V.S. Desai, J.
1. The question that arises for consideration on this reference is whether a certain transaction of the purchase and sale of silver entered into by the assessee was an adventure in the nature of trade.
2. The assessee is a Hindu undivided family, carrying on business in commission agency and money-lending over a large number of years. The karta of the assessee-family was one Vallabhdas Murlidhar until his death on the 27th December, 1944, and thereafter his son, Tribhuvandas Vallabhdas, has been acting as the karta of the family. The assessee had its head office at Yeola and its branch office at Bombay. In Samvat years 1996 and 1997, which correspond to calendar year 1939-40 and 1040-41, Vallabhdas, the then karta of the family, had purchased 111 silver bars valued at Rs. 2,01,824. These purchases were made in six instalments between the dates 12th August, 1940, and 23rd January, 1941. Although the assessee family was doing commission agency business in all kinds of goods, including bullion and also money-lending business, it never did any business in bullion on its own account. The assessee had a Tijori account at Yeola known as 'Vallabhdas Gangaram Tijori Vahi'. The amount for the purchase of 111 silver bars was taken out from this Tijori account and not from the funds of the assessee's regular business. Vallabhdas, 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 Hindu undivided family, came into possession and management of the family affairs, he utilised five out of the 111 bars of silver for preparing utensils some time in 1945 or 1946 and thereafter from 2nd of December, 1946, onwards he gradually sold all the silver bars during a period of more than two years. In Samvat year 2003 he sold 45 bars and in the next Samvat year he sold 29 bars. The sale of 45 bars in the Samvat year 2003 was for a total amount of Rs. 1,97,263 and realised a surplus of Rs. 1,15,453 over its cost price. The 29 bars, which were sold in Samvat year 2004, fetched a price of Rs. 1,48,232 realising an excess of Rs. 95,510 over their cost. In the assessment of the assessee for the assessment year 1948-49 and 1949-50 for which the relevant account years were Samvat year 2003 and 2004, respectively, these surplus amounts resulting from the sale of the silver bars were claimed by the assessee as accretions to capital and, therefore, not taxable. According to the assessee, the purchase of the bars made by Vallabhdas in the Samvat year 1996 and 1997 was by way of investment and not in the course of business. The Income-tax Officer did not accept this claim of the assessee. According to him, the purchase and sale of the silver bars was an adventure in the nature of trade and the profits arising therefrom were liable to tax. In coming to the conclusion that the transaction was an venture in the nature of trade, the Income-tax Officer relied on the circumstances, firstly, that the purchase was made at the burning of the Second World War in the expectation that the price will go up as a result of the war as the experience of the last world war showed; secondly, Vallabhdas was a shrewd businessman and a money-lender and was not likely to lock up his capita in an investment, which was not capable of yielding any income. He had a large surplus cash in his 'Tijori' at Yeola and was, therefore, in a position to wait, after having made these purchases, or a suitable opportunity to sell of the silver bars at a profit; that after purchasing the 111 bars, Vallabhdas, during his lifetime, had not put them to any use and though his son, after the death of Vallabhdas, had utilised some five out of the 111 bars for making utensils, the rest of the bars had been sold off at a profit. He also pointed out that the manner of purchase and sale, which was not in one lot, also indicated an intention to do business and not to go in for an investment. He accordingly took the surplus amounts be parts of the taxable income of the assessee and brought them to tax. The assessee appealed to the Appellate Assistant Commissioner from these orders of assessment passed by the Income-tax Officer. It was urged in the grounds of appeal that the silver bars were purchased from capital as an investment; five of the bars were utilised for making household utensils and 45 bars were sold in the Samvat year 2003 for making provision for income-tax and super-tax payments and for the advance payment of taxes under section 18. Similarly, in the next Samvat year 2004, 29 bars were sold for paying income-tax and for meeting house-hold and other expenses. The Appellate Assistant Commissioner, before whom these appeals came for the first time, took the view, relying on the case of Lalit Ram Mangilal of Cawnproe v. Commissioner of Income-tax that the transaction in question not having been in the regular line of the assessee's business, the burden was on the department prove that the adventure was undertaken from a motive of making profit and not from any other motive. According to him, this approach to the question under consideration had not been properly adhered to by the Income-tax Officer and it was, therefore, necessary to remand the case and call for a report from the Income-tax Officer after a proper examination of the assessee's books of account and the other material on record in the light of the contentions, which the assessee had raised. In order to guide the Income-tax Officer for the further enquiry, which was being called for, the Appellate Assistant Commissioner asked him