Law: Income Tax Act, 1922

Section: 10,10(2)(vii)

(a) Income-tax Act (XI of 1922)---S. 10 (2) (vii)--fronsactiun icy nature of trade--Test--Sale of mining funds, plants and machinery to 100% subsidiary is a venture in the nature of trade--On realisation--Sale the excess over written down value of machinery not exceeding difference of original cost and written down value is liable to be brought to tax under. 10 (2) (vii)--Profit from such sale therefore, is taxable incom. (1958) 34 I T R 336 (Bom.); (1963) 47 I T R 565 (Cal.) and (1969) 72 I T R 603 (SC) ref. (b) Admission-- Admission of counsel is substantive evidence against, his client. Income-tax Act (XI of 1922)-- ---5. 10--Appeal--Tribunal must take into consideration all relevant facts and circumstances on record to ascertain whether a transaction is a venture in nature of trade for their total effect determines true character of the transaction--Where Tribunal failed to give reasons for brushing aside essential and relevant facts found by department, it misdirected itself in law by ignoring material on record in arriving at conclusion. (1965) 57 I T R 21 (SC); (1968) 68 I T R 573 (SC) and (1969) 72 I T R 603 (SC) ref. (1958) 34 I T R 336(Bom.) and Commissioner of Income-tax v. Mugneeram Bangur & Co. (1963) 47 I T R 565 (Cal.) no more a good law. JUDGMENT DEB, J.--The following questions of law are involved in this reference under section 66 (1) of the Indian Income-tax Act, 1922. 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the sale of plant and machinery by the assessee to Messrs Kariatari Mica Mining Co. Ltd. took place before the previous year and in excluding the sum of Rs.52,778 out of the assessee's total income? 2. Whether, on the facts and in the circumstances of the cases, the Tribunal was right in holding that the sale by the assessee of mines and mining, rights to Messrs Kariatari Mica Mining Co. Ltd. did not amount to a venture in the nature of trade or a trading transaction and as such the sum of Rs.4,21,023 was not assessable as business profit? 3. Whether, on the facts tend in the circumstances of the case, the Tribunal was right in holding that in any event no profit was earned…

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