JUDGMENT By the Court.—These references under Section 256 (1) of the Income Tax Act, 1961 (the Act) relating to the assessment year 1981-82 (previous year ending 31.3.1981 and 1982-83 (previous year ending on 30.6.1981) arise out of the orders passed by the Income Tax Appellate Tribunal in Kanodia Group of cases. Separate reference application was filed by the revenue, before the Tribunal. The common question of law raised in all these references is as follows : “Whether in law and on facts of the case the I.T.A.T. was justified in holding that the transactions were not adventure in the nature of trade and the profits in question are not revenue profits.” 2. The Yaduraj Kanodia Trust, Kanpur is assessable as an AOP. The trust came into existence on 26.9.1978 with Master Yaduraj Kanodia (minor son of Shri G.P. Kanodia) as its sole beneficiary. During the previous year, relevant to the assessment year 1980-81, the trust received by way of gift the National Defence Gold Bonds weighing 10000 gms from Shri D.P. Kanodia and Smt. Ratan Devi Kanodia (wife of Shri B.M. Kanodia). These National Defence Gold Bond 1980 were issued as per notification dated 19.10.1965 (as amended upto 19.11.1965) issued by the Ministry of Finance, Department of Economic Affairs. The relevant para of the notification provided : “Wealth Tax, capital Gains Tax and Estate Duty. The bonds will be exempt from wealth tax and any capital gains from their sales or transfer will not be subject to income-tax. Capital loss if any will not be eligible for being set off, Gifts, in a year, of Bonds by the initial subscriber will be exempt from Gift Tax to the extent of the value of Bonds for an aggregate weight of five kilogrammes of gold. The Bonds will also be exempt from Estate Duty on the first occasion on which they pass on the death of a holder to the extent of the value of Bonds for an aggregate weight of fifty kilogrammes of gold.” 3. Besides other benefits/immunities, National Defense Gold Bond enjoyed exemption from capital gain tax; and in the hands of the initial subscriber, gift of such bonds was exempted from gift tax, subject to a ceiling of 5000 gms in the case of one initial subscriber/donor. Besides other benefits/immunities, National Defense Gold Bond enjoyed exemption from capital gain tax; and in the hands of the initial subscriber, gift of such bonds was exempted from gift tax, subject to a ceiling of 5000 gms in the case of one initial subscriber/donor. The trust received by way of gift 5000 grams of gold on 16.10.1978 and another 5000 grams of gold on 29.3.1979 with market value of Rs. 3,20,000/- and Rs. 3,72,000/- respectively. 4. The repayment of gold bonds was to start from 27.10.1980. Prior to the arrival of the said date, the assessee sold the gifted quantity of gold bonds of 3000 grams on 5.9.1980; 5000 grams on 6.9.1980 and 2000 grams on 18.9.1980 (total 10000 grams of the value of Rs. 12,67,000/-. 5. The Assessing Officer took a view that the gold bonds represented stock-in-trade of the business of the assessee and subjected the assessee to tax on the income of Rs. 5,75,000/- (less expenses) which was the difference of the sale consideration as realized by the assessee and the value of the National Defense Gold Bonds. 6. In the press communique issued by the Government of India on 22.9.1980 before the date of redemption commencing from 27.10.1980, the gold bond received on redemption were either to be sold to a licensed dealer/certified goldsmith or the same were to be converted into ornaments through licensed dealer/certified goldsmith. The gold so received on exchange of gold bond were to be treated as a capital asset within the meaning of Section 2 (47) of the Income Tax Act which could attract capital gain tax. The relevant portion of the communique provided : “7. The bond holders will be issued a certificate by the bond repaying office at the time of delivery of the gold to them indicating the details of the gold bars/discs received by them. The recipients of gold shall, within a period of 6 months, from the date of receipt of gold, either sell the said gold to a licensed dealer/certified goldsmith or get the said gold converted into ornaments through a licensed dealer/certified goldsmith. On the basis of the certificate issued by the bond repayment offices at the time of delivery of the gold to the bond holders as aforesaid, a licensed dealer/certified goldsmith can purchase/covert the gold into ornaments within the prescribed time limit.” 