Law:

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Section 28(i) of the Income-tax Act, 1961 - Business income - Assessable as - Assessee was dealing in copper bars - His consignments of copper bars while on way from USA to India were seized by Pakistani authorities during hostilities in 1965 - Assessee was paid for said goods by insurers, but owing to devaluation of rupee he received excess amount, which was taxed by ITO treating it as trading receipt - Whether said amount, having been received as part of payment for trading assets, was a trading receipt and, thus, liable to tax - Held, yes FACTS The assessee was doing business in copper bars. His two consignments of the said goods were on board via Karachi when they were seized by the Pakistani authorities due to hostilities between Pakistan and India in September 1965. The assessee's claim was satisfied by the insurers and it received an excess amount of Rs. 1,13,745 as a result of devaluation of rupee. The ITO brought the said excess amount to tax on the ground that it was a trading receipt The AAC accepted the assessee's appeal, but on the revenue's appeal the Tribunal restored the ITO's order. On reference: HELD In view of the decision of the Division Bench of the High Court in CIT v. IBM World Trade Corpn. [1986] 161 ITR 673 (Bom), the answer to the question whether loss was a trade loss or not, depended on the answer to the question whether said loss was in respect of trading asset or capital asset. In the instant case, the Tribunal had found that the assessee's business was in copper bars. They were trading assets. They were seized and the insurers paid for them. The said amount was part of that payment. The Tribunal, therefore, rightly held that the said amount was a trading receipt and was taxable. CASES REFERRED TO CIT v. Mehboob Productions (P.) Ltd. [1969] 74 ITR 676 (Bom.), CIT v. IBM World Trade Corpn.[1986] 161ITR 673 (Bom.) andSutlej Cotton Mills Ltd. v. CIT [1979] 116 ITR 1 (SC). G.S. Pikale for the Applicant. G.S. Jetley, Mrs. Manjula Singh and K.C. Sidhwa for the Respondent. JUDGMENT Bharucha, J.-The assessee was doing business in copper bars. He imported two consignments of copper bars from the United States of America. The value…

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