to consider a few points which he enumerated. These point, briefly stated, were, firstly, to consider the significance of the period at which the purchases were made and the funds which were utilised for the purpose; secondly, the time-lag which had occurred between the purchase and the sale; thirdly, whatever the assessee's explanation as to the reasons why the bars were sold was substantiated by the record, and, fourthly, whether the case came within the ratio of the decisions of the English cases reported as Commissioners of Inland Revenue v. Living stone and Martin v. Lowry. On remand the Income-tax Officer examined Tribhuvandas Vallabhdas, the karta of the family, and also their munim. In his examination Tribhuvandas stated that being minor at the time when the purchases were made, he did not know anything about the transaction, nor could he say anything about the circumstances under which the purchases were made. He had started looking after the business since 1944 and that he had to sell the bars for paying income-tax and super-tax is, as he had no sufficient, cash in hand to meet the income-tax and super-tax dues within the period allowed by the income-tax department, he had sold the bars by parts. At times the income-tax dues were first paid and to meet the cash shortage, the silver bars had to be sold. The munim, Govindji Shamji, stated that Vallabhdas had purchased these bars as investment and that they and been sold to meet income-tax dues, and the cash shortage caused by the payment of income-tax and for purposes of business. After considering the evidence given by these two persons and the other material before him, the Income-tax Officer submitted his report. His conclusions were that the purchase was not for investment, nor was the sale for the payment of income-tax dues, and having regard the circumstances that the purchase was made at a time when the World War II had started and the prices were rising and that they were sold later on at profit, the sole intention in purchasing and selling the silver bars was to earn profits and the transaction was, therefore, an adventure in the nature of trade. The assessee gave its written objections to the remain report of the Income-tax Officer. It stated therein that Vallabhdas Murlidhar and purchased 111 bars of silver as an investment from home-savings and they were not purchased from business cash balance; that they had been purchased with a view to make utensils for house hold use and Vallabhdas no intention of purchasing or selling them for profit. They had been held in stock after their purchase for a long period and although they had ample other cash in the home-safe and also in the Bombay office to pay large amount of income-tax, they thought of selling the bars for replenishing the balance of cash in the home-safe. The Appellate Assistant Commissioner after receipt of the remand report from the Income-tax officer heard the appeals before him and came to the conclusion that there was clear and unmistakable profit motive behind the purchase of the bars and the Income-tax Officer's action in bringing within charge the profit arising from the sale thereof was in order. He accordingly dismissed the appeals of the assessee. The assessee thereafter appealed to the Income-tax Appellate Tribunal. The Tribunal held that the assessee's case that the purchase was by way of investment or for the purpose of making utensils could not be believed. There was also nothing on record to show that the purchase of silver was made to conserve capital at the time of a political upheaval. There was also no panic in the market at the time when the purchase was made and the only object, therefore, with which a shrewd businessman like the assessee had made a purchase of Rs. 2 lakhs worth of silver was with a view to earn profits. According to the Tribunal, the purchase having been made with the intention to sell at profit, it was material whether the sale proceeds were utilised in the payment of taxes or otherwise. The Tribunal was, therefore, of the view that, by the purchase of the silver bars, Vallabhdas had entered into a venture in the nature of trade and profits arising out of the transaction, therefore, were business profits of the assessee's undivided Hindu family which were taxable under the Indian Income-tax Act. The assessee applied under section 66(1) for a reference of certain questions of law, which, according to it, arose on the order of the Appellate Tribunal. The application was rejected and it appears that an application made to his court under section 66(2) was also rejected. The assessee thereafter went in appeal by special lead to the Supreme Court. It succeeded in the said appeal and the Supreme Court directed the Income-tax Appellate Tribunal to draw up a statement of the case and refer the following two questions of law for the opinion of this court under section 66(2) of the Indian Income-tax Act :
'(1) Whether, on the facts and in the circumstances of the case, the profit replied from the sale of 45 silver basis by the assessee in the previous year arose from an adventure in the nature of trade within the meaning of section 2(4) of the Income-tax Act and was liable to income-tax
(2) Whether, on the facts and in the circumstances of the case, the profit realised from the sale of 29 silver bars by the assessee in the previous years arose from an adventure in the nature of trade within the meaning of section 2(4) of the Indian Income-tax Act and was liable to income-tax ?'
