Bhagwati, C.J.

1. The short question that arises for determination in these references is whether a certain transaction of purchase and sale of land effected by the assessees was by way of realisation of investment or was an adventure in the nature of trade. The assessees in these four references are brothers. D. S. Virani, one of the four brother, is the assessee in Reference No. 11 of 1970, while each of the other three brothers is the assessee in Reference Nos. 12, 13 and 14 of 1970. It is common ground between the parties that D. S. Virani was at all materiel times resident in Rajkot but the other three brothers were residing outside India. By a sale deed dated 18th April, 1951, D. S. Virani and his three brothers, whom we shall collectively refer as the assessees, jointly purchased certain land admeasuring 1,00,000 square yards situate in village Kotharia on the outskirts of the city of Rajkot for the price of Rs. 10,000 from Thakoreshri Shivsinhji Pratapsinhji and Prince Shri Ahitsinhji Shivsinhji. Each of the assessees contributed an equal sum of Rs. 2,500 towards the purchase price and was entitled to an equal 1/4th share in the land. Nothing was done on the land by the assessees by way of development or plotting or laying out roads; the land remained in the same condition in which it was when purchased. On 2nd October, 1959, the assessees entered into an agreement with one Bhagwanji Khataubhai and three others for sale of 91,571 square yards out of this land at the price of Rs. 1 per square yard. This agreement is not on the record of the case. The Tribunal, at the hearing of the appeals before it, called upon the assessees to produce it but they expressed their inability to produce it on the ground that it was not available. Whatever be the reason for non-production, the fact remains that it was not produced and it is, therefore, not possible to say what were the precise terms on which the assessees agreed to sell 91,571 square yards of land to Bhagwanji Khataubhai and his three colleagues. But, it does appear from a subsequent document dated 7th November, 1963, executed between Bhagwanji Khataubhai and his three colleagues, which is on record as annexure "E" to the statement of the case, that Rs. 5,000 was paid by Bhagwanji Khataubhai and his three colleagues to the assessees as earnest money against the execution of the agreement dated 2nd October, 1959, and the balance of the price was to be received by the assessee at the rate of Re. 1 per square yard as and when the land purchased was divided into plots after laying out roads and the plots were sold by Bhagwanji Khataubhai and his three colleagues, subject to adjustment when the sales of the plots were completed. Bahgwanji Khataubhai and his three colleagues thereafter laid out roads and divided the land purchased into 115 plots and sold the plots to different persons at prices ranging between Re. 1 and Rs. 1-6-0 per square yard. Since the property in the land was not conveyed by the assessees to Bhagwanji Khataubhai and his three colleagues pursuant to the agreement dated 2nd October, 1959, by executing a document of sale in favour of Bhagwanji Khataubhai and his three colleagues, the assessees at the instance of Bhagwanji Khataubhai and his three colleagues executed documents of sale in favour of persons to whom the plots were sold by Bhagwanji Khataubhai and his three colleagues, and in these documents of sale, Bhagwanji Khataubhai and his three colleagues joined as confirming parties. The assessees received from the purchasers of the plots, against the execution of the documents of sale, amounts calculated at the rate of Re. 1 per square yard and the balance of the price was received by Bhagwanji Khataubhai and his three colleagues. The assessees thus received diverse amounts towards payment of the price of 91,571 square yards of land sold to Bhagwanji Khataubhai and his three colleagues. The surplus of sale proceeds over cost price realised by Rs. 9,919 for Chhotalal Virani, Rs. 9,852 for Chhaganlal Virani and Rs. 10,002 for Manilal Virani. The question arose in the assessments of the assessees to Income Tax for the assessment year 1961-62, for which the relevant year was Samvat year 2016, whether the surplus realised by each of the assessees on sale of the land to Bhagwanji Khataubhai and his three colleagues represented capital gain or business profit. If the surplus represented capital gain, the charge of Income Tax would be much lighter than what it would be, if it represented business profit. The Income Tax Officer took the view that the transaction of the purchase and sale of land was an adventure in the nature of trade and the surplus realised on the sale of land was, therefore, revenue profit and not capital gain. Each of the assessees contested this view taken by the Income Tax Officer in appeal before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner agreed with the contention of the assessees that so far as the assessees other than D. S. Virani were concerned, the transaction of purchase of 1/4th share in the land by each of them was by way of investment an when they sold their respective 1/4th share in the land to Bhagwanji Khataubhai and his three colleagues, they merely realised the enhanced value of their investment and the surplus realised by them was, therefore, capital gain and not business profit, but so far as D. S. Virani was concerned, the Appellate Assistant Commissioner took the view that though 1/4th share in the land was originally purchased by as an investment, D. S. Virani started dealing in land on a large scale since "the last ten years or so", that is, since about 1956-57 and his 1/4th share in the land was converted by him into stock-in-trade long before it was sold by him to Bhagwanji Khataubhai and his three colleagues and the surplus realised by him from sale of his 1/4th share in the land was, therefore, business profit and not capital gain. This decision of the Appellate Assistant Commissioner led to the filing of four appeals, one by D. S. Virani and the other three by the revenue. The Tribunal disposed of all the four appeals by a common order since they involved consideration of the same facts. The Tribunal took the view that the transaction of purchase and sale of land effected by the assessees was an adventure in the nature of trade and the surplus realised by each of them was gain resulting from a scheme of profit-sharing entered into between them. The Tribunal accordingly upheld the decision of the Appellate Assistant Commissioner so far as it concerned D. S. Virani and reversed it so far as it concerned the other three assessees. The result was that the surplus realised by each of the assessees on sale of the land was treated as business income and not of the assessees on sale of the land was treated as business income and not capital gain. Hence, the present references at the instance of the assessees raising the question whether the surplus realised by each of them on sale of the land is business income or capital gain.

