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Issues:
1. Whether the agricultural properties acquired during the money-lending business were held as capital assets or stock-in-trade. 2. Whether the profits derived from the sale of agricultural properties are taxable as income. Analysis: Issue 1: The case involved determining whether the agricultural properties acquired during the money-lending business were held as capital assets or stock-in-trade. The assessee maintained separate accounts for money-lending and general business, with an inter-connecting current account. The income tax authorities and the Tribunal concluded that these properties were stock-in-trade based on the evidence that the properties were dealt with in a manner consistent with trading assets. The Tribunal considered the length of time the properties were held and the reason for their sale, due to tenancy legislation, in reaching this conclusion. The court upheld this finding, stating that the properties were indeed stock-in-trade based on the facts presented. Issue 2: Regarding the taxation of profits derived from the sale of agricultural properties, the Appellate Assistant Commissioner and the Tribunal held that the profits were taxable as the lands were considered stock-in-trade. The assessee contended that the lands were held as capital assets due to the circumstances of their acquisition and sale. However, the court cited previous judgments emphasizing that the use of income from the property for business purposes indicates it is stock-in-trade. The court referred to the principle that if the income of the property acquired during business is used for business purposes, it is stock-in-trade. The court affirmed the decision that the profits from the sale of the agricultural properties were taxable income. In conclusion, the court answered the question in the affirmative, stating that the profits derived from the sale of the agricultural properties were indeed taxable income. The assessee was directed to pay the costs of the department.
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