3. It may be pointed out that the first question arises out of the assessment order for the assessment year 1948-49 and the second out of the assessment order for the assessment year 1949-50. The Appellate Tribunal accordingly has drawn up a statement of the case and referred the said questions to us.
4. The Appellate Tribunal has annexed certain documents to the statement of the case and made them part of it. The assessee has taken out a notice of motion by which it wants certain other documents and material to be made part of the statement of the case, which is submitted by the Income-tax Appellate Tribunal.
5. The main grievance of Mr. Palkhivala, learned counsel who appears for the assessee, is that the Appellate Tribunal has not taken into consideration several important and material circumstances on record which are in favour of the assessee and which go a long way to show that the transaction of the purchase of silver bars was by way of an investment as alleged by the assessee and not an adventure in the nature of trade as held by the departmental authorities and the Income-tax Appellate Tribunal. The Tribunal further has not given proper consideration to the case urged by the assessee and has not cared to understand it properly. It has also not given good and sound reasons for the conclusions to which it has arrived. According to Mr. Palkhivala, therefore, the decision of the Tribunal is not capable of being sustained and on a proper consideration of the material on record, which is disclosed by the annexure to the statement of the case and the further material, which he wants to supplement by the notice of motion which he has taken out, it will be abundantly clear that the purchase of the silver bars in the present case was by way of investment and not as an adventure in the nature of trade.
6. Now, the question whether a given transaction is an adventure in the nature of trade will depend upon the facts and circumstances of each case. In order to determine whether the transaction is an adventure in the nature of trade, no general or absolute tests, which may apply to all or even a large number of cases, can be laid down. There are, however, certain tests which can be applied or which can help in determining the nature of the transaction. In G. V. Venkataswami Naidu and Co. v. Commissioner of Income-tax, the Supreme Court has enumerated the several factors, which may be relevant in determining the nature of the transaction, which are :
'... 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 quantity 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 resaleable; 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 ride of possession.'
7. It has then observed :
'The presence of all these relevant factors may help the court to draw an inference that a transaction is in the nature of trade; but it is not a matter of nearly counting the number of facts and circumstances pro and con; what is important to consider is their distinctive character. In each case, it is the total effect of all relevant factors and circumstances that determines the character of the transaction.'
