Law:

Section:

Section 28(i) of the Income-tax Act, 1961 [corresponding to section 10(1) of the Indian Income-tax Act, 1922] - Business income - Chargeable as - Assessment year 1951-52 - Assessee was a public limited company carrying on business of banking - During relevant assessment year, assessee sold four items of property - ITO brought profits from sales proceeds to tax as its income - Tribunal, however, opined that assessee was also a dealer in real property and that profits from sales were assessable on that basis - On instant reference, it was seen that out of four items of property, three were admittedly purchased in Court sales in execution of decrees held by assessee against its debtor - Thus, those three properties represented converted form of stock-in-trade or banking business - However, so far as fourth item of property was concerned, it was house adjacent to company and thus directors though that it could usefully be acquired for purposes of company - Hence, assessee-company purchased said property for its own use which represented investment - Whether, on fact so far as first three items of property were concerned profit realised by their sale was income of money lending business assessable to tax - Held, yes - Whether however, so far as fourth item of property was concerned, profit made by transaction of its sale was not incidental to money-lending business of assessee - Held, yes FACTS The assessee was a public limited company carrying on the business of banking. It took over in some cases properties of its debtors in discharge of the loans advanced to them in the course of its banking business. Eventually, the assessee sold those properties. In the relevant assessment year the Department found that four items of properties had been disposed of by the bank, rejected the contention of the assessee that all these four items of properties had been acquired and held as investments and that it was compelled to sell the properties because of the amendment of the Banking Companies Act, the ITO took the view that the assessee purchased the properties in realisation of dues owing to it, with a view also to convert the properties into cash when a suitable opportunity…

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