CIT v Calcutta Co Ltd

• Calcutta Co Ltd purchased a large parcel of land
• The company subdivided the land into plots and sold them at a profit
• The company claimed the profit was a capital gain (not business income) as it was a one-time transaction
• The Revenue argued it was an adventure in the nature of trade

1. Whether profit from a single transaction of purchase and resale of land constitutes business income (adventure in the nature of trade) or capital gains.

• An "adventure in the nature of trade" falls within the definition of "business" even if it is a single isolated transaction
• The test is the intention at the time of purchase: if the intention was to resell at profit (not to hold as investment), it is business
• Surrounding circumstances are relevant: nature of commodity, manner of purchase, subsequent dealing, magnitude of transaction
• The company's actions (subdivision, plotting, active selling) indicated commercial intent from inception

Even a single, isolated transaction can constitute an "adventure in the nature of trade" and generate business income under S.28. The determinative factor is the intention of the assessee at the time of purchase. If the purchase was made with the dominant intention of resale at profit, the transaction is in the nature of trade regardless of frequency. The nature of the commodity, the manner of dealing, and the magnitude of the transaction are relevant circumstances.