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PETITIONER: KHAN BAHADUR AHMED ALLADIN & SONS

       Vs.

RESPONDENT: COMMISSIONER OF INCOME-TAX, ANDHRA PRADESH

DATE OF JUDGMENT: 24/11/1967

BENCH: RAMASWAMI, V. BENCH: RAMASWAMI, V. SHAH, J.C. BHARGAVA, VISHISHTHA

CITATION:  1968 AIR  788            1968 SCR  (2) 439

ACT: Indian Income-tax Act, 1922, s. 2(4)-Adventure in the nature of  trade-What  is-Tests  to  determine-question  is   mixed question  of  low  and  fact-Tribunal’s  duty  in  preparing statement of case.

HEADNOTE: The  assessee  firm  purchased a Brengun  factory  from  the Government  of  India and sold the stores and  part  of  the lands  and buildings shortly afterwards At a  higher  price. It  admitted  before  the Income-tax  authorities  that  the purchase  and sale in respect of the stores  constituted  an adventure in the nature of trade, but in respect of the land and buildings sold it contended that they had been purchased by way of investment, and the sale of a part of them did not result in assessable profit.  The claim was rejected by  the Income-tax  Officer, by the Appellate Commissioner,  and  by the Appellate Tribunal.  The High Court in a reference under a. 66(1) also rejected it.  The firm appealed to this  Court by special leave. HELD : (i) In reaching the conclusion that a transaction  is an adventure in the nature of trade, the Appellate  Tribunal has to find the primary evidentiary facts and then apply the legal   principle  involved  in  the  statutory   expression "adventure  in the nature of trade,, used in s. 2(4) of  the Indian Income-tax Act.  A question of this description is  a mixed  question  of  law and fact and the  decision  of  the Appellate  Tribunal  thereon is open to challenge  under  s. 66(1) of the Act. [442 F-G] (ii) The question whether the transaction is an adventure in the  nature of trade must be decided on a  consideration  of all the relevant facts and circumstances which are proved in the  particular case.  The answer to the question  does  not depend on the application of any abstract rule, principle or formula but must depend upon the total impression and effect of  all the relevant facts and circumstances established  in the particular case. [442 H] (iii)     In  the present case the appellant firm  purchased the  Brengun factory from borrowed money.  The  income  from the  property was only about 1/6 of the interest payable  by the  company  on  the money borrowed.  The  first  sale  was

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effected  by the firm within three months of  the  purchase. and the sums received from sale were utilised for paying off the debts as also the dues to the Government.  The firm  had not enough financial resources to invest the money  required to  purchase  the  factory and  the  transaction  could  not therefore  be with a view to making a permanent  investment, but only for making profit.  It had not been established  by evidence  that  the  appellant firm  purchased  the  Brengun factory for purpose of establishing a cycle factory.  Having regard  to  the total effect of all the relevant  facts  and circumstances established in the case it was rightly held by the High Court that the transaction was an adventure in  the nature of trade and part of a profit making scheme. [448  B- H] (iv) The statement of case is not intended to be a mere copy of  the order sheet in a litigation but it must set out  the points raised by the .aggrieved party, the reply thereto, if any, and the authorities or statutory 440 provisions  relied upon for the view taken by the  Appellate Tribunal together with an intelligible summary of the  facts found  by  the  Appellate  Tribunal.   The  Tribunal  should clearly  state  its  conclusions and findings  of  fact  and should  not  leave  it to the High Court or  this  Court  to deduce the findings or to collect facts from a large  number of documents which are part of the record of the case.  [449 A-D] Vankataswami  Naidu & Co. v. Commissioner of Income-tax,  35 I.T.R.  594, Californian Copper Syndicate v. Harris, 5  T.C. 159,   Martin   v.  Lowry,  I  I  T.C.  297,   Rutledge   v. Commissioners   of  Inland  Revenue,  14  Tax   Cases   490, Commissioners of Inland Revenue v. Fraser, the assessee.  24 Tax  Cases  498, Leeming v. Jones, 15 Tax Cases  333,  Saroj Kumar  Mazumdar v. Commissioner Income-tax, West Bengal,  37 I.T.R. 242 and Commissioners of Inland Revenue v.  Reinhold, 34 Tax Cases 389, referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 708 to 710 of 1966. Appeals  by special leave from the judgment and order  dated July  23,  1964  of the Andhra Pradesh High  Court  in  Case Referred No. 42 of 1962. Sukumar  Mitra,  Y. V. Anjaneyulu, Bhuvnesh  Kumari,  J.  B. Dadachanji and O. C. Mathur, for the appellant (in all the appeals). Niren De, Solicitor-General, S. K. Aiyar, R. N. Sachthey and S.   P. Naya;-, for the respondent (in all the appeals), The Judgment of the Court was delivered by Ramaswami, J. These appeals are brought by special leave from the judgment of the High Court of Andhra Pradesh  dated 23rd July, 1964 in referred case No. 42 of 1962. The assessment years involved in these appeals are 1358  F., 1953-54  and 1954-55, the relevant accounting periods  being the   years  ending  30-9-1948,  30-9-1952  and   30-9-1953, respectively.  The assessee firm Khan Bahadur Ahmed  Alladin &  Sons  (hereinafter referred to as  the  ’assessee  firm’) consists of three partners, Khan Bahadur Ahmed Alladin,  and his  two  sons, Khan Saheb Dost Mohammed  Alladin  and  Noor Mohammed  Alladin.  The assessee firm purchased the  Brengun Factory and the properties attached to it consisting of  403 acres  of  land, 14 factory buildings,  about  on,-  hundred residential quarters, and railway sidings, furnitures  etc.,

