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Issues Involved:
1. Inclusion of Rs. 70,860 in the total income of Maneklal for the assessment year 1957-58 under section 16(3)(a)(iii) of the Income-tax Act, 1922. 2. Inclusion of Rs. 5,104 in the total income of Maneklal for the assessment year 1958-59 under section 16(3)(a)(iii) of the Income-tax Act, 1922. 3. Inclusion of Rs. 4,183 in the total income of Maneklal for the assessment year 1959-60 under section 16(3)(a)(iii) of the Income-tax Act, 1922. 4. Inclusion of Rs. 5,105 in the total income of Maneklal for the assessment year 1959-60 under section 16(3)(a)(iii) of the Income-tax Act, 1922. Issue-wise Detailed Analysis: 1. Inclusion of Rs. 70,860 for Assessment Year 1957-58: The primary question was whether the surplus of Rs. 70,860, resulting from the sale of shares gifted by Maneklal to his wife, constituted income arising directly or indirectly from the transferred assets under section 16(3)(a)(iii). The argument presented by the assessee's counsel was that "income" under this section should not include "capital gains" from the sale of the transferred assets. However, the court held that "income" as defined in section 2(6C) includes "capital gains" chargeable under section 12B. The court reasoned that the profits or gains from the sale of the asset arise from the asset itself, even though the operation causing the income is the sale. Thus, the Rs. 70,860 was considered income arising from the transferred assets and was liable to be included in Maneklal's total income for the assessment year 1957-58. The court answered this question in the affirmative. 2. Inclusion of Rs. 5,104 for Assessment Year 1958-59: The issue was whether the interest earned from the sale proceeds of the transferred assets should be included in the total income of Maneklal. The court noted that the value of the transferred assets at the date of transfer was Rs. 69,730, and the sale proceeds were Rs. 1,54,800, resulting in a gain of Rs. 70,860. The court held that only the interest attributable to the value of the transferred assets (Rs. 69,730) should be included in Maneklal's total income. The interest attributable to the surplus (Rs. 70,860) should not be included as it was income from the income, not from the transferred assets. The court answered this question in the negative. 3. Inclusion of Rs. 4,183 for Assessment Year 1959-60: The assessee's counsel did not press this question, and the conclusion of the Tribunal was accepted as correct. The court answered this question in the affirmative. 4. Inclusion of Rs. 5,105 for Assessment Year 1959-60: Similar to the second issue, this question concerned whether the interest from the sale proceeds of the transferred assets should be included in Maneklal's total income. The court reiterated that only the interest attributable to the value of the transferred assets (Rs. 69,730) should be included, and the interest attributable to the surplus (Rs. 70,860) should not be included. The court answered this question in the negative. Conclusion: The court answered the first question in the affirmative, confirming the inclusion of Rs. 70,860 in Maneklal's total income for the assessment year 1957-58. Questions two and four were answered in the negative, excluding Rs. 5,104 and Rs. 5,105 from Maneklal's total income for the assessment years 1958-59 and 1959-60, respectively. Question three was answered in the affirmative, accepting the inclusion of Rs. 4,183 in Maneklal's total income for the assessment year 1959-60. There was no order as to costs since both the department and the assessee had partial success.
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