Commissioner Of Income -Tax, West Bengal Ii v. Rajasthan Mines Ltd., Calcutta

AAR Bara, Weal FTa-2 seat atgea fataes, SaeaT(The Commissioner of Income-tax, West. Bengal-II Rajasthan Mines Ltd., Calcutta)|a8 1970)co (iat0 Fo ato ME, HoTAO gusAT gusATAT Vo to Wat)1922 (1922 st 11)—aret9— st 11)—aret9— 11)—aret9—9— sfosam gen deq daz,1922 (1922 st 11)—aret9— st 11)—aret9— 11)—aret9—9—fratfcet aver wea att eafaea at aarat afga ancfasafearet at avian aat—avtat af acafeal at faatieat areaa feat aat—aaral et orfta site ara—2da aarat a onftaat fawa a Qa ara ara Heda aet ght ‘sfreaa gram deer Bez, 1922(1922 eT 11)—aret 66—-Bea aaa & fda eriagl—afasco a ag aemers frondfe wa-fasa areartl deqagre & at gar e—afence & fronatST Sem aaa gafatea at amas fraifedt aeadt Fags ufait ¥ areas fer atte fac) Bearatar-fara FH fata ae cesar F ate feo ae waeATAU To wlew ate warfare Basar wea Het ar fatae arafeart fratfedt atangafirt wxfear var)faatfedt aa & aravaS aren se yfa Had adl ale war gafar gakt deat Aqarafaart oa fear) arrax ofearet A aren site carfiner at arguaaral ar fraifed at uusea orftaat ® er Hath far frateofears sae fretted are faa ae fame ay areartt WAIT AATat seat ga art ara ae at at afedfea at fear. aaae— aTgat (ait) Ae afar A sa ordeal at gies atafarae fase faatar fe fraifedt & fata a aga set aa-erfer Tarzait ot1 freq at fare ate area aa or fa fakar sa wea ® dara % faq aaa wt wer arfaatfedt & aaa-aga gra sa ara Ait@aqt arafrat afsaaza,aaa,eaafea wea aie gah ataea FTearagge Sra F far gaat fear war arsfratfedt era aaa 7s%aia fag ar as afasia gma gt ara att aq aTMaraH eat arafral AHA & sa wet FOH Ba or cafe aeaa aa fratfedt ar|faatfeat + adel ag yfaal at ara & faa aa fear ate ateTgaq arifaat facnay & Fa wena R gee adl ar) cea: sea Ba cararaa A as ay & Pe facta & yea faeg caratera yeaaeararaa Hata at Te atte afta Heat ge, afafratfa—oe fad} araa 3 geareazr fate & fracaatagart ate fratfedt wren aie eatfner at aaral ar sa afarFRAT H STH gHare st are attSa wen ake earfaea a amararate & caret Fw Haadia wt ar ats afaare a at aa zakaie set Hes Bt earfaea sl agHraysl HA Huey asl attat ana ¢ fe gearacn fara % aa ata alae Hr AaaITT Heaaa wien Mt catfaea st .gHral ae cara a fear war at faqagara fratfat ara aisa ofeare at safe t arg ofeada setwit1 (Fz 7)7|.||ag am fr fratfedt 3 aa at we aeaf a Ge AA F TWTaeatg ay % far aa fearag aa#ereat F fru fasaroan at atafe aar ag fama faaifedt are areart F aaaFH fear war at|ga ea 8 fs fratfedt wat wet FR Ga A as dad qe aayaraRae aa Fat Rana arag agar ad arrat at ararfe yfaat ade ot Sagar Far at afee aafta Ft ag atart a et ag cfeieaia fe acaftat sae ged wag ag at we afaa fasay % facarg arate sar wet zefH seata fax aTeaI<eaper Ht fear vat araragsarcifea stan arywa: Ue famea alt ara arasfosaa gen zac daz, 1922 F gear Huge aeiT| (x1 9)7|| afe den ataedt tg fasag ara F afaa fay ag sitaratfers aval & fants ag agar oe orga atoat freer araarfgat &agfad drarat & vat gaat yaar atefafearaqar at aatat at aT aadt &1 cane ay afar aver faery ae asa araedt frongHt FT ATA TT Fatal Sa wr afrare stats fe sa fasag ar fetfafas ater gtr aagaaél glareat gaaradeal & fasta warmace frag ahaa wT et araa wal@1afe tar afware atfaaez fear ary at eararas at ga aa oe feat HAT etar @ fe satmead fasae agfra aét ge atx gafere ga ater sel feat arat1 (Fz 10) ——-arfee fatase fasta [1959]- 35 at€o do ato 594:| Sitodmeraratatte ges weet gay MART ATTA. (G. Venkataswami Naidu and Co. Vs. The Commissioner of Income-tax). fafa actett afeatieat : 1968 at fafa ate deat 1626 ste 1627. 