Law: Income Tax Act, 1922

Section: 10(2)(vii)

(Appeal by special leave from the judgment and order of the Kerala High Court dated September 17, 1964, in Income-tax Referred Case No. 62 of 1963). Income-tax-Depreciation-Balancing charge-Conditions for application of provisions after amendment in 1949-Provisions whether applicable to closing down sale-Indian Income-tax Act, 1922, S. 10(2)(vii), prov. II (after amendment in 1949), The words "whether during the continuance of the business or after the cessation thereof" inserted in 1949 in the second proviso to section 10(2)(vii) of the Indian Income-tax Act, 1922, eliminated the third condition which had been laid down in Commissioner of Income-tax v. Express Newspapers Ltd. (1964) 53 I T R 250 (S C), for the applicability of the proviso. viz., that the machinery or plant shall have been sold when the business was being carried on and not for the purpose of closing it down or winding it asp. Once that condition disappears as a result of the amendment in 1949, only the first two conditions remain and all that has to be seen, for the purpose of taxing the excess realised over the written down value up to the original cost of the machinery or plant sold, is whether during the entire previous year or a part of it the business has been carried on by the assessee and that the machinery or plant has been used in the business. The assessee, who was running the business of plying buses, plied the buses for some time in the previous year and sold them in that year. The question was whether the amount realized by him in excess of their written down value up to their original e is taxable under the second proviso to section 10(2)(vii) : Held, accordingly, that, even on the assumption that the sale of the buses was a closing down sale or realisation sale, count was none the less taxable, since the sale was made after the amendment of the second proviso to section 10(2)(vii) by the Act No. 67 of 1949. Commissioner of Income-tax v. Ajax Products Ltd. (1965) 55 I T R 741 (S C) applied. Commissioner of Income-tax v. Express Newspapers Ltd. (19: I T R 250 (S G) ; Commissioner of Income-tax v. R. R. Ramakrishna Pillai (1967) 66 I T R 725 (S C) ; Commissioner…