Appeal No 347 of 1955
Appeal by special leave from the judgment and order dated March 26 1954 of the Income tax Appellate Tribunal Calcutta in Income tax Appeal No 5263 of 1953 54
A V Viswanatha Sastri and Sukumar Chosh for the appellant
G K Daphtary Solicitor General of India B Ganapathy R H Dhebar and D Gupta for the respondent
May 4
The Judgment of Bhagwati and Sinha JJ was delivered by Sinha J Kapur J delivered a separate Judgment
848 SINHA 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 March 26 1954 passed in ITA 5263 of 1953 54 in respect of the Assessment year 1948 49 reversing that of the Appellate Assistant Commissioner of Incometax Range  C  Calcutta dated September 5 1953
The facts of this case leading upto 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 53000 1946 47 and Rs 59000 1947 48
The appellant holds investments in shares of the value of Rs 245000  out of which according to the assessee shares of the value of Rs 195000  though standing in his name belong to other members of his family including his father and his wife
The Hindusthan Co operative Insurance Society Limited of Calcutta hereinafter referred to as  the Society  acquired a block of about 578 bighas of land lying between Diamond Harbour Road and Tolly s Nullah within the Municipal limits of the Corporation of Calcutta between the years 1940 and 1942
The Society decided to level the land thus acquired and to open out roads and after developing the same it subdivided it into small plots and sites in different blocks suitable for residential purposes under its scheme called  The New Alipore Land Development Scheme No XV 
The Society offered such plots for sale
One such plot being plot No 77 in block  E  of the said Scheme was agreed by an agreement dated January 10 1946 to be sold to the assessee at the rate of Rs 2550 per katha
In pursuance of the said agreement the assessee paid to the Society a sum of 849 Rs 13099 being 10 of the estimated price of the plot with an approximate area of 51 kathas which subsequently on exact measurement was found to be 45 56 kathas
Subsequently on the acceptance of his offer the appellant paid another SUM of Rs 19649 omitting annas being 15 of the estimated price
Thus in all a sum of Rs 32748 being 25 of the estimated total price of the land was paid by the assessee to the Society
All this area which the Society had undertaken to develop and sell to different purchasers in small plots was in occupation of the Government which had requisitioned it for purposes connected with the prosecution of the Second World War
Hence one of the terms of the transaction between the assesee and the Society was that the transaction of purchase would be completed within six months of the lands being released from Government occupation
It was further stipulated that the assessee would be entitled to apply within three months of the receipt of the notice of de requisition for extension of time not exceeding one year for the completion of the transaction on the condition that he paid interest at the rate of 7 per annum on the outstanding amount during the extended period
If the assessee as purchaser paid to the Society another sum which together with Rs 32748  already paid would amount to 50 of the total price of the plot in question within six months of the notice of de requisition he could get a conveyance of the property on his executing an English Mortgage for the remaining 50 of the price carrying interest at the rate of 7 on the expiry of these aforesaid six months
As there was an apprehension that the Government might acquire the whole property for its own purpose it was further stipulated that in the event of such an acquisition by Government the agreement for sale would stand rescinded and the assessee in that event would be entitled to re payment of the amounts paid by him to the Society by way of advance for the completion of the transaction
The assessee s case is that as the terms of the payment of purchase price in several instalments as aforesaid were convenient to him 107 850 he agreed to take the plot on the conditions aforesaid with a view to building a residential house for himself and constructing a workshop in connection with his business activity
At the end of the Second World War the assesee s construction activities began to decline and there was no immediate prospect of the land in question being de requisitioned by Government
In those circumstances the assessee negotiated for the assignment of his rights under the agreement with the Society to Rani Yuddha Rajya Devi of Nepal
The Rani appeared to have taken a fancy to the plot and to have made an attractive offer to the appellant
Hence after exchange of letters between the parties it was agreed between them that a sum of Rs 107000 odd would be deposited by the Rani with the assessee on suspense account until the transaction of sale between the Society as the vendor and the Rani or her nominee as the vendee would be executed and the transaction of purchase finalised upon her undertaking to pay the sum of Rs 98000 odd to the Society which was the outstanding amount of the sale price in respect of the plot agreed by the assessee to be purchased by him from the Society
After a good deal of correspondence on December 27 1950 the Society executed a deed of conveyance in respect of the said plot to the daughter of the said Rani as the vendee
