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Issues Involved:
1. Applicability of section 10(3) of the Income-tax Act, 1961. 2. Nature of receipt of Rs. 1,01,572. 3. Taxability of total receipts as revenue receipt. 4. Nature of excess amount of Rs. 41,586.42 as capital accretion. Summary: Issue 1: Applicability of section 10(3) of the Income-tax Act, 1961 The Tribunal held that section 10(3) was not attracted as the receipts were not of casual or non-recurring nature. The court agreed, stating that the income arose during the course of trade and constituted trading profit. The increase in sale proceeds due to devaluation was directly connected to the trade, thus not exempt u/s 10(3). Issue 2: Nature of receipt of Rs. 1,01,572 The Tribunal determined that the receipt of Rs. 1,01,572 arose out of business transactions, and the element of casualness was absent. The court upheld this view, noting that the additional amount received due to devaluation was part of the sale proceeds and thus a trading profit. Issue 3: Taxability of total receipts as revenue receipt The Tribunal concluded that the total receipts, including the disputed amount of Rs. 1,01,572, were taxable as revenue receipts. The court agreed, emphasizing that the receipts were directly connected with the sales made in the course of trading activity. Issue 4: Nature of excess amount of Rs. 41,586.42 as capital accretion The Tribunal rejected the assessee's alternative claim that the excess amount of Rs. 41,586.42 was capital accretion. The court concurred, stating that the debt due from purchasers was a current or business asset, not a capital asset. The excess amount received due to devaluation was a revenue receipt, directly connected with the trading activity. Conclusion: The court answered all questions in the affirmative and against the assessee, holding that the receipts in question were taxable as revenue receipts. The reference was answered accordingly with no order as to costs.
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