2. The assessments of the assessees having been made under the Indian Income Tax Act, 1922, the decision of the controversy here would be governed by the provisions of that Act. Section 10 of the Indian Income Tax Act, 1922, makes profits and gains of business, profession or vocation carried on by an assessee, taxable. The definition of "business" given in section 2, sub-section (4), is an inclusive "any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture". Since the transaction of purchase and sale of land was admittedly an isolated transaction so far as assessees other than D. S. Virani are concerned, the question which falls for consideration is whether it could be said to be an adventure in the nature of trade. Now the law is well settled that that question whether profit in a transaction has arisen out of an adventure in the nature of trade is a mixed question of law and fact. It was pointed out by the Supreme Court, in what may properly be regarded as the leading case on the subject, namely, G. Venkatswami Naidu and Co. v. Commissioner of Income Tax that the expression "adventure in the nature of trade" in the sub-section (4) of the section 2 postulates the existence of certain elements in the adventure which in law would invest it with the character of trade or business and a Tribunal while considering the question whether a transaction is or is not an adventure in the nature of trade, before arriving at its final conclusion, has to address itself to the legal requirements associated with the concept of trade or business. Such a question is one of mixed law and fact and the decision of the Tribunal on it is open to challenge under section 66(1) of the Act. See Saroj Kumar Majumdar v. Commissioner of Income Tax and Janki Ram Bahadur Ram v. Commissioner of Income Tax.

