| Case ID |
d4ec70a9-1e8e-476f-865a-e08cee8b804d |
| Body |
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| Case Number |
IT REFERENCE No. 5 OF 1960 |
| Decision Date |
Mar 20, 1961 |
| Hearing Date |
|
| Decision |
The final decision of the case was in favor of the assessee, Rohtak and Hissar Dist. Electricity Supply Co. Ltd. The court held that the surplus amount of Rs. 2,51,576, which was realized from the sale of plant and machinery used in the distribution of electricity, was not chargeable to tax under section 10(2)(vii) of the Indian Income-tax Act, 1922. The court concluded that since the machinery had not been used in the assessee's business during any part of the accounting year, the surplus was not considered taxable income. This decision underscored the importance of the timing of asset sales and their use in the business for tax purposes. |
| Summary |
The case revolves around the tax implications of the surplus amount received from the sale of assets by the Rohtak and Hissar Dist. Electricity Supply Co. Ltd. The court examined the provisions of the Income-tax Act, 1961, and the earlier Indian Income-tax Act, 1922, particularly focusing on section 10(2)(vii) related to balancing charges. It was established that the assessee company, which had ceased its distribution business prior to the accounting year, sold its assets to a newly formed company. The key legal issue was whether the surplus amount generated from the sale was taxable. The court ruled that since the assets were not used in the business during the accounting period, the surplus was not liable for taxation. This case highlights crucial aspects of tax law regarding asset sales and the definitions of taxable income, making it significant for practitioners and stakeholders in the field of taxation. |
| Court |
Punjab High Court
|
| Entities Involved |
Commissioner of Income Tax,
Rohtak and Hissar Dist. Electricity Supply Co. Ltd.,
South Punjab Electricity Corporation (Private) Ltd.
|
| Judges |
Capoor, J.,
Grover, J.
|
| Lawyers |
Not available
|
| Petitioners |
Rohtak and Hissar Dist. Electricity Supply Co. Ltd.
|
| Respondents |
Commissioner of Income Tax
|
| Citations |
1962 SLD 405 = (1962) 45 ITR 539
|
| Other Citations |
CIT v. National Syndicate [1961] 41 ITR 225 (SC),
Crown Flour Mills v. CIT [1956] 29 ITR 733 (Punj.),
Gujrat Ginning & Manufacturing Co. v. CIT unreported,
Liquidators of Pursa Ltd. v. CIT [1954] 25 ITR 265 (SC)
|
| Laws Involved |
Income-tax Act, 1961,
Indian Income-tax Act, 1922
|
| Sections |
41(2),
10(2)(vii),
10(2)(vii)
|