The aforesaid vendee executed a deed of mortgage in favour of the Society for the outstanding amount of Rs 50900  after payment of Rs 32700 odd to the Society
In the result the assessee received on April 3 1947 a sum of Rs 107000 odd from the Rani in pursuance of the agreement between her and the assessee
Until the execution of the sale deed between the Society and the Rani s nominee as aforesaid the assessee continued to be liable to the Society in respect of the agreement of January 10 1946
The assessee thus received from the Rani a sum of Rs 74000 odd in excess of the amount paid by him to the Society
The property including the plot in question was not de requisitioned until some time in 1949
In respect of the assessment year 1948 49 the assessee filed a return of his income to the Income tax 851 Department showing a loss of Rs 2000 odd for the financial year 1947 48
In pursuance of the notice under section 232 of the Income tax Act the assessee appeared before the Income tax Officer Calcutta and produced all his books of account including his bank accounts
The Income tax Officer on an examination of the accounts and after questioning the assessee came to the conclusion that the assessee had made a profit of Rs 74000 odd from the transaction in question which according to him was an adventure in the nature of trade
Hence on an examination of the assessee s accounts the Income tax Officer included the sum of Rs 74485 as profit from an  adventure in the nature of trade  taxable under section 10 of the Income tax Act as one of the items of income accrued to the assessee during the assessment year 1948 49
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 74000 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 instalments and on execution of a mortgage in respect of the vended property to the extent of 50 of the consideration money
He also pointed out that the assessee bad considerable investments to the extent of Rs 245000 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 hold that the motive of making a profit at the time of the purchase had not been established by the Department 852 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 bad 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
The Department went up in appeal to the Incometax Appellate Tribunal which by its judgment dated March 26 1954 allowed the appeal
The Tribunal pointed out that the assessee was not a man of such large means as to think of acquiring the plot for his own residential or business purposes
The admitted shares worth Rs 245000 standing in his name the Tribunal pointed out were held by the assessee in respect of the major portion on behalf of other members of his family
The Tribunal also observed that Rs 32748 paid by the assessee to the Society had been paid out of borrowed money
This conclusion does not appear to have been well founded in fact
The accounts do show credits in favour of the assessee of a larger amount
The Tribunal also pointed out that undoubtedly the  assessee is a keen businessman and has a number of varied business interests
Admittedly he is a director of about a dozen concerns and managing director of two or three
Her is 8 annas partner in an Engineering concern which is carrying out a number of construction and other contract works
He is an Engineer by profession and a resident of Calcutta
 The Tribunal based its conclusion that the sale was an adventure in the nature of trade and that the profits thus made were assessable to income tax on the following grounds That the payment by the assessee to the Co operative Society of Rs 32748  came out of a loan taken for the purpose from a company which conclu
sion as already pointed out is not borne out by the entries in the books of account of that company 853 2
That the assessee could not have paid the balance of Rs 98000 odd the outstanding amount of the purchase money to the Insurance Company  3
That the assessee had no means to construct a house on the land and lastly 4
That the site itself fetched no income thus showing that it could not be an investment but only an excursion into the realm of trade
Against this decision of the Appellate Tribunal the assessee moved this Court and obtained special leave to appeal
Before we deal with the main question in controversy in this appeal we would like to make some general remarks on the nature of the questions involved in this case
It is not disputed on behalf of the respondent that the question now before us is a question of law or a mixed question of fact and law as has been recently laid down by this Court in the case of G Venkataswami Naidu and Co vs The Commissioner of Income tax 1
Speaking for the Court Gajendragadkar J after a detailed discussion of the decisions of this Court Meenakshi Mills Madurai vs Commis
sioner of Income tax Madras 2 and The Oriental Investment Co Ltd vs Commissioner of Income tax Bombay 3 and of the House of Lords in Edwards vs Bairstow 4 came to the conclusion that the question arising in the case is a mixed question of law and fact and therefore open to examination by this Court
In G Venkataswami Naidu and Co vs The Commissioner of Income tax supra the question raised was exactly similar to the question now before us though in a different setting of facts