3. It is, therefore, competent to this court to examine the facts and circumstances of the present case in order to see whether the Tribunal has properly applied the legal principles in reaching a finding that the transaction of purchase and sale of land by the assessees was an adventure in the nature of the trade. But, before we proceed to do so, it would be desirable to notice a few general principles which must be borne in mind while examining the question whether a particular transaction is an adventure in the nature of trade. It is now well settled that the burden lies on the revenue to establish that the profit earned in a transaction is within the taxing provision and it would, therefore, be for the revenue to show that the transaction is an adventure in the nature of trade. Vide speeches of Lord Carmont and Lord Russell in Commissioners of Inland Revenue v. Reinhold G. Venkatswami Naidu and Companys case and Saroj Kumar Majumdar case. But the question is what are the tests for determining whether a particular transaction is an adventure in the nature of trade. There are numerous cases where this question has been considered and decided in the context of the particular facts and circumstances prevailing in those cases but it is not possible to glean from these decided cases any general or universal test which would be applicable in all cases for determining whether a transaction is an adventure in the nature of trade. No single fact or circumstance has decisive significance and it is the totality of the relevant factors and circumstances that has to be taken into account for the purpose of determining the true nature of the transaction. It is not, as pointed out by Gajendragadkar J. in G. Venkataswami and Companys case :

"... a matter of merely 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.... the decision about the character of a transaction in the context cannot be based solely on the application of any abstract rule, principle or test and must in every case depend upon all the relevant facts and circumstances."

4. Each case must be determined on the total impression created on the mind of the court by all the facts and circumstances disclosed in that particular case. But even so "general criteria indicating that certain facts have dominant significance in the context of other facts" are to be found in decided cases and these serve as guides in determining the true nature of the transaction. If for instance a transaction is related to the business normally carried on by the assessee, though not directly part of it, an intention to engage in an adventure in the nature of trade may be readily inferred; there would be no difficulty in such a case in concluding that it is a trading transaction. But, where it is not related to the business of the assessee, there would have to be clear and positive evidence of facts and circumstances to show that the transaction was an adventure in the nature of trade. The nature of the commodity which forms the subject-matter of the transaction may also throw light on the true legal character of the transaction. If the commodity is a commercial commodity, the transaction may lend itself more easily to the inference that it is an adventure in the nature of trade than in a case where the commodity is not a commercial commodity. So far as land is concerned, it is now clear from the decisions of the Supreme Court in G. Venkataswami Naidu and Companys case and Janki Ram Bahadur Rams case that land is not a commercial commodity. Gajendragadkar J. pointed out in G. Venkataswami Naidu and Companys case; "Normally the purchase of land represents investment of money in land"; and to the same effect we find the following observation of Shah J. in Janki Ram Bahadur Rams case : "........ a transaction of purchase of land cannot be assumed without more to be a venture in the nature of trade". It is also now well settled that merely because the original purchase was made with intention to resell, if an enhanced price could be obtained, is by itself not enough to raise the inference that the transaction is an adventure in the nature of trade. The decision of the House of Lords in Commissioner of Inland Revenue v. Reinhold is a direct authority on the point. There, a director of a company carrying on business of warehousemen, purchased a number of house with a view to resale. He had actually at the time of purchase instructed his agents to sell, whenever a suitable opportunity arose. The houses were subsequently sold by him at a profit and the question was whether it represented revenue gain. The Court of Session held that the transaction of purchase and sale of houses was not an adventure in the nature of trade; it was merely realisation of the enhanced value of the investment. The Court of Session relied on the following observations of Lord Buckmaster in the case of Jones v. Leeming :

"... an accretion to capital does not become income merely because the original capital was invested in the hope and expectation that it would rise in value; if it does so rise, its realization does not make it income."

5. The same view was also taken by the Supreme Court in Saroj Kumar Majumdars case, Janki Ram Bahadur Rams case and Raja Bahadur Kamakhya Narain Singh v. Commissioner of Income Tax. Shah J., speaking on behalf of the Supreme Court in Janki Rams Bahadur Rams case, observed, after referring to Commissioners of Inland Revenue v. Reinhold, Saroj Kumar Majumdar case and Jones v. Leeming :

"It may be emphasized from an analysis of these cases that a profit motive in entering into a transaction is not decisive, for, an accretion to capital does not become taxable income, merely because an asset was acquired in the expectation that it may be sold at profit."

