Business receipts from service-line charges were held taxable where collections exceeded cost and arose from regular operations.

Amounts received from consumers for laying service lines were treated as part of the company's regular business operations, not as an isolated capital transaction. Even if the service lines were the company's property, the receipts were not limited to reimbursement of cost and included an excess over expenditure. Applying the principle that profits and gains arising from business are taxable under the income-tax law, the receipt's character depended on its commercial substance and its nexus with business activity. The excess amount was therefore taxable business income and not a capital receipt.

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Issues: Whether the excess received from consumers for laying service lines constituted capital receipt or taxable trading receipt.

Analysis: The service-line activity was treated as part of the company's regular business and not as an isolated venture. Even assuming the lines formed the company's property, the receipts were not confined to reimbursement of cost but included an amount over and above expenditure. Under section 10 of the Indian Income-tax Act, profits and gains arising from business are taxable, and the character of the receipt depended on its commercial substance and its connection with the business operations.

Conclusion: The excess received from consumers was taxable business income and not a capital receipt.

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