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Additional Commissioner of Income-tax Vs. B.N. Bhagi and Brothers - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberIncome-tax Reference No. 710 of 1972
Judge
Reported in[1977]106ITR359(All)
AppellantAdditional Commissioner of Income-tax
RespondentB.N. Bhagi and Brothers
Appellant AdvocateDeokinandan, Adv.
Respondent AdvocateK.M.L. Majela, Adv.
Excerpt:
- .....represents an adventure in the nature of trade and hence the profit was liable to be taxed as business profit. this view was affirmed by the appellate assistant commissioner on appeal. the assessee went up to thetribunal. the tribunal held that the intention of the assessee in buying these claims was to purchase a building for his own use. they were not purchased with a view to carry on any trade in such claims. it was a casual receipt not liable to tax as business income. on this view the tribunal held that the difference of rs. 10,937 was not liable to tax. 2. at the instance of the commissioner of income-tax the tribunal has referred the following question of law for the opinion of this court: 'whether, on the facts and in the circumstances of the case, the tribunal was right in.....
Judgment:

Satish Chandra, J.

1. On 28th April, 1965, the assessee purchased a half share in a cinema building for Rs. 46,496. The sale consideration was paid in cash to the extent of Rs. 10,000 and the balance of Rs. 36,496 was paid in the form of evacuee compensation claims. These claims had been purchased by the assessee in the open market for Rs. 25,555. The Income-tax Officer brought the difference between the purchase and the sale price of these claims to tax as income from business of dealing in evacuee compensation claims. He held that the assessee did not purchase these claims as capital investment, but with a view to sell them for profit. The transaction represents an adventure in the nature of trade and hence the profit was liable to be taxed as business profit. This view was affirmed by the Appellate Assistant Commissioner on appeal. The assessee went up to theTribunal. The Tribunal held that the intention of the assessee in buying these claims was to purchase a building for his own use. They were not purchased with a view to carry on any trade in such claims. It was a casual receipt not liable to tax as business income. On this view the Tribunal held that the difference of Rs. 10,937 was not liable to tax.

2. At the instance of the Commissioner of Income-tax the Tribunal has referred the following question of law for the opinion of this court:

'Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the amount of Rs. 10,937 was not profit arising out of an adventure in the nature of trade, but was receipt of a casual and non-recurring nature ?'

3. It is not disputed that the assessee made a single transaction of purchase of these claims. He did not sell it as such. He utilised the claims for purchase of a building for his use. From these facts the inference that the intention of the assessee was not to deal with such claims as a matter of business, cannot be said to be without any material. On this finding, the conclusion of the Tribunal that the receipt was of a casual and nonrecurring nature and not a profit from a business adventure was eminently justified.

4. In the result we answer the question in the affirmative, in favour of the assessee and against the department. The assessee will be entitled to costs which are assessed at Rs. 200.


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