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Issues Involved:
1. Jurisdiction of the Appellate Assistant Commissioner under Section 31 of the Income-tax Act. 2. Classification of the sum of Rs. 13,197 as capital receipt or business income. Issue-wise Detailed Analysis: 1. Jurisdiction of the Appellate Assistant Commissioner under Section 31 of the Income-tax Act: The primary question was whether the Appellate Assistant Commissioner (AAC) had the jurisdiction to include and assess the sum of Rs. 9,397 after remand, even though this amount was not part of the original appeal for the assessment year 1944-45. The court noted that the appeal initially addressed only the sum of Rs. 3,800. However, under Section 31(3) of the Act, the AAC has the power to "confirm, reduce, enhance, or annul the assessment." This power is not restricted to the subject-matter of the appeal but extends to the entire assessment order. The court referenced the case of Commissioner of Income-tax Punjab v. Nawab Shaw Nawaz Khan [1938] 6 I.T.R. 370, which held that once an appeal is preferred, the AAC can enhance the assessment even if the Commissioner did not appeal against the adverse decision. The court concluded that the AAC was within his rights to include the sum of Rs. 9,397 in the assessable income, rejecting the assessee's contention that the AAC overstepped his jurisdiction. Thus, the answer to the first question was in the affirmative and against the assessee. 2. Classification of the sum of Rs. 13,197 as capital receipt or business income: The second issue involved determining whether the sum of Rs. 13,197, consisting of Rs. 9,397 from the sale of plots and Rs. 3,800 from the sale of fruit shop buildings, should be classified as capital receipt or business income. The court first examined the Rs. 3,800 from the sale of fruit shop buildings, concluding that it was a capital receipt, as there was no element of business in the sale of those sites. Regarding the Rs. 9,397, the court considered whether the sale of plots constituted an adventure in the nature of trade. The court emphasized that each case must be decided on its own facts, and no hard and fast rule could be laid down. The court referred to the definition of "business" in Section 2(4) of the Act, which includes "any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture." The court distinguished between an owner selling property to convert an investment into money and a speculator purchasing property to sell it for profit. The court concluded that the sale of plots by the assessee did not constitute an adventure in the nature of trade, as the land was not acquired with the intention of selling it for profit. The court referenced Hudson's Bay Co. v. Stevens [1909] 5 Tax Cas. 424, where it was noted that a landowner selling plots with roads and sewers does so as an owner, not as a land speculator. Thus, the Rs. 9,397 was also deemed a capital receipt. In conclusion, the court answered the second question in the negative and in favor of the assessee, determining that the sum of Rs. 13,197 was exempt from tax. The assessee was entitled to costs fixed at Rs. 250.
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