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R.M.V.R.M. Virappa Chettiar Vs. the Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai
Decided On
Reported inAIR1930Mad123; (1930)58MLJ95
AppellantR.M.V.R.M. Virappa Chettiar
RespondentThe Commissioner of Income-tax
Cases ReferredLtd. v. Ogg
Excerpt:
- - the income-tax officer in this case proceeds on what he says is a well-known fact that in the course of their business abroad and as a part of it nattukottai chetties purchase land and other properties when they are cheap and hold them until such time as they are able to sell them at a good price and that during the period these properties are in their possession the income derived, if any, on the one hand and the expense of maintenance, if any, on the other are included in their business accounts......if any, on the one hand and the expense of maintenance, if any, on the other are included in their business accounts. in the present case, there is no evidence afforded by the books that the income derived and the expense incurred were included and made part of the firm's business accounts. all that appears is that these chetties purchased one item of property in 1919 and another item of property in 1924 and that these were sold in 1926-27. on this fact and on this general presumption which the income-tax officer thinks fit to draw in these cases he has treated the difference in prices as a business profit. there is no evidence about what was done with the income. the books are not before the income-tax officer and there is nothing to show that the income and expenses were, as a matter.....
Judgment:

Kumaraswami Sastri, J.

1. The question referred to us is, whether there is any evidence to justify the finding that the purchase and sale of lands formed part of any business which the assessee was carrying on. The Income-tax Officer in this case proceeds on what he says is a well-known fact that in the course of their business abroad and as a part of it Nattukottai Chetties purchase land and other properties when they are cheap and hold them until such time as they are able to sell them at a good price and that during the period these properties are in their possession the income derived, if any, on the one hand and the expense of maintenance, if any, on the other are included in their business accounts. In the present case, there is no evidence afforded by the books that the income derived and the expense incurred were included and made part of the firm's business accounts. All that appears is that these Chetties purchased one item of property in 1919 and another item of property in 1924 and that these were sold in 1926-27. On this fact and on this general presumption which the Income-tax Officer thinks fit to draw in these cases he has treated the difference in prices as a business profit. There is no evidence about what was done with the income. The books are not before the Income-tax Officer and there is nothing to show that the income and expenses were, as a matter of fact, brought into the partnership accounts. There is nothing to show that the profits were made by the operation of the petitioner's money-lending business and were not in the nature of capital profits on the sale of an investment. As pointed out by Sankey, J., in T. Beynon & Co., Ltd. v. Ogg (1918) 7 Tax Cases 125 ordinarily profit arising out of an isolated transaction outside the scope of the business does not fall to be chargeable as a business profit. On these facts we are not prepared to say that there is legal evidence on which the assessee can be assessed on the ground that it is part of the profits of the business carried on. The petitioner will be entitled to his costs, Rs. 250.


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