Law: Income Tax Act, 1961

Section: 256(1)

Income-tax----Business---Adventure in the nature of trade---Solitary transaction of purchase and sale of gold bonds---Burden on Revenue to prove that transaction amounted to an adventure in the nature of trade---No evidence to show that purchase had been made with an intention to re-sell---Profit from sale not assessable as income from business. In deciding the character of a solitary transaction of purchase and resale, several factors are relevant, such as, whether the purchaser was a trader and the purchase of the commodity and its resale were allied to his usual trade or business or incidental to it; the nature and quality of the commodity purchased and resold; any act subsequent to the purchase to improve the quality of the commodity purchased and thereby make it more readily re¬salable; any act prior to the purchase showing a design or purpose; the incidents associated with the purchase and resale, the similarity of .the transaction to operations usually associated with trade or business; the repetition of; the transaction; the element of pride of possession. Where a transaction is not in the line of business of the assessee- but is an isolated or single instance of a transaction, the onus is on the Revenue to prove that the transaction was an adventure in the nature of trade. The assessee purchased National Defence Gold Bonds, 1980 on April 3, 1980, at the price of Rs. 1,125 per bond. He, however, sold these bonds in one lot on October, 1,1980. He made a profit of Rs. 33,500 and claimed that it was not taxable. The Income-tax Officer brought the amount of Rs. 33,500 to tax as income from an adventure in the nature of "trade. This finding was upheld by the Appellate Assistant Commissioner and the Tribunal. On a reference: Held, that there was no material to establish that the only motive of the assessee in purchasing the bonds was to sell them at profit at a later date. The assessee had not purchased bonds in very large quantities. The assessee had the means to pay for the bonds and in fact he paid for them. There was also no material to show that the assessee was carrying on any business similar to that of buying and selling bonds such as dealing in stock…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492