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in  addition  to the stores, from the Government  of  India. The price of the Brengun Factory and the properties together with the furniture etc. was fixed at Rs. 27 lakhs while  the price  of the stores was fixed at Rs. 8 lakhs.   During  the relevant accounting years, the assessee firm sold a part  of the  stores for Rs. 9,53,918 O.S. and 46 acres of  land,  14 factory  buildings, furniture, railway siding, etc. for  Rs. 26,48,215 O.S. It was not disputed that the excess over  the price realised for the re,-sale of                             441 stores was Rs. 2,26,484 O.S. and for the re-sale of part  of the  factory land, building etc. was Rs. 10,46,834  O.S.  It was  admitted  by  the assessee firm  before  the  Appellate Tribunal  that the surplus realised by the resale of  stores was not a capital accretion but an adventure in the,  nature of trade.  With regard to the factory it was argued that  it was  an  investment, and not an adventure in the  nature  of trade  and as such the excess amount realised represented  a realisation  of  capital  asset.   The  contention  of   ,he assessee firm was rejected by the Income-tax Officer, by the Appellate  Assistant  Commissioner  and  by  the   Appellate Tribunal  in  appeal.   The  view  taken  by  the  Appellate Tribunal  was  that  the assessee firm had  planned  a  well calculated  scheme  of  profit  making,  that  it  had   the intention   of  exploiting  the  properties  which  it   had purchased  to  its  advantage,  that  the  transactions   in question constitute an adventure in the nature of trade, and any  surplus  which it got by sale of the  portions  of  the properties  was  liable  to tax.  At  the  instance  of  the assessee  firm, the Appellate Tribunal stated a case to  the High Court on the following question of law :                "Whether   the  purchase  of  the  site   and               buildings  known as "Brengun Factory"  was  in               the  course  of a profit-making scheme  or  an               adventure in the nature of trade By  its  judgment  dated 23rd July,  1964  the  High  Court, answered the question against the assessee firm. On behalf of the appellant Mr. Sukumar Mitra argued that the assessee  firm along-with Abdullah Alladin, brother of  Khan Bahadur  Ahmed Alladdin had been carrying on business  as  a partnership  firm  under  the name  of  Khan  Bahadur  Ahmed Alladdin  and  Company (hereinafter referred to  Alladdin  & Co.).  It  had substantial interest in various  joint  stock companies, and was the managing agent of several joint stock companies, and possessed considerable financial  resources.- The  assessee  firm acquired the Brengun  Factory  with  the intention  of  starting  a bicycle  factory  or  some  other industry  as  an investment, but not with the  intention  of resale.   The  argument was stressed that the  purchase  and sale  of land and buildings was not in the line of  business of  the assessee firm.  It was stated that the purchase  was an  isolated transaction and even after the sales,  a  major portion of the factory remained with the assessee firm.   It was contended that the, assessee firm had not developed  the land  or  parcelled  it  out with the view  to  sell  it  to purchasers  as a residential area, and make a  profit.   The submission  made  on behalf of the appellant  was  that  the transaction of purchase was in the nature of investment  and was  not an adventure in the nature of trade and  the  sales represented the realisations of capital asset. 442 The provision of law under which assessment was made for the assessment  year 1358 F. was section 31(3) of the  Hyderabad Income  Tax Act (hereinafter referred to as  the  ’Hyderabad Act’)  which corresponds to s. 23 (3) of the  Indian  Income

