COMMISSIONER OF INCOME TAX Vs. NANDURI SURYANARAYANA

JUDGEMENT

(1.) THIS reference arises under section 66(2) of the Indian Income-tax Act. The two questions referred to for decision are as follows :

(2.) WE have perused the decision of the Appellate Tribunal and find that it was not held that the sale of land was not an adventure in the nature of trade. Consequently, the first question does not arise for decision on the admitted facts of the case.

(3.) THE next case to which reference was made by the learned advocate for the income-tax department is Commissioner of Income-tax v. A.K.A.R. Family. That decision also has no application to the facts of the present case. Dunkley J. held, on the facts of that case, that until the entire land of acres 63.34 and the house which were purchased in settlement of a debt of Rs. 9,000 were sold, it was not possible to ascertain the loss to be set off. Reference was no doubt made to the decision, K.H. Mody, In re, in support of the proposition that no assessment can be made until the whole transaction was completed. We are inclined to take the view that there is no warrant for the proposition that until the whole transaction is completed, the liability to assessment does not arise if profits had accrued in respect of the entire transaction during the years previous to the year of assessment. This view is correctly expressed by the learned authors, Kanga and Palkhivala, in their Commentary on the Indian Income-tax Act, at page 162 (volume I, fourth edition). THEy state that "if the entire cost is recouped earlier, the profits may be assessed even before the venture comes to an end". THE view taken by us is also supported by the decision of the Allahabad High Court in Lalit Ram Mangilal v. Commissioner of Income-tax. THE decisions of the Bombay High Court and the Rangoon High Court are distinguished by the learned judges as being restricted to the particular facts of those cases. Seth J. lays considerable emphasis on the expression "normally" used by Kania J. in K.H. Mody, In re. THE passage is as follows :