LAWS(APH)-1957-10-31

ALAPATI RAMASWAMI Vs. COMMISSIONER OF INCOME TAX

Decided On October 11, 1957
ALAPATI RAMASWAMI Appellant
V/S
COMMISSIONER OF INCOME TAX Respondents

JUDGEMENT

(1.) THIS reference made by the CIT under S. 66(2) of the Indian IT Act raises the following question :

(2.) THE facts that gave rise to the reference may be briefly stated. The assessee is a money lender carrying on business since a few decades. During the course of his business, he advanced loans to several persons. In the case of some debtors, presumably because they were not able to repay the advance in cash, he took their lands in discharge of their debts. On 17th Sept., 1935, he took 3 acres 51 cents of land in Upparapalem owned by one of his debtors, Shaik Nanne Bibi of Vinukonda, valued at Rs. 2,000 in full discharge of his debt. But on 27th Sept., 1945, the said extent was sold and a sum of Rs. 10,000 was realised.

(3.) NEITHER the statement of the case nor the record submitted along with it discloses how the lands purchased were treated by the assessee. The said items were sold by the assessee 10 years, 22 years, 11 years and 16 years respectively after the date of their purchase. It is not disputed that the items purchased were not entered in the accounts as part of the stock in trade and that no part of the income from the business was utilised to meet any expenditure incurred in connection with the properties so purchased. The assessee continued to do money lending business and, during the accounting years, he increased his money lending capital by bringing in the money realised by the sale of the properties.