9. On the basis of the certificate issued by the bond repayment offices at the time of delivery of the gold to the bond holders as aforesaid, a licensed dealer/certified goldsmith can purchase/covert the gold into ornaments within the prescribed time limit.” 9. No capital gains will arise when the bonds are exchanged for gold on redemption. However, any subsequent sale, exchange or transfer of such gold within the meaning of Section 2 (47) of the Income Tax Act would attract capital gains tax in respect of capital gains arising from such sale, exchange or transfer. For the purpose of computation of capital gains, the cost of acquisition of gold would be the market value of the Bonds on then date of redemption.” 7. After the gold bonds received in gift by the trust were sold prior to the date of its redemption, the assessee made investment in fresh purchase of gold bonds. These purchases were made of 2500 grams on 6.10.1980 for Rs. 3,35,000/- and 1900 grams on 27.10.1980 of Rs. 2,60,000. These gold bonds were sold in the quantities of 600 grams on 17.3.1981, 800 grams on 20.3.1981 and 600 grams on 2.4.1981.On the transaction of 600 grams of gold the Assessing Officer worked out a profit of Rs. 19,668/- and assessed the same for tax. The Appellate Authority by his order dated 4.11.1985 dealt with the matter independent of the observations made by the Assessing Officer: “22. The claim of the appellant that profit on transfer of gold bonds results in capital gain which is specifically exempt is theoretically correct in view of the Government notification but the situation changes when the gold bonds are not held as capital, asset but the held for the purposes of making profit by capital rotation. In the present case the trust is investor and financier which had received gifts of gold bonds which it had disinvested at a profit of about Rs. 5.74 lacs, without waiting for maturity of the gold bonds. From the male proceeds it again purchased gold bonds at times when the period of holding allowed was very limited and the bonds had to be surrendered to acquire gold from the R.B.I. And sold it off. The sequence of events has been tabulated earlier. 5.74 lacs, without waiting for maturity of the gold bonds. From the male proceeds it again purchased gold bonds at times when the period of holding allowed was very limited and the bonds had to be surrendered to acquire gold from the R.B.I. And sold it off. The sequence of events has been tabulated earlier. The systematic manner of purchases of gold bonds by the family, their gift to the Trust on which no Gift tax was levied, sale of the bonds by the Trust when the market was going up, repurchase of gold bonds just before surrender date and sale of gold when sold prices were going up clearly indicates intention to carry on an activity for profit. There was no question of holding by the trust of the gold bonds as there was “no pride of possession, or systematic satisfaction” involved in holding these gold bonds:. As a matter of fact, the well planned manner in which the Kanodia family including the sole beneficiary of the Trust want about creating trusts and Companies, making centralised purchases of gold basis even out of borrowings, making gifts, selling gifted gold bonds and requiring gold bonds and then selling gold clearly point out an attempt to make profit in the hope of exempting...capital gains in view of the Government notification exempting capital gains from sale or transfer or gold bonds. In this connection I may make a reference to the detailed discussion above of the series of transactions uncovered as a result of search operation and the details of which are given in the assessment order.” 