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Interpretation of whether surplus from the sale of lands should be considered as capital accretion or taxable profits in a money-lending business. Analysis: The case involved a Hindu undivided family engaged in money-lending business, where lands taken from debtors were sold during the accounting year. The Income Tax Officer treated these lands as part of the business's stock-in-trade, resulting in profits from the sale being taxed. The Appellate Assistant Commissioner and the Income Tax Appellate Tribunal upheld this decision, considering the lands as assets of the money-lending business. The Tribunal noted that the income from the lands was used in the business and accounted for village-wise in the assessees' books. The assessee argued that the funds used for cultivation did not come from the money-lending business, but this claim was not substantiated with evidence challenging the facts presented by the Income Tax Officer. The counsel for the assessee relied on legal precedent to argue that specific elements must be present for lands acquired in lieu of debts to be considered part of the stock-in-trade. However, the court rejected this argument, stating that even if not all elements are present, the lands could still be deemed as part of the business assets. The court referenced previous judgments to support its decision, emphasizing that the department's conclusion aligns with established principles. The court ruled against the assessee, upholding the department's assessment and ordering the assessee to pay costs to the respondent. The judgment clarified the treatment of surplus from land sales in a money-lending business, affirming the taxation of profits derived from such transactions based on the assets' integration into the business operations.
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