His conclusion may be stated in his own words as follows  In other words in reaching the conclusion that the transaction is an adventure in the nature of trade the tribunal has to find primary evidentiary facts and then apply the legal principles involved in the expression  adventure in the nature of trade  used by section 2 sub section
It is patent that the clause in the nature of trade  postulates the existence of certain elements in 1  2  3  4  854 the adventure which in law would invest it with the character of a trade or business
and that would make the question and its decision one of mixed law and fact In that view of the matter this Court further pointed out that the more proper form of the question is  whether on the facts and circumstances proved in the case the inference that the transaction in question is an adventure in the nature of trade is in law justified
 The recent decision of this Court has examined almost all the relevant cases decided in Indian as also English and Scotch Courts and thus our task in the present case has been very much simplified
It has further been observed in that case more than once that judicial opinion was unanimous that no general principles or universal tests could be laid down which could govern the decision of all cases in which the question for determination is similar to the one now before us
Each case must be determined on the total impression created on the mind of the Court by all the facts and circumstances disclosed in that particular case
Hence no decided case can strictly speaking be a precedent which could govern the decision of a later case involving a similar question
Those decisions can be used only by way of illustrations of the different view points which have a bearing on the decision of the case in hand
It has also not been disputed that in a case where a transaction under examination is not in the line of the business of the assessee and is ail isolated or a single instance of a transaction like that the burden lies on the Revenue to bring the case within the words of the statute namely that it was an adventure in the nature of trade
That the onus is on the Department has been clearly laid down by Lord Garmount in the case of Commissioners of Inland Revenue vs Reinhold 1
That was a case in which the respondent the assessee was a director of a company carrying on the business of WarehousemeD and had bought four houses in January 1945 and sold them at a profit in December 1947
He admitted that he had bought the property with a 1  393 855 view to resale and had instructed his agents to sell the same whenever a suitable purchaser was forthcoming
The assessee was made liable for tax in respect of the profit made by him on the resale
On an appeal by the assessee before the General Commis 7 sioners it was contended on his behalf that the profit on the resale was not taxable
On behalf of the Crown it was contended that the transaction of purchase and sale in question constituted an adventure in the nature of trade and that therefore the profits arising out of the transaction were chargeable to income tax
The General Commissioners being eqally divided allowed the appeal
It was held by the Court of Session First Division that the fact that the property was purchased with a view to resale did not of itself establish that the transaction was an adventure in the nature of trade and that therefore the determination by the Commissioners was justifiable in law
The Court in coming to that conclusion took into account the con siderations that the respondent was not a property agent and that his business was not in any way associated with the purchase and sale of estates
It was an isolated transaction even though the assessee had purchased a hotel and sold it again ten years previously
The Court made a reference to the following observations of Lord Buckmaster in the case of Leeming vs Jones 1   an accretion to capital does not become income merely because the original capital was invested in the hope and expectation that it would rise in value if it does so rise its realization does not make it income
 Placing that decision along side of the present case let us see what its salient features are
Though the appellant is engaged in various types of business as a share holder or a director in limited liability concerns as also in building contracts dealing in landed estates is not in the line of his business
If such a transaction were in the line of his business it would not matter much whether in the assessment year he had several such transactions or only one
Even a single 1  420 856 transaction of dealing in landed estates being a part of his business would be liable to income tax if a profit is made in that transaction
But admittedly the transaction in question is the only one of its kind rout of which the appellant has made a considerable profit which appears to have been in the nature of a windfall
When he entered into the agreement with the Society for the purchase of the plot in January 1946 he had expected that at the end of the World War the Government would release the property from its requisition and that the Society will develop the land by laying the necessary roads and providing other amenities to the plot holders
