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Additional Commissioner of Income-tax Vs. Chaman Lal Punjabi - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberIncome-tax Reference No. 709 of 1972
Judge
Reported in[1977]106ITR538(All)
ActsIncome Tax Act, 1961 - Sections 147 and 256(1)
AppellantAdditional Commissioner of Income-tax
RespondentChaman Lal Punjabi
Appellant AdvocateDeokinandan, Adv.
Respondent AdvocateP.N. Pachauri, Adv.
Excerpt:
- - it was at best a casual gain of a non-recurring nature. an appeal filed by the assessee before the appellate assistant commissioner failed and thereafter the matter was taken up before the tribunal......face value of the house property and the purchase price of the compensation claim represented the assessee's income, which had escaped assessment. the income-tax officer, thereafter, initiated proceedings under section 147(a) of the income-tax act, 1961, and the assessee in response to that gave a written explanation to the effect that the transaction in question was not an adventure in the nature of trade, as, when the assessee entered into the transaction he had no profit motive. it was at best a casual gain of a non-recurring nature. the income-tax officer rejected the plea on the ground that the assessee had in the past been regularly carrying on the business of purchase and sale of evacuee claim in his capacity as a partner in the unregistered firm of chaman lal roshan lal. he,.....
Judgment:

1. The Income-tax Appellate Tribunal, Allahabad Bench, Allahabad, has referred the following question under Section 256(1) of the Income-tax Act, 1961, for our opinion :

'Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the amount of Rs. 9,141 was not profit arising out of an adventure in the nature of trade, but was receipt of casual and non-recurring nature ?'

2. The assessment year relevant for the present reference is the year 1959-60 and the assessee is a Hindu undivided family. An original assessment was made of income from cloth business and house property.Subsequently, it was discovered that the assessee had purchased a house in Shahjahanpur for Rs. 22,500 during the relevant accounting year. The price of this house was adjusted against the compensation claim of the face value of Rs. 22,500 which was purchased by the assessee for Rs. 13,359 in the open market. The Income-tax Appellate Tribunal took the view that the difference between the face value of the house property and the purchase price of the compensation claim represented the assessee's income, which had escaped assessment. The Income-tax Officer, thereafter, initiated proceedings under Section 147(a) of the Income-tax Act, 1961, and the assessee in response to that gave a written explanation to the effect that the transaction in question was not an adventure in the nature of trade, as, when the assessee entered into the transaction he had no profit motive. It was at best a casual gain of a non-recurring nature. The Income-tax Officer rejected the plea on the ground that the assessee had in the past been regularly carrying on the business of purchase and sale of evacuee claim in his capacity as a partner in the unregistered firm of Chaman Lal Roshan Lal. He, accordingly, treated the difference of Rs. 9,141 as profit arising out of the business of dealing with the evacuee claim. An appeal filed by the assessee before the Appellate Assistant Commissioner failed and thereafter the matter was taken up before the Tribunal. The Tribunal has found that it was no doubt true that the assessee was in the past a partner of a firm which had been carrying on the business of purchase and sale of evacuee compensation claim, but that business had been closed a few years before the relevant assessment year. It also found that the purchase of the claim of Rs. 22,500 was a solitary transaction and was not repeated either in the relevant accounting year or in future. The Tribunal held in these circumstances that the transaction in question was not an adventure in the nature of trade and as such was not taxable. In coming to this conclusion, the Tribunal took note of the fact that a single transaction may constitute an adventure in the nature of trade but on the facts of the present case, it held that this was not so. In ITR No. 710 of 1972--Additional Commissioner o] Income-tax v. B. N. Bhagi and Brothers : [1977]106ITR359(All) (decided on 5-12-1974) this court has held that purchase of a single compensation claim, which was later on utilised for the purchase of a building for the assessee's residence did not constitute an adventure in the nature of trade. The facts of the present case are in pari materia with that of Addl. Commissioner of Income-tax v. B. N. Bhagi and Brothers : [1977]106ITR359(All) , The finding that the transaction in question was not an adventure in the nature of trade, in the circumstances of the case, appears to be one of fact.

3. In view of our above conclusions, we answer the question in the affirmative and against the department. The assessee is entitled to costswhich we assess at Rs. 200. Counsel's fee is assessed at the same figure.


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