| Case ID |
2b545055-1deb-4fbc-9d6a-8d0a6ebd27c0 |
| Body |
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| Case Number |
IT REFERENCE No. 304 OF 1975 |
| Decision Date |
Mar 13, 1978 |
| Hearing Date |
|
| Decision |
The court held that the profit of Rs. 1,95,883 which accrued to the assessee on account of devaluation of the Indian rupee was business income. The Tribunal found that the surplus arose in the course of trade and constituted a trading profit. The income accrued at the time of devaluation and not at the time of adjustment of accounts. Thus, the Tribunal was directed to ascertain the exact amount of foreign exchange receivable by the assessee on the date of devaluation, which was September 16, 1949. The decision confirmed that the surplus should be taxed in the accounting year it arose and became receivable by the assessee, irrespective of when it was shown to have accrued in the books. |
| Summary |
In the case of Khandelwal Brothers (P.) Ltd. v. Commissioner of Income Tax, the Calcutta High Court addressed the tax implications of a profit arising from the devaluation of the Indian rupee. The court determined that the profit of Rs. 1,95,883 was business income and should be taxed in the year of devaluation, rather than when it was reported in the accounts. The ruling emphasized the importance of timing in recognizing income related to foreign exchange transactions. The judgment highlighted that the surplus was a result of trade operations and should be treated as a trading profit. This case underscores the complexities of international transactions and the taxation of foreign income, making it a significant reference point for similar cases in the future. |
| Court |
Calcutta High Court
|
| Entities Involved |
Not available
|
| Judges |
Dipak Kumar Sen,
C.K. Banerji
|
| Lawyers |
Kalyan Ray,
S.N. Dutt,
Ajit Sengupta
|
| Petitioners |
Khandelwal Brothers (P.) Ltd.
|
| Respondents |
Commissioner of Income Tax
|
| Citations |
1979 SLD 922,
(1979) 117 ITR 452
|
| Other Citations |
Badridas Daga v. CIT [1958] 34 ITR 10 (SC),
Bank of Cochin Ltd. v. CIT [1974] 94 ITR 93 (Ker.),
CIT v. Canara Bank Ltd. [1967] 63 ITR 328 (SC),
CIT v. Mehboob Productions (P.) Ltd. [1969] 74 ITR 676 (Bom.),
CIT v. Mogul Line Ltd. [1962] 46 ITR 590 (Bom.),
CIT v. Nainital Bank Ltd. [1965] 55 ITR 707 (SC),
CIT v. Tata Locomotive and Engineering Co. Ltd. [1966] 60 ITR 405 (SC),
Davies v. Shell Co. of China Ltd. [1951] 32 TC 133; [1952] 22 ITR (Supp.) 1 (CA),
Hindustan Aircraft Ltd. v. CIT [1963] 49 ITR 471 (Mys.),
Imperial Tobacco Co. v. Kelly [1943] 25 TC 292 (CA),
Landes Brothers v. Simpson [1934] 19 TC 62 (KB),
M. Shamsuddin & Co. v. CIT [1973] 90 ITR 323 (Ker.),
Sutlej Cotton Mills Ltd. v. CIT [1971] 81 ITR 641 (Cal.)
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
28(i)
|