But as the Government did not release the property and as the appellant was a businessman who was interested in return from his capital and as he had already paid Rs 32000 odd by way of advance towards the purchase price and as in 1947 at the end of the Second World War his business in contracts for building con structions began to decline he naturally thought of making the best of the bargain
If he did not get out of the transaction his financial difficulties in meeting his further liabilities under the agreement as a result of slump in his main line of business might lead to the forfeiture of the advance of Rs 32000 odd he would naturally be on the lookout for a good purchaser
He was lucky to find a lady with a lot of money to spare who had as he alleged taken a fancy to the plot in question
Thus he could assign to her the benefit of his agreement with the Society on terms which were highly profitable to him
There is no clear evidence in support of the inference of the Appellate Tribunal that the land was purchased with the sole intention of selling it later at a profit
The Tribunal considered two alternatives in relation to this transaction one that the land was purchased in order to build a residential house and the second that it was purchased in hope of selling it later for a profit
The first alterna tive the Tribunal rejected on the ground that  be does not seem to have very much of means at his disposal
 That itself is a statement which does not bear close scrutiny
During the two years previous to the year under assessment the appellant had 857 been assessed to income tax on Rs 53000 and Rs 59000  as already indicated
That does not lend countenance to the surmise that the appellant was not a man of means
Admittedly he held marketable shares of the value of about 2 12 lacs of rupees though all those shares standing in his name were not claimed by him as his omn
Apparently he was carrying on a lucrative business during the immediately preceding years
It is true that in the year of assessment on his own showing in his income tax return he had suffered a loss but that may have been a turning point in his fortunes and that would not necessarily lead to the inference that he was not in a sound financial position on the date of the agreement with the Society
It may be that his hopes of flourishing in his business in the years to come were not realized after the conclusion of the Second World War
But even assuming that the Tribunal was right in its conclusion as to the second alternative namely that the purchase was made in the hope of making a profit after re sale the matter is not concluded
In this connection a reference may be made again to the decision in Commissioners of Inland Revenue vs Reinhold supra at p 392 where it was argued on behalf of the Revenue that a profit made in a transaction which was in the nature of an investment in the hope and expectation of a rise in price may be an accretion of capital but that if at the time of the purchase the purchaser had resolved to sell the property in the event of a profit being made and instructions had been issued to his agents accordingly the transaction could not have been treated as an investment but was truly an adventure in the nature of trade and the profit thus made must be treated as income
This argument was not accepted as valid
In that connection reference was made to the following observations of Lord Dunedin in the case of Jones vs Leeming 1   
The fact that a man does not mean to hold an investment may be an item of evidence tending to show whether he is carrying on a trade or 1  P 423
108 858 concern in the nature of trade in respect of his invest ments but per se it leads to no conclusion whatever
 The decision of the House of Lords in the case afore
said which is also reported in  is rather ins
tructive
In that case the appellant was a member of a syndicate of four persons formed to acquire an option over a rubber estate with a view to selling at a profit
The option was secured but the estate was considered to be too small for re sale
An option over another joint estate was accordingly secured and it was decided to resell the two estates to a public company to be formed for the purpose
Another member of the syndicate undertook to arrange for promotion of the company
The syndicate s rights were transferred to a company
This company floated another company to which the properties were sold
The syndicate s profits were divided between the members and the appellant as one of the members of the syndicate was assessed to income tax in respect of his shares of the profits
The General Commissioners on appeal were of the opinion that the interest in the property in question had been acquired with the sole object of making a profit and that there was no intention of holding it as an investment
Hence the assessment to income tax was affirmed
The King s Bench Division at the first hearing remitted the case to the General Commissioners for a finding as to whether there was a concern in the nature of trade and the Commissioners found that the transaction was not such a concern
It was held by the House of Lords that the profits were not liable to tax on the basis that they were income from an adventure in the nature of trade
Viscount Dunedin in the course of his opinion referred with apparent approval to the dictum in Ryall vs Noare 1 to the following effect  A casual profit made on an isolated purchase and sale unless merged with similar transactions in the carrying on of a trade or business is not liable to tax He also approved of the following dictum of Lawrence L J in the case of Leeming vs Jones 2 _ 1  454
