A.N. Bhandari, C.J.
(1) This is a reference under Section 66(1) of the Indian Income-tax Act.
(2) During the period November 1939 to January 1941 the assessee purchased 4316 tolas of gold in fourteen separate transactions each of which consisted of several purchases. During the account year 1945-46 he sold 3049 tolas of gold for Rs. 2,31,203/- recovering a sum of Rs. 1,00,096/-in excess of the price paid by him. The Income-tax Officer regarded this profit as a revenue receipt arising out of business and assessed him accordingly. The order of the Income-Tax Officer was upheld by the Appellate Assistant Commissioner and later by the Appellate Tribunal. The Appellate Tribunal has now stated the following question of law under the provisions of S. 66(1) of Indian Income-tax Act, namely :
'Whether in the circumstances of the case there is material to justify the finding that the adventure in question was an adventure in the nature of trade?'
(3) Mr. D. N. Awasthy who appears for the assessee contends that his client had no intention of embarking on an adventure in the nature of trade. The Second World War was declared in the year 1939 and there was widespread panic in the country. His sole object was to put his money in a safe investment and thereby to avoid the risk of War involved in bank deposits. The assessee who is a man of the world realised that circumstances may compel him to leave the shelter of his roof and to seek his fortunes elsewhere. He accordingly decided to avoid the risk involved in bank deposits, to liquefy his assets, and to convert every penny he had into gold.
With this object in view he cashed before maturity the bank and postal cash certificates. He called in or realised deposits with banks and business houses and raised loans on the security of fixed deposits of which the terms were yet to expire. He retained the gold in his custody during the first 51/2 years of the War. Germany collapsed on 7-5-1945 and the assessee sold his first lot of 20181/2 tolas on 12-5-1945. Japan capitulated in August 1945 and the assessee made another sale of gold on 9-12-1945. It is true that the gold was purchased at the average price of Rs. 43/-per tola and that it was sold at the average price of Rs. 75/12/-per tola yielding a substantial profit to the assessee, but the mere fact that the assessee recovered a profit on these transactions does not indicate necessarily that the adventure was in the nature of trade.
Had the purchases been made with the sole object of making a profit, the assessee would have parted with his gold in the year 1943 when the prices were at their peak and would not have waited till the year 1945 when the prices had fallen. He did not sell gold in small quantities but in large blocks. These circumstances, it is contended make it quite clear that gold was purchased for the purpose of safe investment and not for the purpose of resale.
(4) The question whether an adventure is in the nature of trade is a mixed question of law and fact. Although the fact that an assessee was actuated by the sole object of selling at a profit is a relevant circumstance which would raise a strong presumption that the purchase and subsequent sale are an adventure in the nature of trade, the said presumption is not conclusive and may be rebutted or offset by other relevant circumstances (G. Venkataswami Naidu and Co. v. Commr. Of Income-tax 0065/1958 : 35ITR594(SC) ). Before an adventure can be regarded as one in the nature of trade, it is necessary to consider whether the assessee embarked upon it with the intention of making a profit or of producing income. The number of transactions entered into and the gross amount of business done are also factors to be considered. If the profit motive is completely absent the enterprise may well be regarded as a hobby.
(5) It is common ground that the assessee is a money-lender by profession. In the assessment for the year 1925-26 he was assessed on a profit of Rs. 17/-in silver dealings and of Rs. 27/- in gold dealings. In the assessment for the year 1926-27 he claimed and was allowed losses of Rs. 957/- in dealings in gold bullion and of Rs. 84/-in dealings in silver bullion. The Income-tax Officer came to the conclusion, with which the Tribunal found itself in agreement, that the assessee taking advantage of the experiences of the First World War during which prices of all commodities had risen, decided to invest every single penny in gold in the confident hope that the prices of gold would rise and bring him a substantial profit.
The business history of the assessee, the outbreak of the War, the extent of the transactions, the mode of financing the purchases and the substantial profits which actually arose led the Tribunal irresistably to the conclusion that the assessee had engaged in this enterprise for the purpose of profit and not for the purpose of safeguarding his property. Having regard to all the facts and circumstances of the case I am not in a position to hold that the conclusion at which the Tribunal has arrived in manifestly erroneous. If the facts and circumstances of a case can reasonably indicate that a certain enterprise is an adventure in the nature of trade it is not within the competence of the High Court to sit in appeal over the decision of the Tribunal or to give a decision of its own on a different view of the facts and circumstances (A. Grezo v. Commr. Of Income-tax : 26ITR169(All) ).
(6) For these reasons I am of the opinion that there is sufficient material on the record to justify the conclusion that the adventure in question was an adventure in the nature of trade. The question referred to us must therefore be answered in the affirmative. The Department will be entitled to the costs of this Court which we assess at Rs. 250/-.
D. Falshaw, J.
(7) I agree.
(8) Answer for department.