8. In Saroj Kumar Mazumdar v. Commissioner of Income-tax the Supreme Court has laid down that where a transaction was not in the line of the business of the assessee but was an isolate or single instance of a transaction, the onus was on the department to prove that that transaction was an adventure in the nature of trade. In the present case, the purchase and sale of silver was not in the ordinary course or line of business of the assessee, which was commission agency and money-lending. The onus to prove that the present transaction was an adventure of trade would, therefore, be on the department and that onus will have to be discharged by the department by pointing out to relevant factors, which would indicate with reasonable certainty that the transaction was an adventure in the nature of trade. The mere circumstance, therefore, that the assessee's explanation that the purchase was by way of any investment and the subsequent sale was for the purpose of payment of income-tax or for household or other expanses, was not acceptable, would not be sufficient to discharge the burden which lay on the department to shown that the transaction was an adventure in the nature of trade. The department, in order to succeed, will have to point out circumstances, which would indicate that the transaction was in the nature of trade and if it succeeds in pointing out such circumstances, the further circumstance that the assessee's explanation that the transaction was an investment and not an adventure in the nature of trade was not believable, would further strengthen the conclusion to be drawn from other circumstances in favour of the department showing that the transaction was an adventure in the nature of trade. Before proceeding to consider the circumstances, which are disclosed on the record and which would show that the transaction was an adventure in the nature of trade, we will deal with the circumstances, which have been pointed out by Mr. Palkhivala, which, according to him, strengthen the assessee's case that the purchase was by way of investment and that the sale was in the circumstances as alleged by the assessee. According to Mr. Palkhivala, the assessee has been doing business of commission agency and money-lending for over a number of years. The commission agency business which it does on behalf of its constituents, includes many things including gold and silver also. The assessee, however, during its entire career of business, had never done business in bullion on its own account. This circumstance, according Mr. Palkhivala, would point out that the transaction of the purchase of 111 bars in the present case was due to some other intention or motive on the part of the assessee and not as a plunge into bullion business. The second circumstance, relied in by Mr. Palkhivala, is that admittedly the purchase has been made not by withdrawing funds from business but out of the capital in the home-safe. The silver, which was purchased in the year 1940-41, was kept by the assessee without disposal for a long period until the year 1946. Although the assessee was doing commission agency business for its constitutes silver also, it did not utilise any part of the silver purchased by the supplying it do its constituents. Mr. Palkhivala says that the Tijori account in the relevant years, when the purchase silver bars was made, would show that the assessee was holding a large number of rupee coins having a high silver content and the Tijori account would further show that after the purchase of silver, its holding of the silver coins of high silver content was considerably reduced. Although an extract of the Tijori account for the Samvat years 2001 to 2004 has been annexed to the statement of the case, the extract for the earlier years including the Samvat years 1996 and 1997, during which period the purchase of silver was made has not been supplied with the statement of the case. In the notice of motion taken out by Mr. Palkhivala, he has asked for the said extraction be made a part of the case. The extract for the years 2001 to 2004, which is annexed to the statement of the case, does show that even in the years 2001 and 2002, the 'Tijori account' possessed a large number of coins. In the year 2001 there were Rs. 2,35,000 worth of coins and in the subsequent year there were coins worth Rs. 50,000. We have looked into the extracts of the 'Tijori account' for the earlier years in the completion accompanying the notice of motion and have found that the opening balance in the Samvat year 1996 consisted of Rs. 4,10,000 coins and Rs. 1,50,000 in notes and the closing balance contained Rs. 4,20,000 coins and Rs. 1,15,000 notes. In the next Samvat year 1997, the closing balance in coins was Rs. 2,20,000. Mr Palkhivala's contention is that the possession of a large number of silver coins of high silver content in the Tijori would show that the assessee was hoarding them for conserving capital and in the years in question, instead of conserving the capital in coins, he thought of purchasing silver bars in view of the demonetizations notification taking out of circulation the silver-rupee coins bearing the effigies of Queen Victoria and Edward the VII. This, according to Mr. Palkhivala, is another indication showing that the purchase was by way of investment. Mr. Palkhivala further says that at the time these purchases were made the was situation was grim; England and its allies had suffered great defeats in the war and the times, therefore, were of uncertainty and panic. This would again indicate that the assessee who was holding large amounts in its Tijori was conserving its capital by purchasing the precious metal. It is Mr. Palkhivala's grievance that all these circumstances, which he has pointed out, have been ignored by the Tribunal in considering the question before it. Not only that, but on the other hand, it has misread the evidence produced by the assessee and misunderstood its contentions and has come to a conclusion, which is no better than a mere surmise. He points out in this connection that the Tribunal in its order states that the assessee contended before the income-tax authorities that the purchase of white metal was made for the purpose of making household utensils and the sales were made when the money was required for the payment of taxes. This, according to him, is misreading of the material on record. The evidence produced on behalf of the assessee is that the purchase was made by way of investment and the sage was made to replenish the cash shortage caused by the payment of income-tax and super-tax. There is no doubt some reference to the making of utensils and also to sales having been effected to pay income-tax. Mr. Palkhivala says that on reading the evidence as a whole it would be seen that the reference to the making of utensils in because some bars have actually been used for the making of utensils and whether the sale was actually for obtaining money for paying income-tax or it was for the purpose of making good the shortage caused by the payment of income-tax dues, which were already paid, the effect of the evidence that the sale was necessitated because of the payment of the income-tax dues.