2  302 859  It seems to me in the case of an isolated transaction of purchase and re sale of property there is really no middle course open
It is either an adventure in the nature of trade or else it is simply a case of sale and re sale of property Lord Warrington of Clyffe in the course of his opinion in the case of Jones vs Leeming 1 made the following observations which apply with full force to the facts and circumstances of the present case   Here we have a case of the acquisition of an item of property and a profit made by the transfer thereof to another
In this I can find nothing but a profit arising from an accretion in value of the item of property in question and the realization of such enhanced value
There is in this nothing in the nature of revenue or income
The fact that the parties intended from the first to make a profit if they could does not in my opinion affect the question we have to determine As already indicated the line of demarcation between cases of isolated transactions of purchase and sale being ventures in the nature of trade and those which are not such ventures if any is very thin
The cases in which single transactions have been held not to belong to the class of ventures in the nature of trade have been noticed above and the considerations which led those courts to hold that such ventures were not liable to income tax apply to the case in hand
On the other side of the line there is a series of cases in which single transactions have been held to have been ventures in the nature of trade for reasons which do not apply to the present case
We may notice some of the typical cases which illustrate the reasons for which a single transaction was brought within the ambit of a venture in the nature of trade
The case of Californian Copper Syndicate Limited and Reduced vs Harris Surveyor of Taxes 2 related to the purchase and sale of a mining property
In that case a company had been formed for the purpose inter alia of acquiring and re selling a mining property
That company acquired some mining property 1  425
2 860 and sold the same to a second company consideration for the sale being paid up shares of the latter company
It was held by the Court of Exbhequer Scotland Second Division that the difference between the purchase price and the value of shares for which the property was exchanged was a profit assessable to incometax
It was pointed out by the Court that the case involved a deal which was a proper trading transaction one within the Company s power under their Articles and contemplated as well as authorised by their Articles 
The ratio of the decision in that case appears to have been that though it was a single transaction in which profit was made it was an adventure in the nature of trade being in the line of the business adopted by the company
The next case of Martin vs Lowry 1 is another instance of a single transaction of purchase of property being treated as a venture in the nature of trade on account of the very nature and magnitude of the commodity dealt in by a person whose usual line of business was wholly outside the scope of the new venture
That was a case in which a wholesale agricultural machinery merchant who never had any dealings in linen trade purchased from the Government its surplus stock of aeroplane linen some 44 million yards
In order to dispose of this huge stock of linen purchased by him the assessee embarked upon an extensive advertising campaign rented offices and engaged expert staff to organize the sales
The number of transactions of sale of that huge stock of linen ran into thousands
The House of Lords affirmed the determination of the courts below holding that the transaction amounted to the carrying on of a trade of which the profits were chargeable to income tax and Excess Profits Duty
Another case in the same volume is The Commissioners of Inland Revenue vs Livingston and others 2
In that case the persons sought to be taxed were a ship repairer a blacksmith and a fish salesman s employee who joined in the venture of purchasing a cargo vessel with a view to converting it into a steam drifter and selling it
That was a new line of business for them
1 2 861 Extensive repairs and alterations to the ship were carried out and the result was a sale of the converted vessel at a profit
It was held that the transaction though an isolated one was a venture in the nature of trade and thus liable to income tax
The ratio of the decision was stated in the following words of the Lord President  If the venture was one consisting simply in an isolated purchase of some article against an expected rise in price and a subsequent sale it might be impossible to say that the venture was in the nature of trade   because the only trade in the nature of which it could participate would be the trade of a dealer in such articles and a single transaction falls as far short of constituting a dealer s trade as the appearance of a single swallow does
of making a summer
The trade of a dealer necessarily consists of a course of dealing either actually engaged in or at any rate contemplated and intended to continue