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Tax Act, 1922 (hereinafter referred to as the ’Indian  Act). The  mnents  for the subsequent years were  made  under  the Indian Act.  The charging section under the Hyderabad Act is s. 3, which corresponds to s. 4 of the Indian Art.  The word "business  is defined in s. 3(1) of the Hyderabad Act  which is identical with the language of s. 2(4) of the Indian Act. Section 8 of the Hyderabad Act states :-                "Save as otherwise provided by this Act,  the               following beads of income, profits. and  gains               shall  be  chargeable  to  income-tax  in  the               manner hereinafter appearing, namely                (iv) Profits    and   gains   of    business,               profession or  vocation".                It corresponds to s. 6 of the Indian Act. The  question whether profit in a transaction is  a  capital accretion or has arisen out of an adventure in the nature of trade is a mixed question of law and fact.  In  Venkataswami Naidu & Co. v. Commissioner of Income-tax(1) it was  pointed out  by  this Court that the expression ’in  the  nature  of trade  in  sub-section (4) of section 2 of  the  Indian  Act postulates   the  existence  of  certain  elements  in   the adventure which in law would invest it with the character of trade  or business : and that a Tribunal  while  considering the question whether a transaction is or is not an adventure in the nature of trade before arriving at its conclusion  on the facts, has. to address itself to the legal  requirements associated with the concept of trade and business.  In other words, in reaching the conclusion that the transaction is an adventure in the nature of trade, the Appellate Tribunal has to  find  the primary evidentiary facts and then  apply  the legal   principle  involved  in  the  statutory   expression "adventure  in the nature of trade" used by s. 2(4)  of  the Indian  Act.   A  question of this description  is  a  mixed question  of law and fact and the decision of the  Appellate Tribunal  thereon is open to challenge under s. 66 (1  )  of the Indian Act. The question whether the transaction is an adventure in  the nature  of trade must be decided on a consideration  of  all the relevant facts and circumstances which are proved in the particular case.  The answer to the question does not depend upon  the  application of any abstract  rule,  principle  or formula but must (1)  35 I.T.R. 594. 443 depend  upon  the, total impression and effect  of  all  the relevant   facts  and  circumstances  established   in   the particular  case.   In  Californian I  Copper  Syndicate  v. Harris(1), Lord Justice Clerk observed, "It is quite a  well settled principle in dealing with questions of assessment of income-tax  that where the owner of an  ordinary  investment chooses  to realise it, and obtains a greater price  for  it than he originally acquired it at, the enhanced price is not profit........ assessable to income-tax.  But it is  equally well   established  that  enhanced  values.  obtained   from realisation or conversion of securities may be so assessable where what is done is not merely a realisation or change  of investment,  but an act done, in what is truly the  carrying on,  or carrying out, of a business...... What is  the  line which separates the two classes of cases may be difficult to define,  and each case must be considered according to,  its facts;  the  question to be determined being-Is the  sum  of gain  that  has  been made a mere enhancement  of  value  by realising  a security or is it a gain made in the  operation of  business in carrying out a scheme for profit  making  ?" But  in judging the character of such  transactions  several

