| Case ID |
04099b4d-83d2-4fdb-91bb-2c8d8e717ee7 |
| Body |
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| Case Number |
IT MISC. CASE No. 109 OF 1963 |
| Decision Date |
Dec 07, 1965 |
| Hearing Date |
|
| Decision |
The Allahabad High Court ruled that the income derived from the sale of gold by the assessee was assessable as business income. It was determined that the assessee had treated the gold bars as stock-in-trade of his business. The court held that the valuation of the gold bars for tax purposes should have been based on the market value prevailing on the date of the partial partition (June 7, 1943), rather than the original cost price. The tribunal's finding that the assessee was engaged in trading and that the gold formed part of his stock-in-trade was upheld. The case highlighted the distinction between capital assets and stock-in-trade, emphasizing that assets can change character upon conversion into business assets. |
| Summary |
In the landmark case of Gangadhar Babu Lal v. Commissioner of INCOME TAX, the Allahabad High Court examined the nature of income derived from the sale of gold by a karta of a Hindu Undivided Family (HUF). The court addressed whether the profits from the sale of gold should be treated as business income or capital gains. The HUF had previously purchased seven patlas of gold, and upon a partial partition of the family business, these assets were allocated to the karta. The court ruled that the income from the sale of gold was assessable as business income under Section 28(i) of the Income-tax Act, 1961, aligning with previous rulings regarding the treatment of capital assets versus stock-in-trade. The decision underscored important tax implications for individuals engaged in trading activities, particularly in the context of inherited assets. This case remains relevant for tax professionals and businesses navigating asset classification and tax liabilities. |
| Court |
Allahabad High Court
|
| Entities Involved |
Not available
|
| Judges |
M.C. Desai, C.J.,
S.C. Manchanda, J
|
| Lawyers |
R.L. Gulati,
R.K. Gulati,
S.C. Das
|
| Petitioners |
Gangadhar Babu Lal
|
| Respondents |
Commissioner of INCOME TAX
|
| Citations |
1966 SLD 301 = (1966) 62 ITR 718
|
| Other Citations |
CIT v. Bai Shirinbai K. Kooka [1962] 46 ITR 86 (SC),
CIT v. Buckingham and Carnatic Co. Ltd. [1935] 3 ITR 384 (PC),
CIT v. Solomon & Sons [1933] 1 ITR 324 (Rangoon),
Francis Vallabarayar v. CIT [1960] 40 ITR 426 (Mad.),
Gangadhar Babulal v. CIT [1964] 51 ITR 841 (All.),
Indian Iron & Steel Co. Ltd. v. CIT [1943] 11 ITR 328 (PC),
Jogta Coal Co. Ltd. v. CIT [1959] 36 ITR 521 (SC),
Kalooram Govindram v. CIT [1965] 57 ITR 335 (SC),
Narain Swadeshi Weaving Mills v. CEPT [1954] 26 ITR 765 (SC),
Ramnarain Sons (P.) Ltd. v. CIT [1961] 41 ITR 534 (SC),
G. Venkataswami Naidu & Co. v. CIT [1959] 35 ITR 594 (SC),
A.H. Wadia v. CIT [1949] 17 ITR 63 (FC)
|
| Laws Involved |
Income-tax Act, 1961,
Indian Income-tax Act, 1922
|
| Sections |
28(i),
10(1)
|