KALIKUTTY Vs. COMMISSIONER OF INCOME TAX KERALA

JUDGEMENT

(1.) THIS is a reference by the Income-tax Appellate Tribunal, Madras Bench, under S.66 (1) of the Indian Income-tax Act, 1922. The assessment year concerned is 1960-61; and the accounting period, the Malayalam year 1134, that is, the twelve months ended on 16th August 1959. The question referred is: Whether on the facts and in the circumstances of the case the sum of Rs. 49,288 was assessable as profit under the provisions of S.10 (2) (vii) of the Indian Income-tax Act, 1922?"

(2.) SUB-section (1) of S.10 of the Indian Income-tax Act, 1922, provides that "the tax shall be payable by an assessee under the head 'profits and gains of business, profession or vocation' in respect of the profit or gains of any business, profession or vocation carried on by him." The relevant portion of sub-section (2) of S.10 is in the following terms:

(3.) THE assessee cited before the Tribunal the decision of the Madras High Court in Commissioner of Income-tax v. Express Newspapers Ltd. (1960) 40 ITR. 38 wherein that Court said that the second proviso to S.10 (2) (vii) was not attracted to a closing down sale as such a sale was not an operation in furtherance of the business of an assessee but only a step for the realisation of the assets of that business in a process of winding up, and held: