Sale of loom hours treated as capital receipt, not business income, because they formed part of the profit-making structure.

Receipts from the sale of loom hours were capital receipts because the loom hours formed part of the assessee's profit-making structure rather than its trading operations. The surplus hours could not be fully used due to inadequacy in the preparatory section, and their transfer for value exhausted the asset in the transferee's hands. The amounts were therefore not profits from business and could not be treated as casual or non-recurring business income under the Act.

---

---

Issues: Whether the receipts from the sale of loom hours were revenue receipts chargeable to tax or capital receipts not liable to tax.

Analysis: The loom hours formed part of the assessee's profit-making structure and were not a product of its trading operations. The assessee could not utilise the surplus hours because of the inadequacy of its preparatory section, and the transfers were made for value with the asset exhausted in the hands of the transferee. The receipts were therefore not earned as profits from the business, nor could they be treated as casual and non-recurring income arising from business within the meaning of the Act.

Conclusion: The receipts were capital receipts and not revenue receipts liable to tax.

---