Law: Income Tax Act, 1922

Section: 10(1)

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 1952-53 - Assessee-company was carrying on business in manufacture and sale of gadas - It sold certain gadas to a Charitable trust in which managing director of assessee was managing trustee - Said trust, on same day, identical goods sold to M who was customer of assessee at a price higher than price at which it was sold by assessee - ITO brought a sum, being difference between price at which assessee sold gadas to trust and price for which trust sold them to M, to income of assessee - Whether having regard to fact that managing director of assessee was moving spirit behind transactions and further that purchase was effected through normal channels of assessee, there was sufficient material to hold that sum in question was taxable income of assessee - Held, yes FACTS The assessee-company was carrying on business in the manufacture and sale of cotton cloth called gadas. The assessee purported to sell 69 bales of gadas to a charitable trust. On the same day, the trust claimed to have sold the identical goods to one M. The ITO brought sum of Rs. 26,000 being the difference between the price at which the assessee purported to sell the gadas to the trust and the price for which the trust was supposed to have sold to M. To the income of the assessee. The assessee objected to the inclusion of the amount on the ground that amount did not represent profits in its hands but was income earned by the trust. The ITO overruled this contention and taxed the said amount as income in the hands of the assessee. Appeals preferred by the assessee to the AAC and the Tribunal were unsuccessful. On reference : HELD The managing director of the assessee was R, and he was also the managing trustee of the trust. There was another institution called F charity Trust formed for the purpose of conducting a High School. R was also a member of the governing body of this institution. The ITO had referred to the fact that a sum of Rs. 31,000 in all had found its way to the education charity. It was quite clear that R was very much…

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