that of the Appellate Assistant Commissioner of Income-tax, Range "C", Calcutta, dated 5-9-1953.

(2.) THE facts of this case leading up to this appeal are as follows: THE appellant is engaged in various types of business activities, being a share-holder and Director or Managing Director of several limited liability concerns, and is also a partner in the firm known as ''Pioneer Engineering Works". In respect of his income during the previous two assessment years, the appellant was assessed to income-tax on the sums of Rs. 53,000 (1946-47) and Rs.59,000 (1947-48). THE appellant holds investments in shares of the value of Rs. 2,45,000, out of which, according to the assessee, shares of the value of Rs. 1,95,000, though standing in his name, belong to other members of his family, including his father and his wife.

(3.) THE assessee went up in appeal to the Appellate Assistant Commissioner of Income-tax, and challenged the conclusion of the Income-tax Officer that the sum of Rs. 74,000 odd was profit from an adventure in the nature of trade. It was also taken as one of the grounds of appeal by him that in any event, the receipt accrued to the assessee only in 1950, after the transaction of sale had been completed as between the Rani's nominee and the Society. THE Appellate Assistant Commissioner did not agree with the Income-tax Officer that the assessee was not in a position either to complete the transaction of purchase by paying the full amount of consideration, or to erect a building thereon, or to use the land in any other way. He pointed out that under the Scheme, the Society had offered terms of purchase on installments and on execution of a mortgage in respect of the vended property to the extent of 50 per cent of the consideration money. He also pointed out that the assessee had considerable investments to the extent of Rs. 2,45,000 in shares of different limited concerns. He, therefore, came to the conclusion that the assessee was a man of means, and that it could not be said that he had not intended to purchase the plot for his own use. He further held that the motive of making a profit at the time of the purchase, had not been established by the Department, and that it was a "solitary transaction." On these findings, he found himself unable to confirm the finding of the Income-tax Officer that the profit was from an adventure in the nature of trade. He took the view that the appellant had made an investment which had appreciated considerably in value, and that it was undoubtedly a case of appreciation of capital. Treating it as a "Capital Gain", he came to the conclusion that as the payment had been made in 1947, the gain accrued in that year and not in the year 1950, as contended on behalf of the assessee. In the result, he made him liable to pay Capital Gains tax.