9911796707
TMI Blog1980 (9) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... aw in holding that veethapalisa or the excess of receipts over the instalments paid by the assessee in its chitty account amounting to Rs. 5,147 and credited to its profit and loss account is not assessable to income-tax for the assessment year 1973-74 ? (2) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is right in law and had any materials before it for holding that there is no nexus between the chitty account and the business of the assessee, and is not the decision of the Tribunal on such basis, perverse and unreasonable ? " The assessee is a firm carrying, on wholesale trade in piece-goods, The firm had subscribed to a kuri conducted by the Lord Krishna Bank Ltd., Kodungallur. That kur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Tribunal, the accrual of dividend or veethapalisa did not depend upon the assessee's volition, but depended entirely upon the bids made by the other subscribers wanting to prize the chitty at a discount. On this basis, the Tribunal held that the amount of Rs. 5,147 received by the assessee had to be regarded as a casual and non-recurring receipt, which was not liable to be taxed. The Tribunal also held that since this was not a case where the assessee had become a subscriber in the kuri for getting finances for its business, any profit arising from the chitty could not be regarded as business income unless there was a clear nexus established as between the assessee's business and the chitty transaction. In the opinion of the I Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ardari Lal Mehra [1973] 87 ITR 47. He also submitted that the Tribunal cannot be said to have committed any error of law in holding that the assessee was not liable to be taxed in respect of the amount in question, unless it was shown to be its business income. In our opinion, the entire approach of the Tribunal to the case was vitiated by an omission to notice certain crucial aspects having a vital bearing on the question of assessability to tax of the receipt in question. Admittedly, the assessee has been maintaining its accounts according to the mercantile system. In such circumstances, whether it could be assessed in respect of the entire amount of Rs. 5,147 received by way of veethapalisa in respect of a period of 16 years during whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance and that hence if any amount is received by way of veethapalisa, it has to be treated as a casual receipt. No conclusion in regard to the aforesaid question can, therefore, we satisfactorily or reasonably reached without looking into the kurivaryola. Unfortunately, this aspect has been omitted to be noticed by the Tribunal as well as by the first appellate authority and the ITO. The result is that the decision of the Tribunal on the question as to whether the disputed amount is assessable as income in the hands of the assessee has been based on mere speculations and conjectures as to the nature of the kuri transactions and its terms. Another unsatisfactory aspect in the reasoning of the Tribunal is that, it assumed that the amount in q ..... X X X X Extracts X X X X X X X X Extracts X X X X
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