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factors  have been treated as significant in decided  cases. For  instance, if a transaction is related to  the  business which  is  normally carried on by the assessee,  though  not directly  part  of  it,  an  intention  to  launch  upon  an adventure in the nature of trade may readily be inferred.  A similar inference would arise where a commodity is purchased and sub-divided, altered, treated or repaired and sold or is converted  into  a different commodity and then  sold.   The magnitude of the transaction of purchase, the nature of  the commodity,  the  subsequent  dealings of  the  assessee  the nature, of the organisation employed by the assessee and the manner of disposal may be, such that the transaction may  be stamped  with the character of a trading venture In  Martin’ v.  Lowry(2)  the  assessee purchased a  large  quantity  of aeroplane  linen and sold it in different lots, and for  the purpose of selling it started an advertising campaign rented offices, engaged an advertising manager, a linen expert  and a staff of clerks, maintained account books normally used by a trader, and passed receipts and payment in connection with the  linen through a separate banking account.  It was  held that  the  assessee carried an adventure in  the  nature  of trade  and so the profit was liable to be taxed.   The  same view  was  taken  in Rutledge  v.  Commissioners  of  Inland Revenue(3)  in  regard  to an assessee  who  purchased  very cheaply  a vast quantity of toilet paper and within a  short time   thereafter-   sold  the  whole   consignment   at   a considerable   profit.   Similarly,  in   Commissioners   of Inland  Revenue v. Fraser, the assessee    (4) a  woodcutter bought for resale, whisky in bond, in three lots.  He (1) T.C. 159,165-6.                   (2) 11 Tax Cases 297. (3) 14 Tax Cases 490.            (4) 24 Tax Cases 498. 444 sold  it later on at considerable profit.  The assessee  had never dealt in whisky before, he had no special knowledge of the trade, he did not take delivery of the whisky nor did he have  it blended and advertised.  Even so it was  held  that the transaction was not an adventure in the nature of trade. Lord  President  Normend  observed  in  the  course  of  the judgment  :  "It  is in general. more easy to  hold  that  a single transaction entered into by an individual in the line of  his  own  trade (although not part  and  parcel  of  his ordinary  business) is an adventure in the nature  of  trade than  to  hold  that  a  transaction  entered  into  by   an individual  outside the line of his own trade or  occupation is an adventure in the nature of trade.  But what is a  good deal  more important is the nature of the  transaction  with reference  to  the commodity dealt in.  The  individual  who enters  into a purchase of an article or commodity may  have in view the resale of it at a profit, and yet it may be that that  is  not the only purpose for which  he  purchased  the article or the commodity, nor the only purpose.. to which he might  turn  it if favourable opportunity of sale  does  not occur.  In some of, the cases the purchase of a picture  has been  given as an illustration.  An amateur may  purchase  a picture  with a view to its resale at a profit, and  yet  he may recognise at the time or afterwards that the  possession of  the picture will give him aesthetic enjoyment if lie  is unable ultimately, or at his chosen time, to realise it at a profit.  A man may purchase stocks and shares with a view to selling  them at an early date at a profit but, if  he  does so,   he  is  _purchasing  something  which  is  itself   an investment,  a potential source of revenue to him  while  he holds it.  A man may purchase land with a view to  realising it at a profit, but it also may yield him an income while he continues to hold it.  If be continues to hold it, there may