6. It is, therefore, clear that if an asset is purchased by way of investment, the transaction does not become an adventure in the nature of trade merely because at the date when the asset was acquired, there was intention to resell it, if an enhanced price could be earned. But, it is equally clear, and that is now settled by the decision of the Supreme Court in G. Venkataswami Naidu and Companys case. that if the purchase of the asset was made solely and exclusively with an intention to resell it at a profit, it would be a strong factor indicating that the transaction is an adventure in the nature of trade. The Supreme Court pointed out in G. Venkataswami Naidu and Companys case, at page 610 of the report :

"Cases may, however, arise where the purchase has been made solely and exclusively with the intention to resell at a profit and the purchaser has no intention of holding the property for himself or otherwise enjoying or using it. The presence of such an intention is no doubt a relevant factor and unless it is offset by the presence of other factors it would raise a strong presumption that the transaction is an adventure in the nature of trade. Even so, the presumption is not conclusive; and it is conceivable that, on considering all the facts and circumstances in the case, the court may, despite the said initial intention, be inclined to hold that the transaction was not an adventure in the nature of trade."

7. It is in the light of these general criteria that we must examine the facts and circumstances of the present case and determine the true nature of the transaction before us.

8. Before we proceed to consider the facts and circumstances of the present case, it is necessary to point out that it was at no time the case of the revenue that in respect of the purchase and sale of the land, there was a joint venture between the assessees or that the surplus realised as a result of the sale of the land was profit of the joint venture. The revenue also did not contend at any stage of the proceedings that the assessees constituted an association of persons in respect of the transaction of purchase and sale of the land. Each of the assessees was sought to be taxed individually on the basis that the transaction of purchase and sale of his respective 1/4th share in the land constituted an adventure in the nature of trade and the surplus realised by him from the transaction was his business profit. We must, therefore, examine the case of each assessee separately and consider whether the transaction of purchase and sale of his respective 1/4th share in the land was by way of realisation of the enhanced value of investment or was an adventure in the nature of trade. Now so far as the case of D. S. Virani is concerned, it stands on an entirely different footing from that of the other three assessees but so far as the latter are concerned, the facts and circumstances relating to them are identical and it would, therefore, be convenient if we divide the assessees into two groups, one of D. S. Virani and the other of the other three assessees and consider whether the Tribunal was right in coming to the purchase and sale of the land was an adventure in the nature of trade, resulting in gain liable to tax as business profit.

9. We may first take up the case of the assessees other than D. S. Virani. The facts found by the Tribunal are that these three assessees were throughout the relevant period residing out of India. None of them had entered into any transaction of purchase or sale of land either prior or subsequent to the purchase of the land in the present case. It was not the business of any of these assessees to trade in land and dealing in land was not in the line of business of any of them. The transaction of purchase and sale of the land was an isolated transaction so far as these assessees were concerned. It would, therefore, appear, on the application of the general criteria discussed above, that the transaction of purchase and sale of the land would not be regarded as an adventure in the nature of trade unless the revenue would point to fact and circumstances which would show that such was its true character. The revenue contended that the transaction was an adventure in the nature of trade. Three circumstances were strongly relied upon by the revenue in support of this contention. The revenue pointed out that the area of the land purchased by each of the three assessees was 25,000 square yards and this was a large area which could not possibly have been intended to be used or enjoyed by any one of the three assessees for himself. Nor was it possible to say, urged the revenue, that this area of land was purchased as an investment with a view to earning return on the investment. The land purchased by the assessees was non-agricultural land and none of the three assessees could have intended to purchase it with a view to earning return on the amount invested. The three assessees were also residing outside India and it would be farfetched to imagine that they purchased the land with a view to making an investment, particularly when in making the purchase, they joined hands with D. S. Virani who was a dealer in land. These circumstances, contended the revenue, clearly indicated that each of the three assessees purchased his 1/4th share in the land with the sole and exclusive intention to resell it at a profit. Now there can be no doubt that if the revenue can persuade us to raise an inference that the sole and exclusive intention of each of the three assessees at the date of purchase was to re-sell his 1/4th share in the land at profit, the revenue would go a long way in establishing that the transaction of purchase and sale was an adventure in the nature of trade but we are not at all satisfied that any of the three assessees had at the time of purchase, sole and exclusive intention to resell his 1/4th share in the land at profit.

