| Case ID |
1ac8598d-fd01-46d7-a5bf-00ff00daf97f |
| Body |
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| Case Number |
IT REFERENCE No. 245 OF 1958 |
| Decision Date |
Sep 17, 1962 |
| Hearing Date |
|
| Decision |
The court held that the trucks sold by the assessee-firm, which were in use prior to their sale, should be regarded as being used for the purposes of the business as per section 10(2)(vii) of the Income-tax Act, 1922. The mere fact that the trucks were sold on the first day of the accounting year does not negate their status as being used for business purposes. The decision emphasized that an article in use doesn't require active employment in producing results and that passive use also qualifies under the law. The court concluded that the excess profit realized on the sale of the trucks could be deemed profits under section 10(2)(vii) together with the second proviso, thus ruling in favor of the revenue. |
| Summary |
In the case of IT REFERENCE No. 245 OF 1958, the Allahabad High Court examined the taxation implications of profits from the sale of motor trucks by a registered firm engaged in the transport business. The case revolved around the interpretation of sections 41(2) of the Income Tax Act, 1961 and 10(2)(vii) of the Income Tax Act, 1922. The central question was whether the profits from the sale of two trucks, which were sold on the first day of the accounting year, could be taxed as profits from business. The court determined that the trucks, though sold early in the accounting period, had been in use prior to their sale, thereby allowing the profits to be considered taxable. This case highlights the nuances of tax law regarding the definitions of 'use' in business contexts and sets a precedent for similar cases in the future. The ruling underlines the importance of understanding how the law interprets 'use' in both active and passive forms, which can significantly impact tax liabilities for businesses. This case is relevant for tax practitioners, accountants, and businesses involved in asset sales, providing insights into tax obligations and the interpretation of tax provisions. |
| Court |
Allahabad High Court
|
| Entities Involved |
Not available
|
| Judges |
M.C. Desai, C.J.,
Brijlal Gupta, J.
|
| Lawyers |
P.N. Pachauri for the Applicant,
Gopal Behari for the Respondent
|
| Petitioners |
Niranjan Lal Ram Chandra
|
| Respondents |
Commissioner of Income Tax
|
| Citations |
1963 SLD 439,
(1963) 49 ITR 177,
(1964) 9 TAX 30
|
| Other Citations |
Birendera Kumar Ghosh v. Emperor AIR 1925 PC 1,
Bhikaji Venkatesh v. CIT [1937] 5 ITR 626 (Nag.),
Central Provinces Manganese Ore Co. v. CIT [1937] 5 ITR 734 (Nag.),
CIT v. Dalmia Cement Co. [1945] 13 ITR 415 (Pat.),
CIT v. Viswanath Bhaskar Sathe [1937] 5 ITR 621 (Bom.),
Counsel of the City of Newcastle v. Royal Newcastle Hospital (1958-59) 100 Commonwealth Law Reports 1,
Liquidators of Pursa Ltd. v. CIT [1954] 25 ITR 265 (SC),
Moses v. Raywood [1911] 2 KB 271,
Nathmal Sriniwas v. CIT [1955] 28 ITR 473 (Pat.),
Rohtak and Hissar District Electricity Supply Co. Ltd. v. CIT [1962] 45 ITR 539 (Punj. & Har.),
Tromans v. Hodkinson [1903] 1 KB 30
|
| Laws Involved |
Income Tax Act, 1961,
Income Tax Act, 1922
|
| Sections |
41(2),
10(2)(vii)
|