Law:

Section:

Income tax---Business Adventure in nature of trade Assessee Company carrying on business in financing of motor vehicles on hire purchase basis Memorandum of Association empowering assessee Company to deal with property of all kinds including land, farms, building, etc. Purchase of land in area likely to be declared an industrial area Transactions of sale of land within close proximity of time indicating that property was purchased with intention to make profit Transactions, held, adventure in nature of trade and liable to tax. JUDGMENT S. RANGANATHAN, J. The question raised in the reference is whether a surplus realisation by the assessee Company is taxable as income arising from an adventure in the nature of trade. The facts are a little unusual but we have come to the conclusion that the Tribunal was right in holding that the surplus constituted taxable income under the I. T. Act. The facts may now be briefly stated. The assessee Company, Messrs Joint Financiers (Pvt.), Ltd., is a Company now in liquidation. We are concerned with the assessment year 1961 62, for which the accounting year ended on October 31, 1960. On May 21, 1960, a sale deed was executed by one Rajinder Kumar in respect of certain lands in village, Ballabgarh, and got registered in the office of the Sub Registrar on May 24, 1960. The sale deed was in favour of the assessee Company and the sale price was stated to be Rs. 1,28,084. Earlier, on April 28, 1960, the board of directors of the assessee Company had passed a resolution in respect of this land which read as follows : "Further, resolved that a sum of Rs. 1,35,000 approximately be invested jointly, with Shri B. K. Bedi in purchase of land situated at the Mathura Road, near Ballabgarh (Punj.), Mr. B. K. Bedi's share being 50 % in, the shape of investment and profit. The advance paid to the seller in this respect be and is hereby confirmed." It will be seen from the above resolution that though the land had been purchased in the name of the assessee Company, it had been agreed between the assessee Company and Shri B. K. Bedi each was to be entitled to a 50 % share in the investment and profit. On October 31, 1960, the assessee entered…

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