10. There is nothing on the record of the case to show that was the intention of the three assessees in purchasing their respective 1/4th shares in the land. But certain facts stand out which require to be considered. The three assessees were residing out of India. It does not appear that they had any business activity in India. They belonged to Rajkot and having found that the area in the vicinity of Rajkot was bound to develop by reason of Rajkot having been selected as the capital of the State of Saurashtra, they purchased their respective 1/4th shares in the land on 18th April, 1951. It is true that the area of the land acquired by each of the three assessees was a fairly large area, namely, 25,000 square yards, but the amount invested by them was only Rs. 2,500, a trifling amount having regard to the large wealth possessed by them. The question is whether, on these facts alone, an inference can be raised that the sole and exclusive intention of the three assessees at the time of purchase was to resell their respective 1/4th share in the land at profit. Our answer to this question can only be in the negative. It is quite possible that since the area around the city of Rajkot was fast developing, the three assessees who belonged to Rajkot might have thought that it would be desirable to invest some moneys in the purchase of land near or around the city of Rajkot. The land which might be purchase might come in useful at any time in the future and the assessees might be able to make use of it for themselves and the members of their respective families or they might be able to earn rent out of it, if there was future development of that area. We do not think that the revenue is right when it says that there could be no intention or earning return from the investment in the purchase of the land. It is true that there was no immediate prospect of earning return on the amount invested, but the possibility of earning return, if the area developed in the future, could not be ruled out. Moreover, it must be remembered that the amount that was being invested by each of the three assessees was a trifling amount having regard to the large wealth possessed by each of them and even if there was no possibility of obtaining returns that would not be a circumstance which would suggest that the intention of the three assessees was not to purchase the land by way of investment but to purchase it only with a view to trading in it. There is absolutely no material on record to show that the sole and exclusive intention of the three assessees at the time of purchase was to resell their respective 1/4th shares in the land at profit. We are of the view that the three assessees purchased their respective 1/4th shares in the land by way of investment and even if they hoped to be able to make profit by selling a large part of it, if a suitable opportunity came, that would not make the transaction any the lees a transaction by way of realisation of the enhanced value of the investment. The Tribunal was, therefore, in error in taking the view that the transaction of purchase and sale of his 1/4th share in the land by each of the three assessees was an adventure in the nature of trade.

