NATHMAL SRINIWAS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN these cases the assessment relates to the year 1946-47, and the accounting year is the period 1352 Sambat corresponding to the period from 16th October, 1944, to 1st October, 1945. The assessee is a registered firm in the name of Messrs. Nathmal Sriniwas. The assessee had a business consisting of rice milling, commission agency and other activities but all the account were kept in one set of books. IN the year of account the assessee sold his rice mills for a sum of Rs. 23,500. The machinery had been purchased for a sum of Rs. 25,000 and at the beginning of the assessment year the written down value of the machinery was Rs. 1,190. The INcome-tax Officer, therefore, proceeded to make an assessment under section 10(2)(vii) of the INcome-tax Act upon the difference between the written down value of the machinery and the actual sale price. The assessee took an appeal to the Appellate Assistant Commissioner but the appeal was dismissed. The assessee then appealed to the Appellate Tribunal and it was argued on his behalf that the rice milling business ceased to be carried on with effect from the beginning of the accounting year and as there was no rice milling business carried on under section 10(1), the assessee was not liable to be taxed under the section proviso to section 10(2)(vii) upon the different between the written down value and the sale price of the machinery. This argument was rejected by the Appellate Tribunal on the ground that the business of the assessee was recorded in one set of books and the manner of maintenance of the accounts appeared to indicate that all the varied activities of the assessee including rice milling should be regarded as one and indivisible unit of business. It was held by the appellate Tribunal, therefore, that even if part of the business activities stopped in the accounting year, the assessee was still liable to be taxed under section 10(2)(vii) of the INcome-tax Act since his business continued in the year of account though in a much reduced form.

(2.) IN these circumstances the INcome-tax Appellate Tribunal has submitted the following question of law for the opinion of the High Court :