1961F araax fata seat 240% Hawa sea aaa ®area 19 TAT, 1965 ater fore aie sree F fees atte | MIATA Bl We a| VIAN Wao frat, Sto Ate TA,WIXo Uo At Mt sto aloual| (ata attett 3) seat aaaa ere erase ad ga araraa at fore raratfacfa to Wao BIS A fear|| aratfaata gre— 5 ਮਈ, 1970 COMMISSIONER OF INCOME· TAX, WEST BENGAL II RAJASTIIAN MINES LfD., CALCUTTA May 5, 1970 [J. C. SHAH, K. S. HEGDE AND A. N. GROVER, JJ.J lndi1111 /11come-ra.r Act, ( 11 of 1922)-Assessee p11rchase.v propri<tory riRlrt.~ u·ith arrea1·s of rent and royalty-Wlrether receipt of tire arrears tax• 11hh·-As.1·w·ee .<ells-Profit If taxabl<~findlng of Hlb11nal, if opr11 to re· riew h.v HiRlt Court. The assessee-company purchased the proprielury interests in lands rich in coal and fireclay. The deeds assigned to the assessee the vendors' right to receive arrears of rent. and royalty in pursuance of the agreement between the vendors and third parties. Later the assessee sold its right since it could not win the mines for want of finances. The Income-tax Officer assessed the entire arrears of rent, and royalty to tax in the assessee's hands as revenue receipts. He also assessed the profit df the •ale to tax as a business transactiC\n. The Appellate Assistant Commis· sioner, and the Tribunal agreed with the orders. The Tribunal found that the assessee was heavily indebted to the vendor but there was no evidence that the payment of the am'lunt was pressed for; the memorandum of association of the assc~ee empowered it to acquire, sell and--disposc of and deal with mines and mining properties; as a major part of the land purchased by the assessee was in possession of other mining companies, it was not possible for the assessee to undertake any large scale and pront· able mining operations; the assessee sold the lands purchased by it for a profit; and the properties purchased were sold very soon after they were purchased. But the High Court differed from these .conclusions. Dis· missing the appeals, this Court :- HELD: (i) The purchase of the riaht to collect arrears of rent and royalty could not be considered as an income. It was true that the assessee purchased the lessors' right from the vendor in pursuance of the agree· f ments entered into by the vendor with third parties whose ~ights had been acquiled by the assessee. The assessee company had been incorporated on Jan. 23, 1947. Th.erefore, it could not have got any right in the pro· perty prior to the conveyance in its favour on Dec. 22, 1947. As per the terms of the conveyance, the assessee becomes entitled to the arrears of rent and royalty as a purchaser of those rights. It had no right to collect ihese arrears of rent and royalty as the owner of the property. It may be that in determining the price payable under the conveyance, the arrears of G rent and royalty were not taken into consideration. But that did not change the nature of the right acquired by the assessee. [520 DJ (ii) The findings of the Tribunal did not afford any basis to it to come to the conclusion that the purchases made by the assessee and the subse-quent sale were in the nature of a trading adventure. The circumstances that the memorandum of association of the assessee permitted the assessee to acquire and sell and dispose of and deal with mining properties was an in~Qn~lu1iv-. one. It was not shown that the assessec had acquired or sold any other property. The fact that the assessee sold property pur· chased by it for profit was not decisive in finding out whether the sale was effected in the course of the business of the assessee. From the fact that' the assessee could not undertake large scale an'<l profitable mining in the- area which was in its possession, no