8. The Tribunal after considering the entire material recorded the a finding that there was no colourable device or dubious names involved in the case as all the transactions done by the assessee were recorded in the books of account which were found in the course of search. The Tribunal held : “There was no question of converting the gold into gold jewellery as the assessee was not a dealer in gold jewellery at any time. The transactions of ultimate sale and the initial transaction of receipt of gifts cannot, in our opinion, be held to be transactions of adventure in the nature of trade. Receipt of gifts arose the sweet will of the donor who thought fit to make a gift. The transactions of ultimate sale and the initial transaction of receipt of gifts cannot, in our opinion, be held to be transactions of adventure in the nature of trade. Receipt of gifts arose the sweet will of the donor who thought fit to make a gift. Sale of gold ultimately was due to the said notification of the Government which forced the assessee to sell as it could not retain the gold which it received on maturity of gold bonds. There was, of course, one transaction of purchase and sale of gold bonds a few months before the date of maturity but, in our opinion, it would not materially alter the nature of the transaction. The case laws relied upon by the learned representative of the assessee fully support the case of the assessee as mentioned above.” ................ “There is absolutely no evidence to show that the assessee has suppressed any transaction or has not recorded some transactions in its books. No particular or specific instance of any dubious method has been pointed out not of any colourful method. The principles laid down by Lordships of Supreme Court in the Mc. Dowell case (supra) do not support the case of the Revenue as there is no dubious method or colourful device found out by the Revenue. The trusts in question have already been held to be genuine by the Revenue. The transactions of sale have also not been questioned. The above mentioned reasons would go to prove that the sale of gold ultimately had to be done by any person who received gold on maturity of gold bonds as the gold received on maturity of gold bonds would not be held as such for more than six months. There was no choice or volition on the part of the assessee in this connection. The case laws quoted by the learned representative of the assessee wholly got to support the case of the assessee. The onus of the proof that lies on the assessee in this connection has been discharged. Revenue has not been above to prove that the transactions were in the nature of trade.” 9. The CIT (A) has challenged the findings on the ground that during the search under Section 132 of the Act on 1.10.1981 at the residential premises of Shri G.P. Gupta and Shri S.P. Kanodia certain documents were seized. Revenue has not been above to prove that the transactions were in the nature of trade.” 9. The CIT (A) has challenged the findings on the ground that during the search under Section 132 of the Act on 1.10.1981 at the residential premises of Shri G.P. Gupta and Shri S.P. Kanodia certain documents were seized. The AO found that these two persons had master minded the purchase and sale of the National Defense Gold Bonds in September/October, 1980 onwards, making use of front organisation, companies and firms and also members of their families in which 10 companies, 8 individuals, 2 firms, and 5 trusts were involved. The volume of purchase and sale of these gold bonds was in the vicinity in the tune of Rs. 2 crores. The investment in purchase of gold bonds were made from the borrowed fund. 10. Shri R.K. Upadhyay appearing for the Income Tax department has made a summary of the facts of these cases to support the order of AO and submits that the entire transactions were adventure in the nature of trade and the profits were taxable. The summary disclosing the profits is as follows : “1. ITR No. 87 of 1991 Smt. Kavita Kanodia v. CIT AY 1981-82 [Previous year ending on 31.3.1981] (Arising out of ITA No. 1736/A/1987) Date of purchase weight amount 9.9.1980 900 gms Rs.1,16,100 12.9.1980 1,600 gms 2,11,200 27.10.1980 3,300 gms 4,78,500 8,05,800 Date of sale weight amount 21.1.1981 