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be also a certain pride of possession.  But the purchaser of a large quantity of commodity like whisky, greatly in excess of  what could be used by himself, his family and friends  a commodity which yields no pride of possession, which  cannot be  turned to account except by a process of realisation,  I can  scarcely consider to be other than an adventurer  in  a transaction  in  the nature of a trade; and I  can  find  no single fact among those stated by the Commissioners which in any  way traverses that view.  In my opinion, the fact  that the transaction was not in the way of business (whatever  it was) of the respondent in no way alters the character  which almost necessarily belongs to a transaction like this". These are cases of commercial commodities but a  transaction of purchase of land cannot be assumed without more to be  an adventure  in the nature of trade.  In Leeming  v.  Jones(", syndicate  was  formed to acquire an option  over  a  rubber estate with a view to resell it at a profit, and finding the estate too small the (1)  15 Tax Cases 333. 445 syndicate acquired’ another estate and sold the two  estates on profit.  It was held that the transaction was not in  the nature of trade and the profit was not liable to be assessed to tax.  The same view was expressed in Saroj Kumar Mazumdar v.  Commissioner of Income-tax West Bengal(1), in which  the assessee  who  carried  on  business  of  engineering  works purchased   land  which  was  tinder  requisition   by   the Government,  negotiated  a  sale before  the  land  was  de- requisitioned  and  sold  it after the  land  was  released. Again in Commissioners of Inland Revenue v. Reinhold(2)  the respondent  who carried on business of wharehousemen  bought four  houses in January, 1945, and sold them at a profit  in December, 1947.  He admitted that he had bought the property with a view to resale and had instructed his agents to  sell whenever  a  suitable opportunity arose.  On behalf  of  the Crown   it  was  contended  that  the  purchase   and   sale constituted  an  adventure in the nature of  trade  and  the profits,  arising therefrom were chargeable to  income  tax. It  was,  held  by the Court of Sessions  that  the  initial intention of the respondent to purchase the property with  a view to resell did not per se establish that the transaction was  an  adventure  in  the nature of  trade  and  the  Com- missioners  were  justified in treating the  profit  as  not assessable  to  income  tax.   But  the  circumstance  of  a particular case may lead to the conclusion that the purchase or   resale  of  land  is  in  the  nature  of  trade.    In Venkataswami  Naidu’s  (3 ) case the  appellant  firm  which acted   as   managing   agents  purchased,   for   a   total consideration  of  Rs. 8,713 four contiguous plots  of  land adjacent  to  the  place where, the  mills  of  the  company managed by it were situated.  The first purchase was made in October,  1941 and the second and subsequent purchases  were made  in November, 1941, June, 1942 and November. 1.942.  As long as the appellant was in possession of the land it  made no effort, to cultivate it or erect any superstructure on it but  allowed  the land to remain unutilised except  for  the rent  received  from the house which existed on one  of  the plots.   The appellant sold the land to the company  managed by  it  in two lots in September and November, 1947,  for  a total  consideration  of  Rs.  -52,600.   The  question  was whether  the sum of Rs. 43,887 being the excess realised  by the  appellant by the two sales over its purchase price  was assessable  to income tax.  The Appellate Tribunal  rejected the  contention  of the appellant that the  properties  were bought as an investment and that the plots were acquired for

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building  tenements for the labourers of the mills but  came to  the conclusion that the transaction was an adventure  in the  nature  of  trade.   On a  reference,  the  High  Court expressed  the  same  view.  It was held by  this  Court  in appeal  that the Appellate Tribunal was right -in  inferring that the appellant knew that it would be able (1)  37 Tax Cases 242. (3) 35 I.T.R. 594. sup.c.1/68---14 (2) 34 Tax Cases 189. 446 to sell the lands to the managed company whenever it thought it  profitable  so to do, that the appellant  purchased  the four  plots of land with the sole intention of selling  them to  the mills at a profit and that the High Court was  right in  holding  that the transaction was an  adventure  in  the nature of trade. As  we  have already said it is not possible to  evolve  any legal  test or formula which can be applied  in  determining whether a transaction is an adventure in the nature of trade or not.  The answer to the question must necessarily  depend in  each case on the total impression and effect of all  the relevant factors and circumstances proved therein and  which determine  the character of the transaction.  What then  are the material facts found in the present case ? Alladin & Co. was the managing agent of several joint  stock companies  viz., Hyderabad Asbestos Cement Products  Limited (hereinafter  referred  to as the Asbestos  Co.),  Hyderabad Laminated  Products Limited (hereinafter referred to as  the Laminated  Products), Hyderabad Allwyn Metal  Works  Limited (hereinafter  referred  to as the Allwyn  Co.)  and  others. Alladdin  &  Co.  started  Asbestos  Co.  in  1946  and  the Laminated Products in 1947.  The Government of Hyderabad had 50% share holding in both these companies.  Negotiations for the purchase of Brengun Factory situate in the out-skirts of Hyderabad  commenced in December, 1946.  On  18th  December, 1946,  there  took place a meeting between Khan  Saheb  Dost Mohammed  Alladin  and Noor Mohammed Alladin  on  behalf  of Alladin  &  Co.  and  Khan  Bahadur  Obaidullah,  the   then Additional  Financial  Adviser to the Government  of  India. The  latter  informed  the two  Alladin  brothers  that  the Government of India had decided to sell the Brengun  Factory as the war had ended and it was going cheap.  It was  agreed that  the price of the factory building should be  fixed  at Rs. 27 lakhs, and of the stores at Rs. 9 lakhs.  Alladdin  & Co.  asked for six months’ time for making the  payment  but finally it was agreed that the price should be paid in  four equal  monthly  installments commencing  from  1st  January, 1947.   The  contract  of  sale  was  made  subject  to  the condition  that  the  Hyderabad  Government  was  no  longer interested   in  the  factory  and  also  subject   to   the confirmation by the Board of Directors.  By its letter dated December 24, 1946, Alladdin & Co. accepted the proposal  and informed the Additional Financial Adviser that the Board had agreed to purchase the Brengun Factory and the first payment would be made on 1st or 2nd January, 1947.  Not having ready cash  to pay the first instalment the firm borrowed the  sum from the State Bank and the Central Bank pledging the shares of  the  partners  valued at about Rs. 20 lakhs  for  Rs.  9 lakhs.   It is significant that the assessee  firm  invested very little of its own money in the purchase of the  factory and the stores.  It got six months                             447 time  from  the  Government of India to  pay  the  price  in instalments,  and  paid it by pledging its shares  with  the

