M.S. Menon, C.J.
1. This is a reference at the instance of the assessee by the Income-tax Appellate Tribunal. Madras Bench under Section 66 (1) of the Indian Income-tax Act. 1922. The assessment year concerned is 1956-57; and the accounting period, the twelve months ended on the 31st March 1956. The question referred is:
'Whether on the facts and in the circumstances of the case, the transactions constituted a venture in the nature of trade and the surplus of Rs. 1,25,000/- was assessable to tax?
2. There was an agreement dated the 18th May 1955 by which the Mundakayam Valley Rubber Company Limited agreed to sell to one A. V. George a rubber state called the Kuttikal Estate measuring 477.71 acres. A.V. George entered into that agreement on behalf of the Kailas Rubber Company Limited.
3. On the 15th August 1955 the assessee entered into an agreement with A.V. George to purchase the Kuttikal Estate for Rs. 6 lakhs and paid an advance of Rs. 11,000/-. The agreement provided that on payment of the balance of Rs. 5,89,000/- A.V. George will execute the sale deed himself or cause it to be executed by the Mundakayam Valley Rubber Company Limited in favour of the assessee or his nominees and that the stamp duty and registration charges will be borne by the asses-see.
4. The assessee divided the 477.71 acres into 23 plots and found purchasers for 22 of those plots. The total extent of the 22 plots for which he found purchasers was 373.59 acres and the tolal price paid by the 22 purchasers was Rs. 5,18,500/-.
5. The sale deed was executed by the Mundakayam Valley Rubber Company Limited on the 31st March 1951). It covered all the 23 plots. The 22 plots for which the assessee found purchasers were conveyed to the respective purchasers and the 23rd plot to the assessee himself. A. V. George and the Kailas Rubber Company Limited were also parties to the document.
6. The plot that the assessee obtained for himself was 104.12 acres in extent. Its value as estimated by the Department--the estimate is not disputed by the assessee--was Rs. 2,08,000/-.
7. The amount spent by the assessee for obtaining the 104.12 acres worth Rs. 2,08,000/-was Rs. 81,500/- inclusive of the advance of Rs. 11,000/- paid by him. In other words the assessee had a financial benefit to the extent of Rs. 1,26,500/-.
8. The Department and the Tribunal havetaken the view that the amount of Rs. 1,26,500/-mentioned above rounded off to Rupees1,25,000/- represents the profit of the assesseefrom an adventure in the nature of trade and ishence assessable to income-tax under the IndianIncome-tax Act. 1922 The sole question fordetermination is whether that view is justified on the facts and circumstances of thecase.
9. Section 6 of the Indian Income-tax Act, 1922, specifies the heads of income chargeable to income-tax. Profits and gains of business come under the fourth of the six heads specified in that section. The expression 'business' is defined in Section 2 (4) of the Act. According to that definition it includes 'any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture'
10. According to Fletcher-Moulton L.J. Liverpool and London and Globe Insurance Co. v. Benneti (1911-12) 6 Tax Cas 327 the words 'in the nature of trade' qualify only the word 'concern' which immediately precedes those words He said:
'I hold that as a matter of interpretation the words 'in the nature of trade' only qualify the word 'concern' that immediately precedes them. They cannot be taken to qualify all the preceding words. inasmuch as it would be absurd to speak of a 'trade in the nature of trade', and. therefore, they can only be construed as qualifying the last of these words. The word 'adventure' therefore stands unqualified.'
This view has not been followed in later English cases, and the Supreme Court has read the words 'in the nature of trade' as qualifying the word 'adventure' as well (Venkataswami Naidu and Co. v. Commissioner of Income-tax. (1959) 35 I.T.R. 594 (AIR 1959 SC 359) ).
11. Sampath deals with the expression 'adventure in the nature of trade' as follows :
'The collocation of the words 'adventure in the nature of trade' implies that an adventure has the characteristic of trade, but not all of them, and that indeed is the distinguishing mark of an adventure, since if it possessed all the characteristics, it would be a following trade straightaway. The idea of the legislature by including an 'adventure' in the definition of trade is to rope in receipts from adventure to tax, even as receipts from trade proper. To define 'adventure' is a difficult task. The business characteristics appertaining to trade are diverse The content of these in an adventure may vary both in quality and quantity. The business characteristics or the business elements which exist in one adventure may not exist in another, and the characteristics which are in fact present might vary from one adventure to another. So, courts have observed that it is difficult to frame a formula which would be applicable to whatever state of facts, so as to determine whether a given activity is or is not an 'adventure in the nature of trade'. Each case would have to be examined on its own facts.' (Iyengar on Income-tax, 5th Edition, Volume 2, page 958).
12. In the ease before us the adventure commenced when the assessee entered into the agreement with A.V. George to purchase the Kuttikal Estate for a sum of Rs. 6 lakhs and paid an advance of Rs. 11,000/-. It terminated with the execution of the sale deed by the Mundakayam Valley Rubber Company Limited in favour of the assessee and the 22 purchasers he had found for 22 out of the 23 plots into which he had in the meanwhile divided the Estate. In our view it is not possible to consider this adventure as anything other than an adventure in the nature of trade and the profit obtained by the assessee of Rs. 1,26,000/- by securing 104.12 acres worth Rs. 2,08,000/- for Rs. 81,500/- as the profit of that adventure.
13. The assessee apparently realised the difficulty of avoiding income-lax in respect of the profit that he had obtained. He was examined by the Income-tax Officer. His deposition was nothing less than an adventure in the nature of perjury. His statement was that there was an agreement between himself and A.V. George, that he did not pay any advance to him, and that he had nothing to do with the finding of purchaser for the 22 plots. A reading of the sale deed quite apart from the other evidence available is sufficient to demonstrate the falsity of the assessee's statement. The fact that the assessee did not have the resources to buy even an eslate worth a lakh of rupees when he entered into the agreement for the purchase of the Kuttikal Estale for Rs 6 lakhs is of equal importance.
14. In the light of what is stated above we must answer the question referred in the affirmative, that is, against the assessee and in favour of the Department. We do so with costs, advocate's fee Rs. 100/-.
15. A copy of this judgment under the seal of the High Court and the signature of the Registrar will be sent to the Appellate Tribunal as required by Sub-section (5) of Section 66 of the Indian Income-tax Act. 1922.