BHOGILAL H PATEL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE question referred under section 66(2) for our opinion is as follows :

(2.) WE are concerned with the assessment year 1950 -51 corresponding to the assessee's accounting year which is the calendar year 1949. Bhogilal H. Patel is the assessee. He has been assessed as an individual. He carried on several business, inter alia, of manufacturing an selling sizing materials, dealing in chemicals, mill stores, and china clay. He has also a business in forward transactions in shares and bullion. He has branches at Calcutta, Coimbatore, Ahmedabad and other places in India and besides income from partnership firms. Apart from his business income he also has house property and investment in shares and agricultural lands.

(3.) HAVING purchased these two plots in 1945 and in 1946 the assessee kept them with him for about 2 1/2 years to 3 years and agreed to sell them in one lot on 5th October 1948. It must be stated here that the assessee had also purchased in the same village survey No. 148 on 7th April, 1942, and this field was also included in the agreement of sale, dated 5th October, 1948. The agreement stipulated for payment in one case by the end of November, 1949, and in the other case by the end of May, 1949. The rates at which the two plots were sold were Rs. 25 per sq. yd. in the case of survey Nos. 150/2 and Rs. 30 per sq. yd. in the case of survey Nos. 140/1 -1 and 140/2. Calculated at this rate the assessee received as the sale price for these two plots Rs. 2,72,250 and Rs. 6,22,545, respectively. The sale deeds were executed on 16th November 1949, and 14th May, 1949. In regard to survey No. 148 a similar sale deed was executed on 20th October, 1949. Thus though the agreement for the sales of all these plots was a common agreement the purchaser took from the assessee separate sale deed for each of the three separate plots. After deducting the price at which these two plots were purchased from the price at which they were sold, the department assessed the gross profit in the case of plot No. 150/2 at Rs. 2,61,964 and in the case of plots Nos. 140/1 -1 and 140/2 at Rs. 5,43,210 thus making a total of Rs. 8,05,174 as the gross profit on the two plots. After deducting certain legal expenses amounting to Rs. 11,626 the department arrived at the net profit of Rs. 7,93,548.