GANGADHAR BABU LAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a case stated under section 66(2) of the Indian Income-tax Act, 1992, by the Allahabad Bench of the Income-tax Appellate Tribunal. The question referred are :

(2.) THE material facts that emerge from the statement of the case are these. THE relevant year of assessment is 1947-48, the previous year being the year ending 22nd October, 1946. THE assessee, Babu Lal, who was the karta of the Hindu undivided family of Gangadhar Babulal, was carrying on money-landing business and was also trading in gold, silver and guineas and the profit made on these transactions was being returned and assessed to tax by the department.

(3.) THE first question posed is merely as to whether there was any material for the finding that the sale of the three patlas amounted to a business ? THE definition of business includes as adventure in the nature of trade. It is well-settled that even a solitary transaction may amount to business provided it has the indicia of trade. It is not necessary that there should be continuous buying and selling. THEre may be periods of quiescence. It is no doubt true that at the partial partition of the assets of the family, the silver and gold which fell to the share of the assessee was capital in his hands. As pointed out by the Federal Court in A. H. Wadia v. Commissioner of Income-tax, it is open to the petitioner on receipt of a capital asset to retain it as such or to convert it into a stock-in-trade. It will be a question of fact to be decided on the materials in each case as to whether the assessee had continued to treat a capital asset as an investment or had converted it into his stock-in-trade. THE Supreme Court in Narain Swadeshi Weaving Mills v. Commissioner of Excess Profits Tax reiterated that no general principle could be laid down which would be applicable to all cases and that each case must be decided on its own circumstances according to commonsense principles. In G. Venkataswami Naidu & Co. v. Commissioner of Income-tax, after laying down various tests for resolving such questions, the Supreme Court again observed :