inference may be drawn that lands \\'ere acquired with a view to sell later on nor the circumstance that the properties were sold very soon after they were purcha5ed affords any basis for the conclusion that the sale.1 in ques~ion was effected in the course of the business. [,521 BJ TAIT TT THT BY UZ AY ANAT HARA Goa AIAAT Hl AlTHTaia alan, ‘al aq HaHa gre xfsaqgeHA gaa daz, 1922(fae gat gat aaa afafsay ser sreat)at are 66(1) Fwat feu ae fade a va eararaa gre feu ae fafaeaa & sear geei amas ata afer afaacn tsa qatar at ua % fagfarafafaa at sq a fafese fax F—| “(1) aan arma & aeat ate ofefeafaet Faraz azcarfaea (cael) ate aren at aaa & eq A faattedt erwey 255,733 Bt AX 3,00,332 waa at ufsat waa:fraictaq 1948-49 wiz1950-51& fanfaraifedt a are wagfaatza 2 ? atx(2) aaraTaa F aeat ateafefeafaat Faraz az2,80,000 saa at ufa, at fafaatfeedt are arate & faa‘Bora at as afar uf 2, faster ag1950-51 % farfratfedt at ara & wa F freaizofts & 1” 2 ame H Hat A orafra aea aeT Fa THIT E 3, fratfeat tad ustegra atgea fafags23saat, 1947 atfanfad waofernfafatsaradt21 wane at cat sett ateaferott worqa Fart ar fas gears aTAT 312 aa Ara gs,yearatai ga yaa A alae ate afaag fash caesar Aaa SGTfsaaqae acqadt fafats ga grat Aa aaa 14 gral A oataa aaa% fau aaqafta afer fax ge ati sar aay 8 ovat4 aferaa fagtfara ata Feo urAwa afat e far wt see—-arfea fara ge aga aroHora stat Aatal H Hae F fae Gaaoragate at tt atc oa ate afas strat aat get ster Ht aTfareq crea ar. dla wea carnal wat arisen tye feaaqte fafads,waa eras HAA ale Tada Tare wWra AA gt Aarat F setyfa S cast at aaa get afta far geearte 22 fearac,1947 ala GH AFTTTA FIT (sit far 26 Grad, 1948 aT eftees fratTat), Ata 20 fata, 1945 we 7 WATT, 1947 ater HUT F BPTTTq fraifedt § wars } us a gad adl aceraa yfaal A arcaftafea ufsa ax frat at fH saa aaaeaqa & agar aaah Agt eT& fafafase fear wat at)saa waaraTA aI wae F UATFT1 faataz, 1946 & cetared & area ate carfaea FY ARIAT TTT HLAoar atfrare fratfcat at aafca ate aagtfng we feari fratfedt areaes Wt carfaes Bt gata area ate aga awaHF afaare aferareqfaa afaaret & asta H far dea sfana 5 ata ea aT 4, fart ag 1948-49 & faa ara ax afaard 4 1 faarax, 1946 @ Raiqet-7s at arta aaiq 22 fearar,1947aHgaaqedardl & sree ates ate caries at arpral Ft got tee aT 31 are,(1948 at aarca att art gd ay & fac fraifedd at aah er ®fratco fearva ate & ata Frater F afeafad at 7s Ye Hy2,55,733 wat at (iii) If the finding of faci is based on an in°fcrence from the primary cvidentiary facts proved in the case, it_s correctness or validity is open to challenge in refe·rence proceedings within narrow limits. It is open to the parties to challenge a conclusion of fact ctr.awn by the trib11nal on the ground that it is not supported by an)i legal eyidence or that the in1pugn-cd conclusion dra~u from the rele".ant facts is not rationally possible. If such a plea is established, the Court has to consider whether the con-clusion in question is not perverse and should not, therefore, be set aside. On the facts of this case, the High Court was justified in examining the · correctness of the inference drawn by the Tribunal on th;: basL;; of th~ primary facts found by that Tr'bunal. [521 EJ G. Venkatarwa1ni Naidu and Co. v. Conunissioner of I11con1£'-tax, 35 l.T.R. 594; followed. CIVIL APPELLATE JURISDICTION: and 1628 of 1968. Civil Appeals Nos. 1627 Appeals from the judgment and order dated January 19, I 965 of the. Calcutta High Court in Income-tax Reference No. 240 c·f 1961. S. Mitra, G. C. Sharma, R. N. Sachthey and D. :a. Sharma, for the appellant (in both the appeals). The resp~ndent did not appear. The Judgment of the Court was delivered by Hegde, J. This appeal by certificate arises from the decision of the Cakutta High Court rendered in a reference made to it by F the Income Tax Appellate Tribunal, 'B' Bench, Calcutta under s. 66(1) of the Indian Income-tax Act, 1922 (which will hereinafter be referred to as the. 