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Banks,  by  obtaining further loan from the  Banks  on  over drafts,  and  by  selling portions of  the  factory  to  the Asbestos Co. and Laminated Products, and the Allwyn Co.  The balance sheet of the assessee firm as on 31-9-1948 disclosed that the assessee firm owed about Rs. 7 lakhs to  Government of India, though by that time it had sold properties  valued over Rs. 30 lakhs.  It is a significant circumstance that on 23rd  December, 1946 a meeting of the Board of Directors  of the  Asbestos Co. was held and in that meeting a  resolution was  passed that the Government should be approached in  the matter  of  the valuation of the site and building  in  tile establishment of the "Asbestos Works" in the premises of the Brengun Factory purchased by the assessee firm and that  the managing  agents be authorised to address Nawab Medhi  Nawaz Jung  Bahadur  in  that behalf.  The  notice  convening  the meeting  was  issued on the 23rd December,  1946,  on  which date,  the  assessee  .firm had  not  even  intimated  their acceptance of offer made by the Government of India for  the sale of Brengun Factory.  Pursuant to the resolution of 28th December,  1946,  the Asbestos Co. resolved to  purchase  14 acres of land, buildings etc. for Rs. 5 lakhs.  It should be noticed  that  the  valuation  by  -the  P.W.D.  which   was considered necessary on the 28th December, 1946 was given up and  the price of Rs. 5 lakhs was accepted by the  Board  of Directors.   In the circumstances, the inference  that  that resolution  was passed at the instance of the assessee  firm is not unreasonable.  Pursuant to the resolution a sale-deed appears  to  have been executed in favour  of  the  Asbestos Company  on  31st  March, 1947.  It  is  apparent  that  the interval of time between the purchase of the factory and the sale was about 3 months, and this is hardly consistent  with the  contention of the assessee firm, that it had  purchased the property as an investment.  It is also admitted that the sale-deed  in  favour  of the Asbestos Co. as  well  as  the Laminated  Products  and  Allwyn Co. were  executed  by  the Government of India in their favour direct.  The sale was in favour  of the Laminated Products pursuant to  a  resolution passed  on  17th September, 1947.  On that day  the  company resolved  that in view of the special facilities for  power, water  and railway siding at the Alladin Industrial  Estate, Sanathnagar, sanction should be accorded for the acquisition of the, proposed area of 8 acres of land for the location of the company’s factory as per the rate offered to the company i.e., at O.S. Rs. 5,000 per acre and a sum of Rs. 40,000 was agreed  to  be  paid towards the  price.   A  sale-deed  was executed pursuant to the resolution in June, 1948.  The next transaction  relates to the purchase by the Allwyn  Co.  The Board  of  Directors  at its meeting on  October  29,  1947, resolved  to sell away their existing factory  buildings  at Azamabad to the Nizam’s State Railway, and purchase the  new factory, 448 land  and  buildings as Sanathagar, for Rs. 25  lakhs.   The property  purchased consisted of 24 acres, of land,  factory buildings  ,,Ind furniture,- and the sale deed was  executed on  February 11, 1948.  It is manifest that within one  year of  the purchase of the Brengun Factory, the  assessee  firm realised  Rs.  13,99,753  by  the sale  of  stores  and  Rs. 33,90,908 by the sale of 46 acres of land and buildings,  in all making a profit of Rs. 11,90,661.  It appears -from  the balance  sheet as on September 30, 1948 that even after  the extended  date, it still owed Rs. 7 lakhs to the  Government though  by that time it had sold over Rs. 30 lakhs worth  of property.  The assessee firm was thus paying off the dues to the  Government  and also discharging its debts  by  selling

