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TMI Blog1962 (8) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... was taxable as income in his hands ? (3) If the answer to question No. 1 or question No. 2 is in the affirmative, then whether the cost price of ₹ 27,710 or the market value of the silver on the date of partition should be taken into account in determining the profit ? The material facts are : that the assessee in this case, namely, Messrs. Gangadhar Babulal was assessed to Income Tax in the status of an individual for the assessment year 1946-47. The previous year corresponding to this assessment year is October 16, 1944, to November 6, 1945. Prior to the previous year on June 7, 1943, the assessee who had been up to that time the member of a Hindu undivided family became separated upon partial partition of the family. Acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , that is to say, on the surplus of ₹ 32,728. The department treated this surplus as the profits of the assessee from silver business. The view of the departmental authorities was upheld by the Income Tax Appellate Tribunal. Thereafter, the assessee asked the Tribunal for a statement of the case to this court, which, on having been refused, the assessee made an application to this court and the Tribunal has now referred the case as directed by this court. So far as the first question is concerned, the material facts are : that the Tribunal, which is the final fact finding authority, found that the Hindu undivided family of which the assessee was a member carried on purchase and sale business in silver and that, therefore, silver wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of silver received by him at its market value and not at the value at which it was shown in the books of the Hindu undivided family. Indeed he appears to have treated the silver business as a continuing business in his own hands as the entry which he made and which has already been quoted above could equally appropriately have been made by the Hindu undivided family itself if it had not parted with this business in favour of the assessee on a partial partition in the family. There is the further fact that the assessee was a member of the Hindu undivided family even if it might be treated as an entity for the purpose of assessment under the Income Tax Act is not a juristic entity. It is composed of a number of individuals. As such when one s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a capital asset, then it has already been pointed out that the manner in which he entered it if he treated it as a capital receipt. The manner in which he dealt with it and disposal of it is more eloquent still of his intention. If he was merely converting a certain quantity of silver into cash in a market like Kanpur where he dealt with it, he could have disposed it of in a single transaction and not necessarily by employing dalals for its disposal. He actually disposed it of in small quantities in 15 transactions and each time through dalals and to different purchasers. From the manner of his dealing with silver it was not unreasonable to infer that the assessee was treating the silver received by him on partition not as a capital asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kind later on at a subsequent date it is converted into an asset of a different class. There it may be possible to value the asset either on the date of the receipt or on the conversion in a manner different from that at which it was valued by the giver or by the person from whom it is acquired. It, however, appears that the position is materially receiver of the asset two continues to treat that asset as of the same nature or class as it was by the giver. Sri R. L. Gulati has relied upon two cases in support of his submission that in any view of the matter the stock of silver received by the assessee on partition should have been valued not at cost price but at market price when it was sought to determine the profit made by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue was as determined by the daughters by reference to the market value. In those circumstances it was held that in determining the profit by sale of the goods the value to be taken into consideration was the market value as put by the daughters on the stock inherited by the father and not the value put by the father on the closing stock of the goods. It will at once be seen that both the cases referred to above are causes of conversion of one kind of stock into another and involve a discontinuance of business or a break between the date of the receipt and the date of conversion. They are not cases of continuity of business and similarity of treatment accorded to a particular asset by the person in whose hands it originally was and the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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