 The case of Rutledge vs The Commissioners of Inland Revenue 1 is another illustration of a case in which a single transaction of purchase and sale was held to be an adventure in the nature of trade for the reason that the commodity purchased was of such a nature and of such a vast magnitude that it could not have possibly been intended for the consumption of the purchaser himself or his family
In that case the assessee was a money lender who was also interested in a cinema company
In the interest of his cinema business he happened to be in Berlin and there took the opportunity of purchasing for a very cheap price a very large quantity one million rolls of toilet paperfor pound 1000 and realised pound 12000 by sale of that com modity
He was taxed on the nett profit of pound 10895
It was held by the Court of Session Scotland First Division that it was certainly an adventure because the assessee made himself liable for the purchase of that vast quantity of toilet paper obviously for no other conceivable purpose than that of re selling it for a large profit
As regards the question whether the adventure was in the nature of trade it was contended 1 862 on behalf of the assessee that it was essential to the idea of trade that there should be a continuous series of trading operations
The Court rightly pointed out that the question was not whether it was a trade but  Whether it was a venture in the nature of trade
Hence though the single transaction of purchase and sale may not have amounted to what is ordinarily understood by trade in the sense of a series of transactions it was certainly a venture in the nature of trade because from the very beginning the intention was manifest that the purchase was made not with a view to utilizing the commodity for the personal use of the purchaser but with a view to making profit by a resale which was apparent from the very nature and magnitude of the commodity purchased
Another illustration of the same rule is to be found in the case of The Balgownie Land Trust Ltd vs The Commissioners of Inland Revenue 1
That was the case of a landed estate which was left by the owner to
trustees with a direction to sell it
The trustees being unsuccessful in their efforts to sell the estate formed a company with general powers to deal in real property and transferred the estate to this company
The company made certain other purchases of property by way of accretions to the original estate
The property was sold in parts during the years 1921 1924 1926 and 1927
The company was assessed to income tax for the profits from the sales of those lands
The Court confirming the assessment of the company to income tax on the profits made on those sales held that the company was doing precisely what it meant to do namely carrying on business of a company dealing in a real estate
The case of Commissioners of Inland Revenue vs Fraser 2 is another illustration of the rule that if a person enters into a single transaction outside his ordinary avocation of life with the sole object of making a profit by re sale it may amount to an adventure in the nature of trade
In that case a wood cutter bought for re sale whisky in large quantities and without taking delivery of the whisky sold it at a profit
It was the assessee s sole 1 2 863 dealing in whisky but all the same it was held to be liable to income tax on the ground that the nature of the transaction with reference to the commodity dealt in in large quantities which would not ordinarily be meant for personal or family consumption may indicate that it was an adventure in the nature of trade
We have set out the illustrative cases on the two sides of the thin line of demarcation that may possibly be said to distinguish one class of case from the other
The question still remains on which side of the line the present case should be placed  The learned Solicitor General placed strong reliance on the recent decision of this Court in G Venkataswami Naidu  Co vs The Commissioner of Income tax supra
The question therefore is whether the present case falls on the same side of the line as the recent decision of this Court which had to deal with a similar question as already indicated
In that case the assessee had purchased four plots under four different deeds
During the time that the assessee was in possession of those plots he made no efforts to put up any structures or to utilize them in other ways
The assessee was in a fiduciary position with the Mills contiguous to which the plots purchased were and it was also found that the assessee was in a position to influence the Mills to purchase those plots at a price favourable to him
It was in that setting of the facts that this Court made the following obser vations When section 2 sub section
4 refers to an adventure in the nature of trade it clearly suggests that the transaction cannot properly be regarded as trade or busi
It is allied to transactions that constitute trade or business but may not be trade or business itself It is characterized by some pB of the essential features that makeup trade or business but not by all of them and so even an isolated transaction can satisfy the description of an adventure in the nature of trade
 Can it be said in the setting of the facts and circumstances of the present case set out above that the transaction in question has such characteristics as 864 to point to the conclusion that itwas a venture in the nature of trade  It was suggested that the area of the land in question namely three quarters of an acre in the suburbs of Calcutta was large enough to indicate that the assessee would not have intended to take it for his own use and occupation