'Act'). Alongwith its statement of case. the tribunal submitted two questions to the High Court. for its opinion. They are: "(I) Whether on the facts and in the circumstances of the case, the sums of Rs. 2,55,733/-and Rs. 3,00,332/- receivable by the assessee as arrears of royalty and, rent were assessable as the income of the assessee for the assessment years 1948-49 and 1950-5 l respectively ? and (2) Whether on the facts and circumstances of the case the sum of Rs. 2,80,000/- being the surplus derived by the assessee on sale of property was assessable as the income of the assessee for the assessment year 1950-51." . The facts set out in the statement of the case, in brief are as follows: · :5. 31 faatax, 1949 a aurea att are gd ad F at fn fateat 1950-51 % fae gaara ag at, fraifedt & wags & car a, eeet faface wud % agaer #, a ara wa FS sfawa B®far, ada24 qaratt, 1949 are gediact-catWTA, We ale caifaey FHaal ara afc, at fs 31 fearaz, 1948 #Y 3,00,332 sad at,aratwT UH AIT ae Bete fratt13 aTea, 1949 BY fautfedd A arte22 fauraz, 1947 FIX 24 wae, 1949 ate qaiat aeaiac fateHare afse aat & yer wrt gaat afar, ew site fea facetdel ate arqdt fafats ate dia ger gaat at 7,50,000 eat atga uf & fare aq feat| ara ax afaaret § 3,00,332 eax at vam% lew atx carfaer a got aarar at fate ad 1950-51 ® etawueaa fraifeal at user siftaat arat . sax faite are yfaat Ffara at at arearet deraere arat at< 2,20,000 satat afar gy,oe fara & fraifet at aa art ge aog 8, fee are aaerrs aryat (AAA) are 2,80,000 wat & eT H gadafnag PraTat, at afaiias Ht featare ac atta afar ga frat aaera et Tar|6. SAGTT SSF FATATAT a, aT Be afeardt, aera CIDE(adit) ate afar gre fame ay feat & qaana Aa ge 4gfasag frepret fa faratfeat arer aren atx earfies at aaral ® BT FHaTeq 255,733 exAte3,00,332 wat FYcufsat waa:faatorAT 1948-49 atx 1950-51 F fae fratfedt & andi® wa F fratvat1 ag ara ax afaerd, aga aad (atta)ste afsarcraver frat aq ga fasagt & wt ena adt ar fe untaeB® uaaadel ag arafe % faaa a fasifedt at ala arat aly fratzorag 1950-51 % fac fraifedt a mas eq Ffratetta ati gaarea e cafes sat arr wt aged,ofeadt gare F <a eaararH adie aye| |Oywd.a|7 7. ara qraaTF ga altAH aena z fe wren atxralfaes at aaraT aga weafare Hwa RY ae agl AAT aTanalag aca 2 fe fratfedta cave B Ga a, SAT aaa &TT UATS F UAT gre fee ay Huw F qqacyFH fHah gfaarefaatfedt arr afta fae ae a, qeerpat afaar< ade far et sarfe aga eat war @, faaifedt seq} 23 aaad, 1947 at fanfRa ay7g ot1 gafrg 22 fearaz, 1947 BY sae get F feu me geataeyqa ag arafa a arg afar area dl Ht andl at| saa getiac-7T& fravaat & agar frattedt wren ate carfaea at aarat ar gaafar & hat F wT FT Hare aa Ta| VA wlem a ealfaea atOa THAT HY Geqher F carat F wR aya Hea sr Hr afsar<al att gt aaa g fH geaiaco-qa & ada déa slag a aaarcTHUT TAT lew Ate carfaea at gaTat ge faar< a fear at atfreq ag ara fratfedt are afore afeare at ocafa F até ofeada aatHU| AA: ST Seq AAA A ga ata A agua = fe wae fafeseTAT gat HT Sat fraifedt F get F fear arat arfac 8. aa em fettaset 9x Peart HF1 fratfedt & agqare varWATT Y-UIT Ara Tears al afce & wa fan F faeq ga }aura ¥HIT ag sa sat F fae faa staat ati afaacy gra me avHET TT Ta WHIT Ss: (1) fraifedA cans ¥ cra a aga afasafer sare oft at fag ag afara wet HF fae as ater ae ar fe tsBT Ter THAT F Aare F fag agra we wet ar (2) faatfedit ¥ara-araa F ga art ate aaa araferai asa wea, aaa ate ahaaea TOT sadae H deraare wea at afer gare at aes(3)fratfedt ara ada wg yfe ar aga ager ara wea @at arafaaymeat H at gata fautfedt # faq a8 Gera ae aye araaas aaaaadfa a gta Fra &Sar fau ava sala fear ar (4) ate (5) featfed saat a§ aeafaatFags ara wae waa awa asqeala aa at ag at|| 9. sata dea afaacy at ge fsae It gat Ffae aryAIae Tatar val Bra fe fratfedt arer farmer wT ake ceardadtfaaa caraiite Sifaa & erFH X1 ag afefeafafefratfedt + The assessee M/s. Rajasthan Mines Ltd. is a public li'mited., Company incorporated on January 23, 1947. The Raja of Ram-garh was the landlord of the North and South Karanpura fields covering about 312 villages. Those tracts of lands were rich m II coal and fireclay. M/s. Karanpura Development Co. Ltd., held coal mining licence in about 14 of those villages. It also held fire-clay leases in about 8 villages and leases of other minerals in port-tions of two villages. That Company had also a prospecting licence for the coal in the said fields with the option to take further coal mining leases. The leases were also held by three other parties {' namely South Karanpura Development Ltd., Janab Mohammad Kamruddin and Jagadish Prasad Bhagat in respect of other parcels of land, in these fields. By an indenture dated December 22, 1947 (registered on the 26th of February, 1948), in pursuance of agreements dated September 20, 1945 and August 7, 1947, the assessee acquired from the Raja of Ramgarh proprietory interest in all those leased out lands, more fully specified in the schedule D appended to the said indenture. By the said indenture, the Raja of Ramgarh also transferred and assigned to the assessee his right to receive the arrears of rent and royalty from the lessees with effect from September I, 1946. The consideration paid .by ~he assessee for the acquisition of the proprietory rights with the right to realise and recover the arrears of rent and royalties was Rs. 5 E lucs. For the assessment year 1948~49, the Income-tax Officer as-sessed the entire amount of arrears of rent and royalty receivable from the said lessees, from September I, 1946 upto the date of conveyance namely December 22, 1947, as the assessee income for the previous ,Year ended on the 31st March, 1948. The net amount included · in the assessment under that head was Rs. 2,55,733/-. In the previous year ended on December 31, 1949 relevant for the assessment year 1950-51, the assessee purchased another lot of villages from the Raja of Ramgarh as per the conveyance ·dated January 24, 1949, in pursuance of the agreements already G referred to for a consideration of Rs. 2 lacs with all arrears of rent and royalty which on December 31, 1948 amounted to Rs. 3,00,332/-. On August 13, 1949, the assessee sold away his right, title and interest in the major portion of the village& ac-quired under the aforesaid deeds of conveyance dated December 22, 1947 and January 24, 1949 to Sirka Valley Coal Co. Ltd. H and threle other parties for a total sum of Rs. 7,50,000/-. The Income-tax Officer treated the entire arrears of rent and royalty amounting to Rs. 3,00,332/- as revenue receipts of the assessee taxable during the assessment year 1950-51. He also treated the salt; of the lands by the assessee as a business transaction and taxed a sum of Rs. 2,~0,000/- as the net profit of the assessee arising from the sale, which profit was recomputed by the Appellate Assi~­tant Commissioner at Rs. 2,80,000/-. The Income-tax Appellate Tribunal agreed with those conclusions. aTa-ata Haat aeafaal aft ae, Fa ak saga HA aarsah