KAUR SINGH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) KAUR Singh, the assessee, an individual, derives income from shares in certain partnership firms, income from property, interest and plying of a truck. The assessee, along with his two brothers, namely, Jaggar Singh and Maghar Singh, had purchased two bungalows along with certain agricultural land attached to them. One bungalow situated near the Zila Parishad House attached with about 8 bighas of land was purchased on 5th June, 1965. The other bungalow known as "Krishan Bagh Kothi" and agricultural land measuring 174 kanals attached to that bungalow was purchased on 9th August, 1967, for a sum of Rs, 1,20,000. Both these bungalows were rented out by the three co-owners and the rental income came to Rs. 10,389. The assessee, instead of declaring his income from property at l/3rd of the aforesaid amount, claimed that his share in the aforesaid income was only 1/9th, because in his 1/3rd share there were three co-owners, namely, the assessee himself and his two sons, Hakam Singh and Pargat Singh. In support of this claim, the assessee produced decrees passed on 14th March, 1972, 4th November, 1972, 18th May, 1972, and 7th December, 1972, by the Civil Court in the suits filed by the assessee's sons against him. The ITO did not recognise these decrees on the ground that the same had been passed by the Civil Court after the previous year for the assessment year 1971-72, ended on 31st March, 1971. The ITO, therefore, did not accept the assessee's contention and 1/3rd income from the aforesaid property was taken as the assessee's income.

(2.) THE assessee had invested a sum of Rs. 1,25,500 in a firm known as M/s. Indra Tractors, Ludhiana, and his share of the loss therefrom had been taken at Rs. 89. THE assessment of the firm was said to be pending and subject to action later on either under Section 154 or under Section 147 of the I.T. Act, 1961 (hereinafter referred to as "the Act"), the ITO treated the assessee's share income from the aforesaid firm at Rs. 1,000. THE assesses had purchased a truck for Rs. 56,260, which was run for a period of about 51/2 months. After claiming the depreciation from the income declared for the aforesaid period, the assessee claimed a loss of Rs. 5,079. As the assessee did not produce the books of account, the loss claimed from the plying of the truck was ignored.

(3.) THIS brings us to question No. 2, on which lengthy arguments were advanced. It was vehemently contended by Mr. Gupta, learned counsel, that the properties were purchased by the assessee for earning rental income and it was purely a case of investment, that the assessee had no intention to sell any land at the time when the properties were purchased and that the income derived from the sale of the plots could not be treated as income from an adventure in the nature of trade. In support of his contention, the learned counsel placed reliance on several judgments.