In the first place the area is not so large as to lead necessarily to the inference that it could not have been meant to be used by him in the way of his business or for his own residence
Certainly the Society having acquired more than 500 bighas of land in a lot could not claim that the land was meant for its own use
On the other side it was meant to be developed into small building sites as they actually did
But the Society had without developing the area sub divided it into building sites one of which was sought to be acquired by the appellant
He was carrying on an engineering concern and it is not therefore unlikely that he may have intended as he alleged to put up a small workshop on a portion of the land to be acquired and to build his own residential house on the other portion
It was not suggested that the appellant had his own house in Calcutta and was therefore not in need of a building site
At the time he entered into the agreement of purchase with the Society he was doing good business as is shown by the large amounts on which he was assessed to income tax
It was not unnatural for him to look forward to continue his business in as prosperous a way as he had been doing in the recent past and thus to raise sufficient funds to build his own residential house or to construct a workshop for his own engineering business
Hence the possibility or the probability that the site may appreciate in value would not necessarily lend itself to the inference that the transaction was a venture in the nature of trade as distinguished from a capital investment
In all the circumstances of this case the total impression created on our mind is that it has not been made out by the Department that the dominant intention of the appellant was to embark on a venture in the nature of trade when he entered into the agreement which resulted in the profits sought to be taxed
865 For the aforesaid reasons we would allow this appeal and set aside the orders of the Tribunal below with costs
KAPUR J
I regret I am unable to agree
that the appeal in the present case should be allowed and my reasons are these On the facts which were proved the Income tax Appellate Tribunal came to the conclusion that the purchase of land by the appellant was an adventure in the nature of trade and profit arising therefrom was assessable to income tax
In coming to this conclusion the Appellate Tribunal took into consideration certain facts 1 that the only payment the appellant made for the purchase of the land was of a sum of Rs 32748 which he borrowed from his company and he was not in a position to pay the balance of Rs 98246 2 the appellant had no money available at all to pay the part of the purchase price of Rs 130994 and be had no means to construct the house  3 that his financial resources were such as not to justify the purchase of the plot of land for the construction of a house 4 the site itself fetched no income but it was a kind of investment with the hope of making a profit out of it and the land was purchased only for the purpose of sale 5 that the appellant being a keen businessman had intimate knowledge of the trend of the rise in prices of land and therefore the purpose for which he made the purchase was in order to make profit and not merely an investment
As against these circumstances various facts were brought to our notice which it has argued militate against the findings of the Tribunal  1 that the appellant was carrying on an engineering concern and therefore it was not unlikely that he intended as he alleged to put up a small workshop on that portion of land 2 that the appellant did not have his own house in Calcutta and therefore he could have been in need of a piece of land on which he could build a house and 3 that at the time he entered into an agreement of purchase he had a prosperous business which is shown by the amount of income tax which he paid for 109 866 two years and he could legitimately expect that his business would continue to remain prosperous 4 that these facts could not lead to the necessary consequence that the transaction was a venture in the nature of trade and that it was not the dominant intention of the appellant at the time when he entered into the transaction to embark upon a venture in the nature of trade
Under the Income tax law it is the exclusive function of the Appellate Tribunal to find facts
Even though the powers of this Court under article 136 are very wide yet they have to be exercised within the limits imposed by the decisions of this Court and one such limitation is that this Court will not ordinarily interfere with findings of fact
It has been held by this Court that the question whether an adventure is in the nature of a trade or not is a mixed question of law and fact
The facts have to be found by the fact finding authority and to those facts the law has to be applied and whenever it is necessary to get a correct finding on a question of fact it is the fact finding authority which is called upon to consider the evidence and give its finding
See G Venkataswami Naidu  Co vs The Commissioner of Income tax 1
