1963 (4) TMI 96 - HC - Income Tax

Summary

Issues Involved:
1. Taxability of profit from the sale of gold.
2. Assessability of rent from houses forming part of impartible property.
3. Taxability of profit from the sale of shares and securities.

Comprehensive Issue-Wise Detailed Analysis:

1. Taxability of Profit from the Sale of Gold:
M.J.C. 342:
- Question: Whether the receipt of Rs. 13,43,469 from the sale of gold is taxable as income, profits, and gains for the assessment year 1945-46?
- Analysis: The court examined the intention behind the purchase and sale of gold. The assessee claimed the gold was bought for safety during wartime and sold due to pressing necessities. However, the Tribunal found inconsistencies in the assessee's explanation, noting that large sums were still kept in banks and cash. The Tribunal concluded that the gold was sold for profit, not due to pressing necessities, as the assessee's conduct indicated a profit motive. The court upheld the Tribunal's finding, stating it was based on reasonable evidence and thus, the profit from the sale of gold was taxable.

M.J.C. 346:
- Question: Whether the receipt of Rs. 33,481 from the sale of gold is taxable as income, profits, and gains for the assessment year 1946-47?
- Analysis: Similar to M.J.C. 342, the court found that the sale of gold was driven by a profit motive rather than pressing necessities. The Tribunal's finding was based on the frequency and timing of transactions, indicating a business activity. The court affirmed the Tribunal's decision, making the profit from the sale of gold taxable.

2. Assessability of Rent from Houses Forming Part of Impartible Property:
M.J.C. 342 and M.J.C. 346:
- Question: Whether the amount of rent for houses forming part of the impartible property is assessable in the hands of the assessee?
- Analysis: The Tribunal and income-tax authorities held that the rent from houses was taxable. The assessee did not present any argument to challenge this decision. The court, therefore, affirmed the Tribunal's decision, making the rent assessable in the hands of the assessee.

3. Taxability of Profit from the Sale of Shares and Securities:
M.J.C. 346:
- Question: Whether the amount of Rs. 88,522 received as profit from the sale of shares and securities is liable to be taxed?
- Analysis: The court examined the assessee's claim that the shares were bought to gain control over a company, not for trading. However, the Tribunal found that the frequency and nature of transactions indicated a business activity. The Tribunal noted that the assessee had borrowed money to purchase shares, further supporting the business motive. The court upheld the Tribunal's finding, stating it was based on substantial evidence, making the profit from the sale of shares taxable.

Conclusion:
All the questions in both cases were answered in the affirmative, in favor of the department and against the assessee. The court upheld the Tribunal's findings that the transactions in question were driven by a profit motive and constituted business activities, thus making the profits taxable. The assessee was ordered to pay the costs to the department, with a consolidated hearing fee of Rs. 250 in both cases.