Law:

Section:

Section 28(i) of the Income-tax Act, 1961 - Business income-Chargeable as - Assessment year 1964-65 - Assessee purchased an assignment at decree lesser price - Thereafter he purchased a house from debtor and adjusted decree amount in part payment of consideration for sale - Whether difference between value of decree and consideration paid for assignment of decree was profit made by assessee in course of his business and, therefore, was liable to be a assessed - Held, yes. FACTS The assessee who was a pawn-broker obtained an assignment of a decree for Rs. 8,000 for a consideration of Rs. 4,000. During the relevant previous year he purchased some house property from the -debtor for a consideration of Rs. 21,500. In part payment of the consideration for the sale, a sum of Rs. 8,000 due under the decree was set off and the balance of consideration was paid in cash. The ITO considered that the assessee had made a profit of Rs. 4,000 in the transaction relating to the assignment of the decree and brought this to tax as business profit. The AAC upheld the order of the ITO holding that the object of getting the assignment of the decree was purely to make a profit and that the assessee did not get the assignment of the decree for the purpose of facilitating the purchase of the property itself. The Tribunal confirmed the view taken by the AAC On reference : HELD No doubt that on the facts and circumstances of the instant case the difference of Rs. 4,000 between the value of the decree and the consideration paid for the assignment was a profit made by the assessee in the course of his business. When the assessee purchased the decree on payment of Rs. 4,000 certainly he should have intended to execute the decree and realise the amount due under the decree. The fact that without the necessity of executing the decree and realising the money he was able to purchase the property of the -debtor by private negotiation and got the decree amount set off against the consideration made no difference. The absence of any prior or subsequent dealings of purchase of decree by the assessee had also no significance because even a first venture could be an adventure in the nature of trade…

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