Therefore if there arose a question of law out of the order of the Appellate Tribunal then the appellant could have had the case stated to the High Court under section 661 and if the Appellate Tribunal refused to state the case it was open to the appellant to have the case stated under section 662 of the Indian Income tax Act
No doubt he did make an application to the Appellate Tribunal to state the case under section 661 but he did not make any application to the High Court till 1957 after he had obtained special leave in this Court and the High Court dismissed the petition on the ground that it was barred by time
The position comes to this that the tribunal refused to state the case under section 661 of the Income tax Act and the appellant did not apply to the High Court under section 662 till long after the period of limitation had expired
In the circumstances the courses open to this 1  867 Court would be 1 to set aside the order of the Appellate Tribunal and remit the case to the Tribunal for decision in accordance with the observations made by this Court as was done in the case of Omar Saly Mohammed Sait vs The Commissioner of Income tax 1 or it may be open to this Court to direct a reference as was done in Jagta Coal Company vs The Commissioner of Income tax 2
Then in Dhakeswari Cotton Mills vs The Commissioner of Income tax 3 this Court only remitted the case to the Appellate Tribunal to proceed in accordance with law on the ground that certain principles of natural justice had been violated and the assessee was not given an opportunity to rebut the evidence against him
The Income tax law has prescribed a procedure to have questions of law determined and an assessee cannot byepass the various steps prescribed under that law
The position therefore comes to this that if there is no evidence to support the finding the question is one of law which would fall under sections 661 and 662 of the Income tax Act 2 if in giving its finding the Appellate Tribunal disregards certain pieces of evidence or proceeds in a manner which is violative of natural justice the finding will be vitiated but if there is evidence to support the finding of fact and these findings are properly arrived at then it will be a pure question of fact which this Court will not ordinarily interfere with  3 if there is an error of law arising as above or because of misinterpretation of the Income tax law then the case has to be stated to the High Court in the manner provided in the Income tax Act and if the assessee does not choose to follow the procedure prescribed then he cannot come to this Court disregarding the remedy provided by the Income tax law and 4 the legal effect of facts found where the point for determination is a mixed question of law and fact would fall under section 661  2 of the Income tax Act
See G Venkataswami Naidu  Co vs The Commissioner of Income tax 4 
This is a case in which certain essential facts have 1 CA No 15 Of 1958 2 C A NO 337 Of 1956
3  4  868 not been considered by the Appellate Tribunal and therefore it is a case which should be remitted to the Income tax Appellate Tribunal to determine the facts in accordance with the observations made by this Court and in the light of those findings to determine whether the transaction was an adventure in the nature of a trade or not
I would order accordingly
ORDER OF THE COURT In view of the opinion of the majority the appeal is allowed with costs


Summary:
A habeas corpus application was made to the High Court alleging that one S had been illegally arrested and kept in unlawful custody without any charge being made against him and without obtaining remand from a Magistrate
By way of a return the appellant a sub Inspector of Police filed a false affidavit controverting the allegations made in the application
He was prosecuted and convicted under section 193 Indian Penal Code
The appellant challenged his conviction on the grounds that i as he was not bound under the law to file an affidavit the case did not fall under section 191 of the Indian Penal Code and he could not be convicted under section 193  and ii the affidavit having been affirmed as true to the best of the knowledge and belief of the appellant it could not be said which part was true to his knowledge and which to his belief
Held that the appellant was rightly convicted
It was not necessary for the application of section 191 of the Indian Penal Code that the accused should be bound under the law to make an affidavit
If he chose to me one and bound himself on oath to state the truth he was liable under section 193 Of the Code if e made a false statement and it was no defence to say that he was not bound to enter the witness box or make an affidavit
In the present case it was necessary for the appellant to file an affidavit as he was bound to place the facts and circumstances justifying 728 the detention which could only be done by an affidavit
Ordinarily where the detention is under orders of the detaining authority in exercise of his plenary powers or of a Court an affidavit may not be necessary in making the return but where it becomes necessary for the detaining authority to justify its action by disclosing facts it has to file an affidavit
Held further that explanation 2 to section 191 of the Code brings a false statement affirmed to the belief of the accused also within the mischief of section 191 and thus makes it punishable under section 193 of the Code
Emperor vs Lachmi Narain I L R 1947 All
155 dis approved