| Case ID |
ffde51e7-5ad7-49a7-9852-ab18911553e4 |
| Body |
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| Case Number |
CIVIL APPEALS Nos. 1594 AND 1595 OF 1968 |
| Decision Date |
Feb 20, 1969 |
| Hearing Date |
|
| Decision |
The Supreme Court held that the profits from the sale of the colliery were taxable as business profits. The transaction of prospecting, developing, and selling the colliery was considered a business operation, and the income was rightly taxable. Regarding the loss from the sale of the Dry Ice Factory, the Court found that the loss was suffered in the account year 1949-50, and could be allowed against the income of that year under section 24(1) of the 1922 Act. The High Court's decision on questions Nos. (1) and (3) was upheld, while the answer to question No. (4) was revised in favor of the company. |
| Summary |
This landmark case involved Karam Chand Thapar and Bros. (P.) Ltd. and the Commissioner of Income Tax, with the Supreme Court of India deciding on the taxability of profits from the sale of a colliery and the treatment of losses from the sale of a Dry Ice Factory. The Court examined the nature of the transactions, determining that the colliery sale was a business operation and thus taxable as business income. The case also addressed the timing of losses, with the Court ruling that the loss incurred from the factory sale was allowable against the income of the account year 1949-50 under the Indian Income-tax Act, 1922. The decision highlighted key aspects of tax law, including the distinction between capital gains and business income, and the set-off of losses. This case is significant for its interpretation of the Income-tax Act, 1961, and its impact on future tax assessments. The ruling emphasized the importance of understanding the nature of business transactions in determining tax liabilities, making it a critical reference for tax professionals and businesses involved in similar disputes. |
| Court |
Supreme Court of India
|
| Entities Involved |
Commissioner of Income Tax,
Karam Chand Thapar and Bros. (P.) Ltd.
|
| Judges |
J.C. Shah,
V. Ramaswami,
A.N. Grover
|
| Lawyers |
Sachin Choudhury,
T.A. Ramachandran,
D.N. Gupta,
D. Narasaraju,
S.K. Aiyar,
R.N. Sachthey,
B.D. Sharma
|
| Petitioners |
Karam Chand Thapar and Bros. (P.) Ltd.
|
| Respondents |
Commissioner of Income Tax
|
| Citations |
1969 SLD 619,
(1969) 74 ITR 26
|
| Other Citations |
Californian Copper Syndicate v. Harris [1904] 5 TC 159,
Commissioner of Taxes v. Melbourne Trust Ltd. [1914] AC 1001 (PC),
Gloucester Railway Carriage and Wagon Co. Ltd. v. Commissioner of Inland Revenue [1925] 12 TC 720 (HL),
Janki Ram Bahadur Ram v. CIT [1965] 57 19 ITR 21 (SC),
Imperial Tobacco Co. v Kelly [1943] 25 TC 292 (CA)
|
| Laws Involved |
Income-tax Act, 1961,
Indian Income-tax Act, 1922
|
| Sections |
4,
71,
3,
24
|