1971 (8) TMI 33 - SC - Income Tax

Property purchased in 1933 for money-lending business upheld as business asset upon sale.

Pandit Narain Dutt Chhimwal Versus Commissioner of Income-Tax, Uttar Pradesh

Pandit Narain Dutt Chhimwal Versus Commissioner of Income-Tax, Uttar Pradesh - [1972] 83 ITR 413 (SC) Issues:1. Characterization of property purchased by assessee in 1933.2. Treatment of excess amount realized on sale of property by assessee.3. Determination of whether the property constituted profits and gains of money-lending business.4. Consideration of circumstances by the High Court in relation to Tribunal's decision.Analysis:1. The judgment dealt with the characterization of the property purchased by the assessee in 1933. The Income-tax Officer considered the property as stock-in-trade of the money-lending business, assessing the excess amount realized on sale as business income. The Appellate Tribunal concluded that the property remained part of the money-lending business, leading to a dispute over the nature of the asset.2. The issue of the treatment of the excess amount realized on the sale of the property was crucial. The Income-tax Officer assessed a net gain, which was modified by the Appellate Assistant Commissioner and further adjusted by the Appellate Tribunal. The Tribunal calculated the profits at Rs. 52,313, leading to the question of whether this amount constituted profits and gains of the money-lending business.3. The central question revolved around whether the amount realized on the sale of the property formed part of the profits and gains of the money-lending business. The High Court considered various circumstances, including the debiting of a sum to the money-lending account and the absence of income or expenditure related to the property in the revenue account. The Tribunal's decision was upheld, emphasizing the property's continued character as a business asset.4. The High Court's consideration of the circumstances highlighted the lack of explanation for certain debits in the money-lending account and the absence of income or expenditure related to the property in the revenue account. The Tribunal's decision was supported, indicating that the property purchased in 1933 retained its character as a business asset until its sale in 1948. The appeal was dismissed, affirming the Tribunal's conclusion and reasoning.In conclusion, the judgment addressed the characterization of the property purchased by the assessee, the treatment of the excess amount realized on its sale, and the determination of whether the proceeds constituted profits of the money-lending business. The High Court's analysis of relevant circumstances supported the Tribunal's decision, ultimately leading to the dismissal of the appeal.