1962 (8) TMI 97 - HC - Income Tax

Summary

Issues:
1. Inclusion of a sum in the assessment of the assessee under section 41 of the Indian Income-tax Act for the assessment year 1955-56.
2. Inclusion of profit on the sale of shares in the income of the assessee for the assessment year 1956-57.

Analysis:
1. The first issue revolves around the inclusion of a sum of Rs. 3,122-8-0 in the assessment of the assessee for the assessment year 1955-56. The sum in question was received by the trustees on the liquidation of the B.E.S.T. Company Limited in respect of shares held by them. The Tribunal held that this amount was not assessable in the hands of the assessee as it was part of the corpus under the trust deed and not income receivable by the assessee. The Tribunal concluded that the provisions of the Indian Income-tax Act could not entitle the assessee to this amount. The court agreed with the Tribunal's reasoning, emphasizing that the amount could not be regarded as income, profits, or gains receivable by the trustees on behalf of the assessee, thus not making it assessable in his hands under section 41(2) of the Act.

2. The second issue concerns the inclusion of profit on the sale of shares in the income of the assessee for the assessment year 1956-57. The trustees, under the terms of the will, had sold some shares resulting in a surplus. The Appellate Assistant Commissioner included a portion of this surplus as profit on the sale of shares in the assessee's income. However, the Tribunal held that the entire surplus amount could not be regarded as received or receivable by the trustees on behalf of the assessee, thus not making it taxable in the hands of the assessee. The court concurred with the Tribunal's decision, stating that under the terms of the will, the profit made on the sale of shares was to be reinvested as part of the corpus, and the income from investments was to go to the assessee for his life. Therefore, the profit from the sale of shares was not taxable in the hands of the assessee.

In conclusion, the court answered both questions in the negative, affirming the Tribunal's decisions in both instances. The department was directed to pay the costs of the assessee.