100 gms 23.1.1981 1,000 gms Rs.5,05,550 Profit Rs. 54,844 2. ITR No. 88 of 1991 Raghuraj Kanodia v. CIT (minor through father and natural guardian Shri S.P. Kanodia AY 1981-92 [Previous year ending on 31.3.1981] (Arising out of ITA No. 1738/A/1987) Date of purchase weight amount 3.9.1980 948 gms Rs.1,20,396 4.9.1980 1,500 gms 1,91,250 24.10.1980 3,400 gms 5,02,100 8,13,746 Date of sale weight amount 21.1.1981 2,100 gms Rs.5,05,550 Profit Rs. 68,272 3. ITR No. 184 of 1987-CIT v. Yaduraj Kanodia Trust AY 1982-83 [Previous year ending on 30.6.1981] (Arising out of ITA No. 2056/A/1985) Trust created on 26.9.1978 with nucleus of Rs. 501/- by Smt. Ratan Devi Kanodia w/o Shri B.M. Kanodia. Sole beneficiary Yaduraj Kanodia (Minor) s/o Shri G.P. Kanodia. Date of purchase Weight Amount 16.10.1978 Gift 5,000 gms. Rs.3,20,000 29.3.1979 Gift 5,000 gms. 3,72,000 10,000 gms. 6,92,000 5.9.1980 sale 3,000 gms. 3,78,000 6.9.1980 sale 5,000 gms. 6,27,000 18.9.1980 sale 2,000 gms. 2,62,000 10,000 gms. 501/- by Smt. Ratan Devi Kanodia w/o Shri B.M. Kanodia. Sole beneficiary Yaduraj Kanodia (Minor) s/o Shri G.P. Kanodia. Date of purchase Weight Amount 16.10.1978 Gift 5,000 gms. Rs.3,20,000 29.3.1979 Gift 5,000 gms. 3,72,000 10,000 gms. 6,92,000 5.9.1980 sale 3,000 gms. 3,78,000 6.9.1980 sale 5,000 gms. 6,27,000 18.9.1980 sale 2,000 gms. 2,62,000 10,000 gms. 12,67,000 Gain on sale of gifted gold bonds Rs. 5,75,000/- [less expenses on sale Rs. 189/-] included Rs. 5,74,811/- in total income assessed (see AO’s order paper book page No. 16) Total Income assessed by AO for AY 82-83 Rs. 6,35,926/- 6.10.1980 2,500 gms. Rs.3,35,000 purchase 27.10.1980 1,900 gms. 2,60,000 purchase 4,400 gms. 5,95,000 17.3.1981 600 gms. Rs.97,500 converted in gold 20.3.1981 -do- 800 gms. 1,38,400 2.4.1981 sale 600 gms. 1,00,848 Gain on sale of gold assessed Rs. 16,350/- (net amount) in total income (see paper book page 16) [Source: Order of CIT (A) paragraph No. 13 page 112 of paper book.] _______________________________________________________ As per assessment order at page 3 of paper book in ITR No. 185 of 1987, the assessee Master Yaduraj Kanodia also purchased gold bonds worth Rs. 10,73,100/- as under: Date of purchase Weight Amount 4.9.1980 200 gms. Rs. 25,500 11.9.1980 1,400 gms. 1,80,600 17.9.1980 1,000 gms. 1,32,000 27.9.1980 5,000 gms. 7,35,000 10,73,100 4. ITR No. 186 of 1987-CIT v. Raghuraj Kanodia Trust AY 1982-83 [Previous year ending on 30.6.1981] (Arising out of ITA No. 2203/A/1985) Trust created with a nucleus of Rs. 251/-. Sole beneficiary Raghuraj Kanodia (Minor) s/o Shri S.P. Kanodia Date of purchase weight amount 29.3.1979 gift 5,000 gms. Rs.3,72,500 from D.P. Kanodia 18.9.1980 sale 3,700 gms. 5,52,200 out of gifted bonds 600 gms. 29.10.1980 sale 700 1,02,900 6,55,100 22.9.1980 2,600 3,56,200 purchase 4.2.1981 2,600 4,31,600 converted into gold 16.2.1981 2,600 4,32,320 sale of gold [Source: Order of CIT (A) paragraph No. 12 page 125 of paper book.] Note: Profit of Rs. 2,82,600- + Rs. 75,708/- included in total income assessed. 5. ITR No. 185 of 1987 CIT v. Yaduraj Kanodia (Minor) Sole beneficiary of Yaduraj Kanodia Trust through father G.P. Kanodia AY 1982-83 [Previous year ending on 30.6.1981] (Arising out of ITA No. 2209/A/1985) As per assessment order at page 3 of paper book, the assessee purchased gold bonds worth Rs. 10,73,100/- as under: Date of purchase weight amount 4.9.1980 200 gms. Rs.25,500 11.9.1980 1,400 gms. 1,80,600 17.9.1980 1,000 gms. 1,32,000 27.9.1980 5,000 gms. 10,73,100/- as under: Date of purchase weight amount 4.9.1980 200 gms. Rs.25,500 11.9.1980 1,400 gms. 1,80,600 17.9.1980 1,000 gms. 1,32,000 27.9.1980 5,000 gms. 7,35,000 10,73,100 Note: Total income determined in the case of Trust at Rs. 6,35,936/- assessed in his hands. 6. ITR No. 21 of 1996 CIT v. Rituraj Kanodia Trust (AOP) Sole beneficiary (Master) Rituraj Kanodia AY 1982-83 (Accounting period ending on 30.6.1981/) (Arising out of ITA No. 720/A/1987) Trust created on 26.9 1978 with a nucleous of Rs. 251/-. Smt. Uma Shashi Kanodia w/o Shri Devi Prasad Kanodia gifted 5,000 grams gold bonds worth Rs. 5,20, 000/- on 16.10. 