1950 (10) TMI 14 - HC - Income Tax

Summary

Issues:
1. Whether the loss arising from the sale of a sugar factory plant was a capital loss and could not be allowed as a deduction under Section 10(2)(vii) in computing income from other businesses?
2. Whether the assessee is entitled to claim loss on the sale of the sugar factory plant made during the year of account or even on sales which took place prior to the year of account?

Analysis:

Issue 1:
The case involved two applications under Section 66(1) of the Indian Income-tax Act regarding a loss of &8377; 55,380 from the sale of a sugar factory plant. The assessee, a limited company engaged in manufacturing glass and sugar, claimed the loss as a deduction under Section 10(2)(vii). The key contention was whether the sugar manufacturing business was separate from the glass manufacturing business, as deductions allowable are for profits and gains of the same business. The Appellate Tribunal found that the businesses were distinct with separate books of account and profit and loss accounts, indicating no interconnection. The Tribunal's findings supported that the loss was a capital loss, not a revenue loss, leading to a negative answer to the deduction claim under Section 10(2)(vii).

Issue 2:
The second question regarding the entitlement to claim loss on the sale of the sugar factory plant did not arise from the facts presented in the case or the Appellate Tribunal's order. As there was no basis for the second question, the court determined that it did not require an answer. Consequently, the court awarded costs to the Department, assessed at &8377; 300. The judgment concluded by stating that the second question did not arise and did not necessitate a response, thus upholding the negative answer to the deduction claim under Section 10(2)(vii) based on the Tribunal's factual findings.