Law: Income Tax Act (XI of 1922)

Section: 12-B,2(4),2(6-C),4(1),4(3),4(vii),6,10

  Income-tax Act (XI of 1922), S. 12-B read with Ss. 2(4), (6-C), 4(1), (3)(vii), 6 & 10 "Business" "Capital gain" "Income" Capital gain" not "income" for purposes of charge under Ss. 4 & 10-Profits or gains which accrue or arrive from "business" are alone assessable-Receipt of casual nature not arising from "business"-Not to be included in income of any previous year.   Income-tax Act (XI of 1922), S. 12-B read with Ss. 2(4), (6-C), 4(1), (3)(vii), 6 & 10 "Fixed capital" and "circulating capital' Distinction Assessee ordinary resident of Pakistan acting as selling agent for manufacturers in United Kingdom on commission payable in pounds sterling in United Kingdom-Periodical statements of account of commission in pounds sterling being sent by principals, assessee converting amount into Pakistan currency and crediting same to "commission, account"--Revaluation of Pakistan currency (in 1955) increasing value of pound sterling from Rs. 9-4-3 to Rs. 13-5-3-Increase in amount of commission thus arising received by assessee front U. K.-Whether "capital gain" not assessable to tax-Amount of commission collected in pounds sterling in U. K.-Whether assessee's temporary investment in U. K. before being brought to Pakistan.   Fixed capital represents the amount spent on setting up structure of the business, e.g., land and machinery for manufacture of goods, the sum paid for acquiring a concern and the amount spent on purchase of stock and securities, etc. Appreciation of their value is not a trading receipt and their depreciation not a trading expense to be incorporated in the profit and loss account. Circulating or floating capital is the amount spent on running the concern, in `carrying on' and `carrying out' `an operation of business for profit making', for example, purchase of raw-material, pay-roll, Directors' fee, etc. Literally, it is that capital which keeps circulating and floating in the course of business and does not constitute its outer frame-work. The amount spent in this account is a trading expense and an…