11. The revenue is, however, on firmer ground when we turn to the case of D. S. Virani. The Tribunal on a consideration of the material on record came to the conclusion that D. S. Virani was a dealer in real property since 1946-47 and if that be so, the transaction of purchase and sale of his 1/4th share in the land by him was a transaction in the ordinary line of his business and unless there are off-setting or countervailing circumstances, it must be presumed to be a part of his business activity. D. S. Virani, according to the record, purchased, in joint venture with others, land at Goregaon in Bombay in Samvat 2003-2004, i.e., 1946-47 and subsequently sold it at a profit of Rs. 11,593 on 8th May, 1959. D. S. Virani also purchased a huge piece of land in the area known as Jagannath plot at Rajkot on 20th October, 1957, from the Thakore Saheb of Rajkot. The total price paid by D. S. Virani for purchase of this land was Rs. 5,31,000. D. S. Virani then laid out roads on this land and divided it into plots and sold the plots to different parties. It was not disputed by D. S. Virani that the surplus resulting from the sale of these plots was business profit. D. S. Virani also purchased sanatorium land in Rajkot in Samvat year 2013, that is, 1956-57, and after leaving 600 square yards for roads, he parcelled it into plots and sold the plots at a profit. This profit was also admittedly business profit in the hands of D. S. Virani. These transaction of purchase and sale of land at different times clearly show, as held by the Tribunal, that D. S. Virani was a dealer in real property since long before the purchase of 1/4th share in the land in the present case. The transaction of purchase and sale of 1/4th share in the land by D. S. Virani was, therefore, clearly in the ordinary line of his business and must be purchased by D. S. Virani jointly with the other three assessees but that cannot militate against the inference that he did it as a trading activity. Merely because the transaction of purchase and sale of of the land, so far as the 1/4th share of each of the other three assessees was concerned, was by way of investment does not mean that the transaction in so far as it related to 1/4th share of D. S. Virani was also by way of investment. It is not at all impossible that four persons may jointly purchase a piece of land in specified shares and out of them, three persons may do so by way of investment while the fourth may do it with a view to trading in his share. It must be remembered in this connection that the other three assessees were residing out of India and the entire transaction of purchased of the land on their behalf was handled by D. S. Virani and, therefore, whatever might have been the intention of the other three assessees in purchasing their respective 1/4th share in the land, that cannot reflect on the intention of D. S. Virani so far as purchase of his 1/4th share in the land was concerned. It was contended on behalf of D. S. Virani that if he had entered into the transaction with a view to trading in his 1/4th share in the land, he would have asked for partition of his 1/4th share and then parcelled it out and sold the plots with a view to earning maximum profit. But, this contention ignores the basic fact that the management of the entire land was with D. S. Virani and if he wanted to sell his 1/4 the share in the land, it was not necessary for him to demand a partition of it. It is only if the other three assessees did not want to sell their respective 1/4th shares in the land and D. S. Virani wanted to dispose of his own 1/4th share, that necessity might have arisen for him to demand partition of his 1/4th share. No such situation obviously arose and D. S. Virani acting on behalf of himself and the other three assessees sold the whole land to Bhagwanji Khataubhai and his three colleagues. t is true that D. S. Virani did not lay out roads and divide the land into plots before selling the land to Bhagwanji Khataubhai and his three colleagues but we do not know what were the precise terms on which D. S. Virani on behalf of himself and the other three assessees agreed to sell the land to Bhagwanji Khataubhai and his three colleagues. The Tribunal called upon the assessees to produce it on the ground that it was not available. The Tribunal raised an inference against the assessees from non-production of his agreement and it cannot be said that the Tribunal was in error in doing so. If this agreement had been produced, it would have shown what were the terms on which the assessees agreed to sell the land to Bhagwanji Khataubhai and his three colleagues and that might have thrown light on the true nature of the transaction. But, even from the document dated 7th November, 1963, executed between Bhagwanji Khataubhai and his three colleagues, it is evident that the purchase price of the land was not to be paid by Bhagwanji Khataubhai and his three colleagues to the assessees, but Bhagwanji Khataubhai and his three colleagues were to lay out roads and divide the land into plots and sell the plots to outside parties and the purchase price for the sale of the land was to be received by the assessees from the purchasers of the plots at the rate of Re. 1 per square yard. It would thus appear that the assessees by entering into such an arrangement, received the benefit of a higher price which would ordinarily follow from laying out roads, dividing the land into plots and selling the plots. This arrangement also indicates that D. S. Virani who entered into the transaction of sale did it by way of trading activity so far as his 1/4th share in the land was concerned. The Tribunal was, therefore, right in taking the view that the surplus realised by D. S. Virani by sale of his 1/4th share in the land was business profit.

12. Our answers to the questions referred to us, therefore, are :- Question in Reference No. 11 of 1970, in the affirmative and question in each of the three References Nos. 12, 13 and 14 of 1970, in the negative. The assessee in Reference No. 11 of 1970 will pay the costs of the reference to the Commissioner while in each of References Nos. 12, 13 and 14 of 1970, the Commissioner will pay the costs of the reference to the assessee.