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Issues Involved:
1. Whether the assessee-respondent, having not appealed against the order of the Appellate Assistant Commissioner, was entitled to contend in the department's appeal before the Tribunal that the entire profit arising out of the sale of land was not liable to assessment under rule 27 of the Appellate Tribunal Rules, 1946. Detailed Analysis: 1. Entitlement to Contend Under Rule 27 of the Appellate Tribunal Rules, 1946: The High Court was asked to determine if, under rule 27 of the Appellate Tribunal Rules, 1946, the assessee-respondent could argue that the entire profit from the sale of land was not liable to assessment, even though the assessee had not appealed against the order of the Appellate Assistant Commissioner. Facts: - The assessee purchased land, which was acquired by the State Government for Rs. 10,000 and subsequently leased back to the assessee for 999 years at a nominal rent. - The assessee sold part of this land for Rs. 1,26,870. - The Income-tax Officer assessed the net receipts as profits of business and fixed the amount at Rs. 1,16,870. - The Appellate Assistant Commissioner confirmed the nature of the receipts as profits but adjusted the net receipts to Rs. 14,814. - The assessee accepted this decision, but the department appealed to the Tribunal. - The assessee, in the department's appeal, sought to argue that the transaction was not an adventure in the nature of trade, invoking rule 27. Legal Provisions: - Section 30 of the Income-tax Act allows an assessee to appeal against the assessment. - Section 31(3) empowers the Appellate Assistant Commissioner to confirm, reduce, enhance, or annul the assessment. - Section 33(2) allows the Commissioner to appeal to the Tribunal. - Rule 27 of the Appellate Tribunal Rules, 1946, allows the respondent to support the order of the Appellate Assistant Commissioner on any grounds decided against him. Court's Reasoning: - The court analyzed the applicability of rule 27, comparing it to Order 41, rule 22(1) of the Civil Procedure Code. - The court noted that while rule 27 allows the respondent to support the order on any grounds decided against him, it does not permit the respondent to seek any variation in the order in his favor without filing a cross-objection. - The court emphasized that an assessment order is indivisible and cannot be split into parts for separate appeals or objections. - The court concluded that the assessee could argue that the receipts were not profits of a business to resist the department's appeal for an increase in the assessed income, but not to seek the annulment of the entire assessment order. Conclusion: - The court held that the assessee could contend that the receipts were not profits of a business to support the order of the Appellate Assistant Commissioner, provided the contention was aimed at resisting the department's appeal for an increased assessment and not at seeking the annulment of the entire assessment order. - The court answered the question in the negative, indicating that the assessee was not entitled to argue against the entire profit being liable to assessment if it implied seeking the annulment of the assessment order. Separate Judgments: - The judgment was delivered by M.C. Desai C.J. and concurred by S.C. Manchanda J.
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