Law:

Section:

Section 2(13) , read with section 28(i) of the Income-tax Act, 1961 (Corresponding to section 2(4), read with section 10, of the Indian Income-tax Act, 1922) - Adventure in nature of trade - Assessment year 1952-53 - Assessee, owning some cement factories, placed an order in 1946 with a foreign company for supply of four cement plants to be installed at different places - After partition of India, one of those places fell in Pakistan - Assessee negotiated with Government of Orissa for installation of cement factory in Orissa and was successful - After obtaining import licence, assessee brought said plant to Orissa and transferred it to Orissa Cement Ltd. at invoice price - Later, after revaluation of plant at assessee's request, assessee received higher price to tune of Rs. 7 lakhs on account of rise in prices - On aforesaid facts, Tribunal and High Court held that Rs. 7 lakhs was received pursuant to an adventure in nature of trade and as such was taxable as assessee's income - Whether High Court was right in so holding - Held, yes FACTS The assessee-company owned certain factories and it placed an order for the supply of four complete units of cement manufacturing machinery with a foreign concern, on 7-2-1946, to increase the production in the factories located at different places, including Dandot. Since the factory in Dandot fell within the territory of Pakistan on its constitution with effect from 15-8-1947, the assessee transferred the Dandot machinery to a new company known as Orissa Cement Ltd. some time in 1950-51, after negotiations with Orissa Government for the installation of cement factory in Orissa and after obtaining an import licence for said machinery. It charged only the invoice price which it had paid to the foreign concern. The assessee thereafter asked for revaluation and a higher price and after some negotiations the Orissa Cement Ltd. agreed on 4-12-1951, to pay a further sum of Rs. 7 lakhs, in lieu of which 70,000 fully paid up ordinary shares of Rs. 10 each were given to the assessee in that company. The Income-tax Officer treated that amount as income earned by the assessee pursuant to an adventure in the nature of trade in 1952-53…

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