Law:

Section:

Section 28(i) of the Income-tax Act, 1961 [Corresponding to section 10 of the Indian Income-tax Act, 1922] - Business income - Chargeable as - Assessment year 1960-61 – Assessee-company purchased land in 1946 - In 1958 land was acquired by Improvement Trust and certain compensation was paid to assessee - Assessee had not developed property nor had any idea to effect sale of property by parcelling out same - Further assessee-company had never sold any property since its incorporation and loan which was obtained by assessee in acquiring property in question was repaid by increasing share capital – Whether, on facts, it could be said that assessee had no intention to undertake adventure in nature of trade - Held, yes – Whether, therefore, surplus realised by assessee on acquisition of its property was not taxable under section 10 of 1922 Act – Held, yes FACTS In 1946, the assessee-company purchased a land. During accounting year relevant to the assessment year 1959-60, the land was acquired by an Improvement Trust and the assessee received certain compensation. In the assessment for the relevant assessment year, the assessee claimed that the difference in value between the cost of purchase made by the assessee and the amount of compensation did not arise from an adventure in the nature of trade. The ITO found that the property was purchased by the assessee with borrowed capital that the property was not an income-yielding asset and that purchase, development and sale of immovable properties fell within the assessee's usual objects of business as mentioned in several clauses of its memorandum of association. The ITO thus held that the surplus arising in its hands consequent to the acquisition was liable to be taxed as profit under section 10 of the 1922 Act. On appeal, the AAC held that the said surplus could not be assessed under section 10 of the 1922 Act but that the same would be liable to capital gains tax. On further appeal, the Tribunal concluded that the assessee had not developed the property nor was there any evidence to indicate that the assessee had any intention to effect sale of the property by parcelling out the same; that the property was in the…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492