1978. Date of purchase weight amount /sale/gift 16.10.1978 gift 5,000gms. Rs.5,20,000/- from Smt. Uma Shashi Kanodia w/o Shri D.P. Kanodia 16.7.1980 sale 2,000 gms. 2,40,000 4.9.1980 sale 500 gms. 63,700 12.8.1980 sale 1,000 gms. 1,30,000 12.9.1980 sale 1,000 gms. 1,30,000 Profit shown Rs. 2,75,750/- ————————————————— 7. ITR No. 2 of 1998 CIT v. Rituraj Kanodia Trust (AOP) Sole beneficiary (Master) Rituraj Kanodia AY 1986-87 (Accounting period ending on 30.6.1985) (Arising out of ITA No. 1516/A/1987) Date of purchase/ weight amount sale Opening stock 500 gms. (converted into gold) Sale during the year resulted in profit of Rs. 70,000/- Note : ITAT following its decision for AY 1982-83 in assessee’s own case held that profit was not in the nature of revenue receipt. 8. ITR No. 28 of 1999-CIT v. Shri D.P. Kanodia AY 1981-82 (Arising out of ITA No. 2175/A/1996) Penalty for concealment of Rs. 45,000/-. Concealed income included Rs. 24,272/- on account of income from sale of gold bonds. 9. ITR No. 36 of 1999-CIT v. Shri D.P. Kanodia AY 1981-82 (Arising out of ITA No. 2176/A/1996) Penalty of Rs. 8,000/- under Section 273(2)(aa) of the Act for similar additions as in ITR No. 28 of 1999. 10. ITR No. 51 of 1999-CIT v. Shri D.P. Kanodia (Individual) AY 1983-84 (Arising out of ITA No. 1204/A/1989) Profit on sale of gold after redemption of gold bonds of Rs. 64,812/- 11. ITR No. 176 of 1991-CIT v. Shri D.P. Kanodia & Smt. Indira Kanodia AY 1981-82 (Previous year ending on 31.3.1981) (Arising out of ITA No. 1734/A/1987 & ITA No. 1737/A/1987) Assessment Order dated 24.9.1984 in the case of Shri D.P. Kandia starts from page 16 of paper book. Special facts of the case have been given at page 30 of the paper book. Special facts of the case have been given at page 30 of the paper book. Date of purchase weight amount /sale 1968 originally 17,561 gms. subscribed Gifted 1,300 gms. 30.7.1980 & 5.9.1980 sale 9.9.1980 2,500 gms. Rs.3,22,000 purchase 26.3.1981 sale 1,40,760 (part) Profit on sale of gold bonds Rs. 24,272/- in the case of Shri D.P. Kanodia. Assessment order of Smt. Indira Kanodia mentions relevant facts at page 49 of the paper book. Date of purchase weight amount /sale 11.9.80 2500 gms. Rs.3,22,000/- Purchase 26.3.81 Sale 1,40,700/- Profit on sale of gold bonds Rs. 40,847/- in the case of Smt. Indira Kanodia. 12. ITR No. 178 of 1991-CIT v. Shri P.D. Singhania AY 1982-83 Arising out of ITA NO. 2189/A/1985 Date of purchase weight amount 26.4.79/19.5.79 1374 gms. Rs.1,04,424/- 6.6.80/1.7.80 1200 gms. Rs.1,27,560/- (bond redeemed on 18.11.80) Date of sale weight amount 29.5.80 Rs.1,42,210/- 9.4.81 redeemed Rs.1,99,200/- gold sold for Profit Rs. 71,640/- 13. ITR No. 55 of 1989-CIT v. Yaduraj Investment (P.) Ltd. AY 1982-83 [Previous year ending on 30.6.1981] (Arising out of ITA No. 94/A/1986) Business: Investors and financiers Date of purchase weight amount /sale 9.10.1980 3,500 gms. Rs.4,90,000 purchase 19.1.1981 sale 2,800 gms. 4,55,000 21.1.1981 sale 700 gms. 1,13,000 5,69,000 Profit Rs. 79,500 minus Rs. 40,143 interest paid to Bank =Rs.39,447/- ————————————————— 14. ITR No. 10 of 2000-CIT v. Master Raghuraj Kanodia (Minor) AY 1983-84 [Previous year ending on 30.6.1982] (Arising out of ITA No. 680/A/1985) Profit of Rs. 62,160/- on sale of gold received after redemption of gold bond 15. ITR No. 112 of 1999-CIT v. Smt. Indira Kanodia AY 1981-82 (Arising out of ITA No. 485/A/1991) Penalty of Rs. 84,000/- for concealment of income including income of Rs. 40,847/- on sale of gold bonds. ————————————————— 16. ITR No. 59 of 1999-CIT v. Shri Ritu Raj Kanodia AY 1984-85 (Arising out of ITA No. 1203/A/1989) Profit of Rs. 78,513/- on sale of gold received after redemption of gold bond” 11. Shri R.K. Upadhyay has relied upon G. Venkataswami Naidu & Co. v. CIT, (1959) 35 ITR 594, in which the Supreme Court held that purchase of land adjacent to the mills of the company with intention to sell at a profit raised a strong presumption that the gain was adventure in nature of trade; Laxmi & Co. Shri R.K. Upadhyay has relied upon G. Venkataswami Naidu & Co. v. CIT, (1959) 35 ITR 594, in which the Supreme Court held that purchase of land