M.S. Menon, C.J.
1. This is a reference by the Income-tax Appellate Tribunal, Madras lunch, under Section 66 (1) of the Indian income-tax Act, 1022. The assessment year concerned is 1959-60; and the accounting period, the twelve months ended 31-3-1959. The question referred is:
'Whether the purchase and sale of part of the property constituted an adventure in the nature of trade, the profits from which, could be taxed?'
2. The assessee agreed to purchase 92 cents of land In Trivandrum with the buildings thereon from one J. M. Sawyer for Rs. 1,40,000/-. The agreement was on 25-4-1958 and the advance paid an that day was Rs. 5,000/-, The arrangement was that the sale should he completed by 30-8-1958. It was effected within that time, by a sale deed dated 23-8-1958.
3. Subsequent to the agreement on 25-4-1058 the assessee entered into the following transactions:
(a) He agreed to sell 7 cents from the area in one N. G. Raghavan Nair, with the building thereon, for Rs. 13,300/-. He received an advance of Rs. 8,000/- on 20-8-1958. The sale was completed and the balance of the consideration was paid to the assessee on 13-9-1958.
(b) He agreed to sell 31/2 cents from the area to the Bank of New India Limited for Rs. 14,000/-on 23-8-1958 and received an advance of Ks. 13,900/-. The safe was completed and balance of the consideration was paid to the assessee on 26-8-1958,
(c) He agreed to sell 5 cents from the area to one Yeonis Salt on 23-8-1958, with the building thereon, for Rs. 20,000/- and received the whole amount on that date.
(d) He sold 7 cents from, the area to one Dr. S. H. Balakrishna Pillai for Rs. 13,300/- on 13-9-1958.
4. It would appear that Raghavan Nalr and Yoonis Salt were in occupation of portions of the property for 17 and 28 years respectively and that there was difficulty to get them ejected therefrom. It is also stated that the Bank of New India Limited was the assessee's banker and that Dr. P. R. Balakrishna Pillai was Ms family Doctor.
5. It Is clear from what has been stated above that only 221/2 cents of the 92 cents purchased were sold by the assessee and that the remaining 691/2 cents are still with him and continue to be his property. The only foundation for the assumption that the transaction was an adventure in the nature of trade is the fact that the assessee did sell those 221/2 cents for a total consideration of Rs. 60,600/- between 25-4-1958 and 13-9-1958. Apart from the said sum of Rs. 60,600/- and the balance of the consideration that still remains unpaid, the rest of the amount due to the vendor was found by the assessee not by sale of any portion of the land but from his own resources, Rs. 45,000/- being raised by an overdraft from the Bank.
6. The assessee is a P. W. D. contractor. He does not deal in land and the transaction mentioned above constitutes his only transaction In real property. The fact that such a transaction is not part of his normal business, that It forms a solitary and isolated act, though by no means conclusive, is certainly not without its significance.
7. There is no peculiar characteristic which distinguishes an ordinary purchase and sale from a purchase and sale by way of trade. The distinction depends on the Intention with which the transaction is undertaken, and in the realms of Intention the factors for detection depend on the facts of each case.
8. The element of repetition has been treated in many cases. The leading case stressing its Importance in deciding whether a trade was being carried on is Pickford v. Quirke, (1927) 138 L. T, 500.
9. The absence of repetition, however, is by no means conclusive. As stated by F, E. Labrie In his book 'The Meaning of Income In the Law of Income-tax'.
'Even an Isolated transaction in a commodity which is as stable a form of Investment as land will still give rise to Income where other circumstances show that the Intention throughout is clearly to purchase and resell for a gain'. (page 89)
10. The difficulty in the way of the Department in this case is that there is no valid circumstance whatsoever which will indicate that the intention was to purchase and resell for gain, and not to make a prudent investment in land in an Important portion of an Important town when the same was available at a price that was attractive. Fart of the consideration was no doubt found by selling a part of the property; and another part by means of an overdraft. But that is the way in which many investments are made; and, we see no reason to hold that that fact will sustain the conclusion that the transaction was an adventure in the nature of trade.
11. It follows that the question referred has to be answered in the negative and against the Department, We do so. The Department will pay the costs of the assessee, advocate's fee Rs. 150/-.
12. A copy of this judgment under the seal of the High Court and the signature of the Registrar will be forwarded to the Appellate Tribunal as required by Sub-section (5) of Section 66 of the Indian income-tax Act, 1922.