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TMI Blog1934 (11) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... can be considered to be income, profit, or gain or business within the meaning of the Income Tax Act. The Income Tax Commissioner held that it was income accruing from business and, therefore, taxable. He, however, made a reference under Section 66 (2) on the application of the assessee, and the questions which we are called upon to answer are as follows :- (1) Did the sum of ₹ 14,560 assessed by the Income Tax Officer represent income, profits or gains ? (2) If so, did that sum represent a receipt arising from business within the meaning of Clause (vii) of sub-Section (3) of Section 4 of the Indian Income Tax Act, 1922, and consequently excluded from the exemption conferred by that clause ? It appears that one Kanhaiyalal J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nced the litigation, and Kanhaiyalal won his appeal. Apparently Kanhaiyalal was not willing to pay the sum of ₹ 21,000 in addition to the sums actually advanced. Eventually a compromise was arrived at between the assessee and Kanhaiyalal, under which the latter paid ₹ 15,000 in full satisfaction of the assessees claim under the agreement referred to above. The Income Tax Department deducted a sum of ₹ 440 on account of interest paid by the assessee, and assessed ₹ 14,560 to income tax. This is the sum which is referred to in question No. 1. The learned advocate for the assessee has argued that the receipt of ₹ 15,000 by Kanhaiyalal in the circumstances already stated cannot be considered to be income, profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income has been linked pictorially to the fruit of a tree, or the crop of a field. It is essentially the produce of somethings, which is often loosely spoken of as capital. But capital, though possibly the source in the case of income from securities, is in most cases hardly more than a element to the process of production. Their Lordships also referred to the phrase business carried on by him in Section 10. In the end they held the payment to Messrs. Shaw Wallace and Company as no more than a solatium. We are clearly of opinion that the observations of their Lordships of the Privy Council quoted above which are strongly relied on by the assessee, should be taken in conjunction with the facts of that cases and we are unable to hold th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd above the sums actually advanced. We are clearly of opinion that the transaction amounted to business within the meaning of the Income Tax Act. We are unable to hold that this income was a purely casual nature. On the contrary, we think that it represents a return on the money invested by the assessee. To hold otherwise would imply that the income, profit or gain, accruing from a single transaction or investment which is not akin to the assessees trade or avocation is not income, gain or profit from business which in our opinion, is contrary to the plain meaning of the words employed in the Act. That a single transaction or investment may be business cannot admit of doubt. Any receipts exceeding the capital must be treated as profit. It ..... X X X X Extracts X X X X X X X X Extracts X X X X
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