Law:

Section:

Section 2(13) of the Income-tax Act, 1961 [Corresponding to section 2(4) of the Indian Income-tax Act, 1922] - Adventure in nature of trade - Assessment years 1948-49 and 1949-50 - Assessee HUF carried on business of commission agency and money lending - V, then karta of assessee HUF purchased certain number of silver bars between 12-8-1940 and 23-1-1941 payment of which were taken out from Tijori account and not from regular business account-V died in 1944 and thereafter, his son who succeeded as karta of assessee gradually sold aforesaid silver bars during year in question - It was stated that proceeds were utilised for income tax, super tax and other house hold expenses - Revenue authorities as also Tribunal held aforesaid transaction as an adventure in nature of trade - Whether in view of facts that there was no need to sell silver bars for replenishing shortage of cash in business and purchase had been made solely and exclusively with intention to resell same at a profit, it could be said that it was an adventure in nature of trade - Held, yes - Whether fact that purchase was made at beginning of Second World War which was expected to cause rise in price of silver and sale was effected at lines when that event had come to end, it was clear that object at time of purchase was to take advantage of opportunity of making profit out of it and, therefore, profits from sale were rightly held to be income and not capital accretion and assessable as such to income-tax - Held, yes FACTS The assessee HUF was carrying on business in commission agency including bullion and money-lending over a large number of years. The V, the then karta of the family, had purchased certain silver bars. The assessee had a Tijori account and the amount for the purchase of said silver bars was taken out from this Tijori account and not from the funds of the assessee's regular business. V, who had purchased these 111 bars, did not sell any of them during his lifetime. After his death in 1944, when his son, the present karta of the assessee-HUF, came into possession and management of the family affairs, gradually sold all the silver bars during a period of more than two years. In…

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