Fae H erage wea F fae agate fear aa 3, afaearae 21ag afaa val feat war & fe fratfedt a ars wea acofa afsa at ftat aa dt dtag cea fe fratfcal A aa at af arafa arafaeaq at ft ag ara awa & faeara adi 2 fe amt fas fraifedt ®BITaIT & TaHH HF PearTAt atga aera fefrsifedd va ada FaT fe gam wey Fai, aS THATe AIR ATMs GAT aae eTqe at THAT Al, a aaT Hate agar at anrar ar azar fayfaat aeaeara Fay at fee a afea at ag af ate a A ag ofefeatfe ma al 1e arattat gaa aa fee Tt Rawr gear Faat aEat aa fase & fre ag arart sara Het @ fe gerne fama aTear<& agar A fear war ar| waT-waT BIS ar argigs wT a ge ATaiefens dea ga frsad oe agar H fre arg arene sara tat Heat Zfe sRaTa TeqaartuN earatiea Stfaa aT| |10. uses frat at ate a ag acta at ag fe afew aT agfang fs yfeat ar aa att fase areare & pen H fear aar armeq dae frog 2 gafae sea earatar ga faod # geaeta adt Txamar 1 feeg star fs sito Seaeearal ates Us Heat AAT ANATmlaea Hee earaTaa are asferat Fear amar 2, afe aca dat atsfacag ana & atfaa fee ag orefeae atfaae aca & faare avWIAA Tt Mga st at fade araargat F aghra arash % atazsaat yaar att fafaareaar at qatet A ar aad se. saad aafaacy gre faaray we aeq dae frog atga grat gz qatatea ar afsare gtar & fe sa faond ar feat fafaa aed are andaaa slatar gaara deat & faatar vat aretaHa fase ata wra ava adl ¢1 af tar afeare arfaa we feat are ateararad aBT aa TX faare wear gar g fH ear seaaa face gafaa aa 2art gafag sa aged vat fear war arfac)ga aayRe acaUae qt See eqrarag F faa afaaeoy greatomesrefers aeat# ATT IR sa afaaeo are fears aT aga a agar at aiaHa qatar Ay|| yy|| ll. wat fag ae areal & ga sea eararaa F ga aa A AeAala g fe sea eararaa at ua & faq sa fafese fae aa fataTet HT SAT At fratfeat H get H fear strat arfaqt12. afearmered 4 adit. wana eal g a aferatatat &.—atta atice at re |Fo7 The High Court of Calcutta differing from the concl!islom reached by the Income-tax Officer, Appellate Assistant Commis-sihner and the Tribunal came to the conclusion that the sums oi Rs. 2,55,733/- and Rs. 3,00,334/- receivable by .the .assessee as · .arrears of royalty and rent were not assessable as, the profits of the assessee for the assessment year 1948-49 and 1950-51 respec-tively. ' It also disagreed with the conclusions reached by the Income-tax Officer, Appellate Assistant Commissioner and the Tribunal that profit made by the assessee by the sale of the pro-perties purchased from Raja of Ramgarh was assessable as the income of the assessee for the assessment.year 1950-51. Aggrie-ved by that order, the Commissioner of Income-tax, West Bengal has come up in appeal to this Court. We are in agreement with the High Court rhat the purchase of the right to collect arrears of rent and royalty cannot be considered as an inccn1e. It is true that the assessee purchased the lessor·s right from the Raja of Ramgarh in pursuance of the agreements entered into by the Raja of Ramgarh with third parties whose rights had been acquired by the assessee. The assessee company had been incorporated. as seen earlier, on January 23, 1947. Therefore it could not have got anv right in the property prior to the conveyance in its favour on December 22, 1947. As per the tenns of the said conveyance, the assessee became entitled to the arrca~s of rent and royalty1• as a purchaser of those rights. It had no right to collect those arre:rrs of rent and royalty as the owner of the property.