9. In our opinion it does appear that the Tribunal has not dealt, as thoroughly and properly as it should have, with the circumstances and facts on record. That, however, will not mean that the conclusion to which it has come is not the correct conclusion. What will have to be seen is whether, on a consideration of all the relevant circumstances, which are on record, including those that the Tribunal and the departmental authorities have considered and those which, according to Mr. Palkhivala, they have failed to consider, the ultimate conclusion as is arrived at by the Tribunal is correct.
10. Now, in considering the circumstances, which have been pointed out by Mr. Palkhivala, we do not think that those circumstances taken individually or cumulatively would be sufficient to come to a necessary conclusion that the purchase was by way by way of an investment. It is true that the purchase and sale of silver was not in the ordinary line of business of the assessee, but it was not a business, which was altogether different from the assessee's line of business or unfamiliar to the assessee. Moreover, as pointed out by the departmental authorities, the munim of the assessee, who was the adviser both of Vallabhdas and Tribhuvandas in the affairs of their business, was carrying on business on his own account in bullion also. Vallabhdas, the karta of the assessee, was a shrewd businessman and money-lender. He had ample cash at his disposal. Such a person, having on fund an opportunity for entering into a profitable business adventure, which may not been in the ordinary line of business, would not be declined to embark upon it. The departmental authorities have pointed out that the experience of the last world war showed that the prices of precious metal rose as a result of the war. The circumstance, therefore, that the assessee has entered into a different line of transaction from the usual line of his business cannot in the present case supply an indication that it was not embarking upon it as trade but only by way of an investment. The money for this transaction has undoubtedly not been taken from the usual money-lending business but it may be pointed out that the Tijori account appears to be the account of the surplus cash not needed for the business conducted by the assessee, and amounts from this account have been taken whenever needed even for the purpose of its business. The Tijori account does not show that the assessee has been anxious to keep the cash in the Tijori at a certain level at all times. The amounts in this account have varied from time to time and in the later years, particularly after the death of Vallabhdas, when the new karta came in management of the affairs of the family, no large amount has been kept in the home-safe, but most of it appears to have been utilised in several kinds of investments and transactions.
11. The circumstance that there has been an interval of six years or more between the purchase and sale is not of a conclusive nature or tendency in pointing out that it is an investment transaction and not a transaction in the nature of trade. If the purchase was made with a view to earn profits and if the assessee had a capacity to wait, which obviously he had, he would wait for a sufficiently long period, until the prices had risen very high. It is pointed out by Mr. Palkhivala that the sales have been effected not at times when the prices were at the highest and that would show that sales were not effected with the intention of obtaining or making of profits. We find, however, that all the sales have been made at rising levels, every subsequent sale being at a higher price than the one preceding it. Moreover, at the time when the sale had started, the market rates will show that the price of silver had, after reaching a certain height, fallen down and was again rising. It may be that the assessee on his own calculations or on the advice received by him, might have thought that he had sufficiently waited and it was advisable then to sell away the stock of silver and make such profit as he could. The circumstance that the assessee did not supply the silver, which was purchased by him, to his constituents but sold it independently in the open market, in our opinion, has no particular significance.