adjacent to the mills of the company with intention to sell at a profit raised a strong presumption that the gain was adventure in nature of trade; Laxmi & Co. v. CIT, (1961) 43 ITR 415 All, in which it was held that the solitary transaction of purchase and sale of silver bars by cloth agent was adventure in the nature of trade; Raja Dhanraj Giriji v. CIT, (1971) 79 ITR 463 (AP), in which it was held that the pledge and sale of jewellery and purchase and sale of shares was an adventure in the nature of trade; CIT v. Sutlej Cotton Mills Supply Agency Ltd., (1975) 100 ITR 706, in which the Supreme Court held that the shares purchased with borrowed funds with dominant intention of the assessee to make profit by resale was adventure in the nature of trade and Anil Jain v. CIT, (2007) 294 ITR 435 SC, in which where units were purchased with borrowed funds and after receiving dividents, units were sold at loss and similar operation was carried out in subsequent year, the transaction was held in the nature of trade. 12. Shri R.K. Upadhyay has also relied upon CIT v. Associated Industries Company, (1971) 82 ITR 586; CIT v. H. Holck Larsen, (1986) 160 ITR 67; Fidelity North Star Fund In Re, (2007) 288 ITR 641 and 291 ITR 385, in which the Circulat dated 15.6.2002 has been discussed. He submits that the nature of transactions in the present case were by way of dubious and colourable transactions for the purposes of gain and in which the gold bonds are to be treated as stock-in-trade. The repurchase of gold bonds from such amount and thereafter the sale of gold will attract principles of law in which the transactions will be treated as investment in the nature of trade and the profits as revenue profits. 13. Shri Ashish Bansal, on the other hand, has defended the reasons given in the order of the Income Tax Appellate Tribunal. He submits that in view of the findings recorded by the ITAT no question of law arises. 13. Shri Ashish Bansal, on the other hand, has defended the reasons given in the order of the Income Tax Appellate Tribunal. He submits that in view of the findings recorded by the ITAT no question of law arises. There was no question of converting gold into gold jewelery as the assessee was not a dealer in gold jewelery at any time. The transaction of ultimate sale and the initial transaction of receipt of gifts cannot be held to be transactions of adventure in nature of trade. The receipt of gifts arose out of sweet will of the doner, who thought it fit to make a gift. The sale of gold was in terms of the notification of the Government which made the assessee to sell the gold bonds as it could not retain the gold which it received on maturity of gold bonds. The purchase and sale of the gold bonds a few month before the date of maturity would not materially alter the nature of transaction. There was no evidence to show that the assessee had suppressed any transaction or did not record these transactions in his books. No instance of any dubious method was pointed out nor any colourable method was adopted. The trusts in question were already held to be genuine by the revenue. The transactions of sale were also not questioned. The sale of gold ultimately had to be done by any person who received not on maturity of gold bonds as the gold received on the maturity could not be held such as for more than six months. The assessee had no choice. They had discharged the burden of proof and that the revenue was not able to prove that any transactions were in the nature of trade. 14. Shri Ashish Bansal relies upon Ashok Kumar Jalan v. CIT, (1991) 187 ITR 316 (Bom); A. Tushar Tanna v. CIT, (2006) 284 ITR 453; CIT v. Oriental Containers Limited Ltd., (1993) 113 CTR 127. In A. Tushar Tanna (supra) a similar question as in the present case has arisen and in which the Court held as follows : “Having noticed various cases and having taken a survey of the divergent views, it is not in dispute that the NDG Bonds which were purchased were sold by the assessees in a very short span of time. The transaction in question involved in each case is an isolated one and did not form part of a series of transaction. None