· It may be that in detennining th~ price payable under the conveyance, the arrears of rent and royalty .F were not taken into consideration. But that does not change the nature of the right acquired by the assessee. Hence we agree with the High Court that the first question referred to earlier must be answered in favour of the assessee. Now coming to the second question, according to the asscssee. it purchased the tracts of land in question with a view to win mines but for want of finance, it was compelled to sell the same. The primary facts found by the tribunal are: (1) the assessee was hea-vily indebted to Raja of Ramgarh but there was no evidence to show that the Raja was pressing for the payment of the amount due to him; (2) the memorandum of association of the assessee p;ave it power to acquire, sell and dispose of and deal with mines and min-ing properties; (3) as a major part 'Of the land purchased by the assessee was in the possession of the other mining Companies, it was not possible for the assessee to undertake any large scale and A profitable minjng operations; (4) the assessee sold the lands pur-chased by it for a profit and (5) the properties purchased were sold very soon after they were purchased. The above findings did not afford any basis to the tribunal to come to the conclusion that the purchases made by the assessce •md the subsequent sale were in the nature of a trading adventure. B The circumstance that the memorandul)I of association of the as-sessec permitted the assessee to ac.quire, and sell and dispose of and cleal with mining properties is .an inconclusive one. It is not sho\\n that the assessee had acquired or sold any other property. The fact that the asses~~e sold property purchased by 1t for profit is not decisive in finding out whether the sale was effected in the c course of the bu,iness of the assessee. From the fact that t1\e as-sessee could not undertake large scale and profitabie minmg in the area which was in its possession, no inference may be drawn that lands were acquired w:ith a view to sell later on, nor the circum-stance that the properties were sold very soon after the} W•'re purchased affords any basis for the conclusion that lhe sale in question was effected in the course of the business. The primary D. facts found either individually, or collectively could not have affor-ded a basis for arriving at the conclusion that the trans~ction in question w:8 an adventure in trade. It was urged on behalf of the RevenUe that the finding of the tribunal that the purchase and sale of lands were made in the E course of business being a finding of fact, it was not open to !he High Court to interfere with that finding. But as observed by this Court in G. Ve11karaswami Naidu and Co. v. Commissionet of Income-tax( [1]). if the finding of fact is based on an inference from the primary evidentiary facts proved in the case, 1ts correctness or validity is open to challenge in reference proceedings within narrcw limits. It is open to the parties to challenge a conclusion F of fact drawn by the tribunal on thi: ground that it is not ~upportcd by any legal evidence or that the impugned conclusion drawn from the relevant facts is not rationally possible. If such a pka is estab-lished, the court has to consider whether the conciu,ion in ques-tion is not perverse and should not. therefore. be set a>ide. On the facts of this case the High Court was justified in examinini:r the G correctness of the inference drawn by the Tribunal on the basis of the primary facts found by that Tribunal. For the reasons m~ntioned above. we agree with the High Court that the second question referred to it for its upinicn •nu st also be answered in favour of the assessee. In the result these a~_oeals fail and they are dismissed. Appeals dismissed. Y.P. (I) 35 l.T.R. 594.