12. The next circumstance pointed out by Mr. Palkhivala that there was a large hoarding of silver coins of high silver content and the purchase of the silver bars was merely for converting that holding from silver coins to silver in view of the demonetisation notification issued by the Government, is not, in our opinion, sufficiently clearly made out on the record. In the first place, in the Samvat year 1996, 25 bars were purchased for a total price of something like Rs. 46,388. No silver coins from the home-safe appear to have been utilised, because the opening balance of that year in silver coins was Rs. 4,10,000 while the closing balance was Rs. 4,20,000. In the next year silver worth about a lakh and fifty thousand has been purchased. The position of the coins in the home-safe during that year would show that the number of coins has gone down by about Rs. 2,00,000. There is, however, nothing to show that the number of coins had been reduced due to the purchase of the silver bars. It may be pointed out in the is connection that neither the assessee nor the munim gave this as the reason for the purchase of the silver bars. No reference was made by either of them to the holding of silver coins of high silver content in the Tijori as a capital reserve nor was any reference made by them to the demonetisation of the said coins or any action taken by Vallabhdas in view of the same. There is nothing on record also to show that these coins in the home-safe were coins of Queen Victoria or Edward VII. This first time when such a suggestion appears to have been made on behalf of the assessee was at the time when the reference application under section 66(1) was made to the Tribunal. In these circumstances, we do not think it will be possible to rely on this circumstance.
13. As to the last circumstance that, at the time when the purchase was made, the war situation was grim and there was a feeling of uncertainty and panic in the country, both the departmental authorities as well as the Tribunal have observed that there was no panic in India until the entry of Japan into war, which occurred somewhere in or about 1942. Mr. Palkhivala says that 1940-41 were the worst years in the war for England and the departmental authorities and the Tribunal were wrong in saying that there was no panic in this country. Now, it may be that the war situation was grim but India was not then affected as much as it later came to be, when Japan entered into war and there was danger of this country being invaded or bombed. 1940 and 1941 may no doubt be years of uncertainty caused by war conditions, but assuming that certain amount of uncertainty or even panic was felt by the assessee, the purchase of 111 bars of silver could hardly be regarded as the best way to conserve capital and keep it in a portable state. If at all the purchase was occasioned by reason of panic, the assessee would have been expected to purchase gold rather than silver. Moreover, it also appears that it is only a part of the surplus cash in the Tijori, which appears to have been converted not silver by the assessee. This circumstance, again, therefore, in our opinion, is not of such a nature of the transaction, which was being entered into by the assessee, was an investment and not trade.
14. In our opinion, therefore, none of circumstances which have been pointed out by Mr. Palkhivala, are sufficiently strong to establish assessee's case that the purchase of silver bars was by way of investment. We do not also find that the sale of the bars, which was effected by the assessee in the years 1946-47, was out of any need or pressure. It is urged before the departmental authorities that the sales were made for the payment of income-tax, for replenishing the cash shortage caused by payment of income-tax and household and other expenses. The income-tax authorities have points doubt that the sales could not have been for purpose of payment of income-tax dues because the dates on which income-tax dues are paid and the dates on which the sales are effected are not so correlated as would indicate that the money for the payment of taxed was obtained by the sale of the silver bars. It may, however, be pointed out that although for the payment of income-tax money was first paid from the business and subsequently the shortage of money was made up by the sale of bars, it may still possibly be said that the sales were occasioned by tea payment of income-tax. It, however, appears on Tribhuvandas's own statement as also on the statement of his munim that there was really no need to sell the silver bars for replenishing the cash shortage in business. The assessee in the written objections, which it submitted to the remand report of the Income-tax Officer, stated as follows :
'It is correct we had ample cash balance in the home-safe and also at Bombay office to pay large amount of income-tax. As we had paid large amount of taxes, we wanted to replenish the balance of cash in the home safe. So I thought of selling the silver bars under discussion....'
