RADHA DEBI JALAN Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THESE are nine references concerning as many assessments of 8 ladies for, in the case of all of them, the asst. yr. 1945-46, and in the case of one, for the asst. yr. 1946-47 as well. The point involved in all these cases is the same. The question asked is whether a particular sum of money, which was the profit made by the lady concerned from the sale of a block of shares held by her, was a part of her business income, taxable as such or a casual receipt from a source other than business and so exempt from taxation.

(2.) THE proceedings have had a course which, for income-tax cases, is rather unusual. In the Tribunal there was a difference of opinion between the two members, the Lawyer Member holding that the amounts concerned were not taxable and the Accountant Member holding that they were. THEreupon the cases were referred to a third member who happened to be an accountant and he agreed with the Accountant Member for the reasons given by him. THE judgment of the Tribunal must therefore, be taken to be the judgment of the Accountant Member.

(3.) IT is necessary to state a further fact. IT is admitted by the Department, and so it has been found, that so far as Radha Debi, or for the matter of that all the ladies, were concerned, the transaction was an isolated transaction. They were not share dealers, had not sold any shares in the past and have not dealt in any other shares. The ITO included these profits in the assessable income of the ladies on the ground that the amounts concerned constituted income from an adventure in the nature of trade. On appeal, the AAC held that they were capital receipts and so not taxable. The majority of the members of the Tribunal reversed the AAC and agreed with the ITO in his finding that the transaction were adventures in the nature of trade and consequently the profits derived from them were taxable as business income. On the facts already stated, the Tribunal has framed and referred to this Court the following question :