of the transactions are from the line of business pursued by each assessee. Tulsidas Tanna entered into a contract dated May 15,1979, took delivery of the bonds on January 4,1980 and sold them on January 8,1980, making a profit of Rs. 36,000 on the sale of gold bonds. The transaction in question reveals that the payment was made and delivery of bonds was taken after six months though they were sold within four days from the date of delivery but that itself cannot be a ground to hold that the assessee has indulged in the transaction in the nature of adventure. Similar are the facts of the case of Kalyanji Tanna and Lamikant Tanna whereas the case of Shri Tushar Tanna (HUF) is on a better footing so far as admitted fact of showing purchase of bonds on November 30, 1978, whereas delivery was taken on December 24, 1979, that is almost after one year whereas the sale is on January 4,1980. Initially, the intention appears to be of investment because in some cases the purchase price was paid almost after one year. However, delivery was taken after a period of one year. Though, after taking delivery within a short span of 4/5 days, bonds were sold. The fact that the bonds were sold within a short time, does not indicate that the transaction was in the nature of trade. There does not appear to be any material to show that the only motive was to show that the bonds were sold at a later date. Purchase of bonds was not in much quantity. As such, there is no material to conclude that the transaction in question was an adventure in the nature of trade. In the circumstances, the question referred for our opinion is answered in favour of the assessee and against the Revenue.” 15. Shri Ashish Bansal submits that at the time of sale of gold in 1980 the Gold Control Act, 1968 was on the statute book which was repealed in the year 1990 by the Gold (Control) Repeal Act, 1990. The Gold Control Act in order to carry on business of gold and gold ornament required a licence to be obtained under Section 27 of the Act. The Gold Control Act in order to carry on business of gold and gold ornament required a licence to be obtained under Section 27 of the Act. A restriction was imposed under Section 8 of the Act on the acquisition, possession and disposal of gold without a licence. The gold bonds were purchased and were given as a gift without requiring any conditions of having a licence and thus the same of some of these gold bonds, even if it was made some time prior to its maturity and from which the gold bonds were purchased again and the sale of gold as a condition of disposal on the purchase of gold bonds could not be treated as sale in the ordinary course of transaction nor there was any evidence of any series of transaction. None of these transactions were in the line of business pursued by any of the assessee. The taking of delivering of gold and its sale was under the terms and conditions of the purchase of National Defense Gold Bonds. There was no material to show, nor there was anything on record to demonstrate that the motive of the assessee was to deal in sale and purchase of the gold. 16. We have considered the provisions of the Act and the judgments cited by learned counsels appearing for the parties and do not find any substance in the contention of revenue that the transactions were by way of adventure in the nature of trade. The gifts, which were donor based at the relevant time and the sale of gold bonds approaching the due date of redemption, the repurchase and thereafter sale of the gold was not in the nature of the regular business of the assessee. All the transactions were made taking advantage of the National Defense Gold Bonds 1980, as scheme as per notification dated 19.10.1965, amended on 19.11.1965, and the communiques issued by the Government of India on 22.9.1980. 17. The transactions and the profits cannot, therefore, be treated as adventure in the nature of trade. 18. The question of law referred to the High Court is thus returned in favour of the assessee and against the department. All the Income Tax References are accordingly disposed of. The department will proceed accordingly. ——————