15. In his evidence again, although the assessee's karta had stated that the silver bars were sold in order to meet the cash shortage, the necessity for replenishing the cash shortage was, according to him, to keep the cash balances at par with other days and for keeping up to his business. He also stated that he could give no detail as to the occasions when he had to sell the silver bars in order to meet the income-tax dues and to replenish the cash shortage caused by the payment of the income-tax dues. The munim again has stated in his evidence that the silver bars were sold to meet the income-tax dues, to meet the cash shortage because of payment of income-tax dues and for purposes of business. It would thus appear that the reasons, which have been given by Tribhuvandas and the munim, are not consistent but varying from time to time. According to the munim, the sales were effected to meet the income-tax dues, to meet the cash shortage and for purposes of business. No payment for business is referred to by the assessee's karta and although replenishing of cash shortage is referred t by him in his written objection she has stated that the replenishing was in the balance of the cash in the home-safe. The balance of the cash in the home-safe in the relevant year would show that it has not been replenished by any of the cash amounts received by the sale of silver bars. The munim also in his evidence has admitted that he could not give particular of any transactions to meet which the assessee had to sell the silver bars. It would thus appear that the sale of the silver bars was not necessitated for purposes of need or under pressure. If the purchase of the bars was not with the intention of making investment and if the sale of the bars also was not for the purposes of any need or under pressure then the transaction of the purchase and the subsequent sale at profit would be show that the purchase had been made solely and exclusively with the intention to resell the same at a profit and would, therefore, raise a very strong presumption that it was an adventure in the nature of trade. In our opinion there were also other circumstances on record, which would support the conclusion that the transaction of the purchase of the silver bars was with the sole intention of subsequently selling the seam at a profit. The purchases were made by a man, who was engaged in business, and whose business, though not in the same line, was not altogether different and unconnected with the transaction entered into by him. The considerable quantity of 111 bars of silver, the manner of making those purchases in six instalments spread over a period of about six months, the fact that the purchase was of something which would not yield income or profit except on resale and was also not such as could be put to some use or give the possessor the pride of possession; the time at which the purchased commodity was sold and the manner in which the sales were effected are circumstances which indicate that the transaction was intended to be an adventure in the nature of trade. The purchase was made at the beginning of an event which was expected to cause a rise in the price of the commodity. The sale was effected at a time when the event had come to an end. Having regard to all these circumstances and having regard to the fact that the assessee's case as to why the silver was purchased and sold not being acceptable, it appears to us that the conclusion of the departmental authorities and the Tribunal, that the transaction was an adventure in the nature of trade, is correct.
16. Apart from the two cases, which we have already referred to earlier, Mr. Palkhivala has invited our attention to two more cases, one in Lalit Ram Mangilal v. Commissioner of Income-tax and the other in A. Grezo v. Commissioner of Income-tax. In the first, a transaction of purchase of gold by the assessee and its subsequent sale was held not to be an adventure in the nature of trade. The assessee in that case had purchased eight bars of gold within a period of one weeks towards the end of October and the beginning of November, 1942. He utilised two of them in making governments for the marriage of him daughter and sold three out of the remaining bars on 27th April, 1943, and the rest in October, 1944. It was held, on the facts and in the circumstances of that case, that the burden, which was on the department to prove that the adventure was undertaken from a motive of making profit and not from any other motive, could not be said to have been discharged. As we have already pointed out, each case has got to be decided on its own facts and circumstances. The facts in that case were different from the facts in the case before us. The other case reported as A. Grezo v. Commissioner of Income-tax, again was decided on its own facts. The two decision relied upon by Mr. Palkhivala, therefore, do not help him.