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fractions  of  the property.  In other words,  the  assessee firm  was  purchasing, selling and  liquidating  the  loans, which   would  all  show  the  commercial  nature   of   the transaction.   These facts establish that the assessee  firm had not enough financial resources to invest Rs. 36 lakhs on the.  Bren Gun Factory and that the transaction was launched upon  with  a  view to make profit and not  as  a  permanent investment.   There  is another aspect of the matter  to  be taken into account.  The property income from Bren Gun  fac- :tory  during  the  year 1953-54 as would  appear  from  the Assessment  Orders of the years, 1953-54, 1954-55 was  about Rs. 22,000 I.G. The interest on loans on over-drafts is paid to be 41 per cent. on 27 lakhs the balance of price  payable to  the Government, the :annual interest would be about  Rs. 1,21,500.   It is manifest that the assessee firm could  not have  borrowed  the  money to purchase the  property  as  an investment  when  the income was about 1/6 of  the  interest payable on the amount borrowed.  Mr. Sukumar Mitra suggested that  the  assessee firm intended to develop  the  Bren  Gun Factory  as  an Industrial Estate and  referred  to  certain correspondence  in this connection.  But the  correspondence does not establish that any of the foreign companies  agreed to  start a cycle factory of their own or  in  collaboration with  the  assessee firm.  The  correspondence  between  the parties  admittedly  ended in February  1946.   Mr.  Sukumar Mitra also referred to the correspondence between January 8, 1947  to  March 10, 1947 but this also does  not  show  that there was any prospect of the assessee firm starting a cycle industry  or  any  other  industry  either  solely  .or   in collaboration with a foreign company. Having regard to total- effect of all the relevant facts and circumstances established in this case we are of the opinion that  the  High Court was right in its conclusion  that  the purchase  of  the  site and the buildings of  the  Bren  Gun Factory was an adventure in. the nature of trade and was- in the  course of a profit making scheme and the  question  was rightly  answered  by the High Court .against  the  assessee firm. 449 We  consider it necessary to add that the statement  of  the case  made by the Appellate Tribunal is  unsatisfactory  and gives   no   information  whatever   about   the   arguments respectively  advanced  by  the  parties  or  the   findings recorded  by the Appellate Tribunal.  The statement  of  the case is not intended to be mere copy of the order sheet in a litigation  but  it must set out the points  raised  by  the aggrieved   party,  the  reply  thereto,  if  any  and   the authorities or statutory provisions relied upon for the view taken   by   the  Appellate  Tribunal   together   with   an intelligible  -summary of the facts found by  the  Appellate Tribunal.  A statement of the case should fully, clearly and precisely  set out all the relevant facts, or if  the  facts have been fully set out in the judgment of the Tribunal they may  be  incorporated  in the statement of  the  case  by  a reference to particular paragraphs of the judgment in  which the  facts  are so set out.  In any event, it  is  important that  the  Appellate  Tribunal  should  state  clearly   its conclusions and findings of fact and should not leave it  to the  High Court or this Court to deduce the findings  or  to collect the facts from a large number of documents which are part  of  the record of the case.  A statement of  the  case which  does  not  set  out precisely  the  findings  of  the Appellate  Tribunal on the questions of law and fact  serves no  ’useful purpose.  It merely gives an opportunity to  the parties  to put forward arguments at the stage of  reference

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which are often untenable, For the reasons already expressed we hold that these appeals must  be  dismissed with costs.  There will be  one  hearing fee. G.C.                             Appeals dismissed. 450