Law:

Section:

Section 2(13) of the Income-tax Act, 1961 [Corresponding to section 2(4) of the Indian Income-tax Act, 1922] - Adventure in nature of trade - Assessee-firm carried on business of agency of cloth - It purchased silver bars in December 1941 and January 1942 and sold them in September 1944 at profit of Rs. 24,656 - Income-tax authorities held that this profit was income liable to income-tax as having accrued to assessee because of an adventure in nature of trade - It was found that assessee purchased silver bars at time when money utilised for making purchase could have been profitably used for reducing its liability in respect of a sum on which it was paying interest - Whether there was sufficient material to hold that transaction of purchase was entered into by assessee with sole object of making a profit on resale, hence, transaction could be held as an adventure in nature of trade - Held, yes FACTS The assessee-firm, was carrying on the business of agency of cloth and was constituted for that purpose. On 30-12-1941, the assessee purchased ten bars of silver and on 2-1-1942, another five bars of silver. The transaction was entered in the books of account of the assessee by debiting this amount in an account styled as "silver account" in the ledger maintained for the selling agency business. Those silver bars were sold at a net profit of Rs. 24,656. The income-tax authorities held that this sum of profit was income liable to income-tax as having accrued to the assessee because of an adventure in the nature of trade. The contention of the assessee was that the transaction of purchase and sale of silver, which the assessee had entered into, was an investment and was not an adventure in the nature of trade so that the extra amount realised was capital gain and not taxable income. The Tribunal upheld the decision of the income-tax authorities. On reference : HELD The following relevant facts had to be taken into consideration in order to answer the question referred : 1.That the transaction of purchase and sale of silver by the assessee was outside the line of regular business of the assessee. 2.That it was a solitary transaction of purchase and sale and no regular…

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