17. Mr. Palkhivala has then argued, relying on the English case of Commissioners of Inland Revenue v. Reinhold, which was referred to in the Supreme Court decision in Saroj Kumar Mazumdar v. Commissioner of Income-tax, that the mere fact that the property was purchased with view to resell it did not by itself establish that the transaction was an adventure in the nature of trade. It is true that even if the idea is entertained at the time of the purchase that the property may be resold at some future date, would not be sufficient to make it a transaction in the nature of trade. But where there is no other intention whatsoever in the purchase of the property except the intention to sell it at a profit and when the adventure is entered into with that object and no other, the position is different. In the present case, on an appreciation of the entire facts and circumstance of the case, we think that the departmental authorities and the Tribunal were right in coming to the conclusion that the sole object of Vallabhdas at the time when he entered into the purchase of 111 bars was to take advantage of the suitable opportunity that had occurred to never into the transaction and make profit out of it. In our opinion, therefore, the decision of the Tribunal on the question referred to us is correct.
18. As to the notice of motion taken out by the assessee the object of having the additional record before the court is as follows :
1. That the Tijori account showed large holdings of silver coins;
2. That in later years when the sales of silver bars were effected, large amounts have been diverted to agricultural and other investments and after the payment of the income-tax dues, the Yeola balances have been reduced to very small amounts;
3. That the extracts of accounts also showed that the assessee had to borrow large amounts to maintain its cash balances;
4. That the times when the silver was sold were not the times when the silver prices were the highest; and
5. That the liquid cash position of the Yeola and Bombay offices taken cumulatively will show that but for the sale of silver bars the position of cash in business would have been unsatisfactory.
19. Material relevant to most of these matters is already on the record and we have also looked into the extract s of the Tijori accounts for the other years as well. Some of the facts, which have been stated on behalf of the assessee, are not, in our opinion, very material for the purpose of the decision of the questions before us. That large amounts have been diverted to agricultural and other investments is not, in our opinion, a material circumstance for showing the nature of the transaction with which we are concerned. It is true that an examination of the Tijori account will show that that account does not hold as much cash as at formerly did. As we find even from the record, which is already before us, that in the years 1946 had 1947 even when the silver bars had been sold the Tijori account had not been replenished with the proceeds of the slab of silver, but had remained constantly at Rs. 15,000. It must be remembered that the ideas as to how the affair of the family and its business would be carried on during the time when Vallabhdas was at the helm of affairs have changed since after the son has come not management of the affair of the family and its business. He has though of entering into several different kinds of businesses and decided to utilise the money available to him in various different ways. It is as a result of this changed ideas, entertained by two different persons, that the business fairs and other activities of the family have been carried on in a different manner in the subsequent year involving a difference in the liquid cash position etc., in the later years. These circumstances, however, in our opinion, would have no substantial effect on the determination of the questions with which we are concerned. The intention with which the purchase was made has to be gathered with regard to the circumstances which prevailed at the time of the purchase. In the present case we find that at the time when the purchase was made the intention could have been no other excepting to make profits. The sale, which was subsequently made, may have been at the most appropriate item or may even have been not at such time by reason of certain circumstances which would have necessitated the sale to take place at a different time. That, however, will not make the transaction any the less a transaction which was entered not as an adventure in the nature of trade and carried out as such. We have, therefore, not found it has necessary to allow the notice of motion taken out by Mr. Palkhivala and take on record all the material which he has referred to therein. We have, how ever, looked at the necessary extracts for earlier years from the Tijori account, which we think was the only important part of that material, apart from the material, which is already annexed to the statement of the case by the Income-tax Appellate Tribunal.
20. In the result, therefore, our answers to the two questions, which are referred to us, are in the affirmative. The assessee will pay the cost of the department of the reference. There will be no order on the notice of motion and no order as to costs.
21. Questions answered in the affirmative.