1961 (8) TMI 7 - SC - Income Tax

Whether on the facts and in the circumstances of the case, the sums received as salami by the assessee for granting sub-leases were trading receipts in its hands and the amount of profit therein is assessable under the Indian Income-tax Act " in the affirmative and against the assessee-company?

Held that:- The relevant clauses of the memorandum of association of the assessee-company show that the various objects for which the assessee-company was incorporated.

It is clear from these operations that the assessee-company having secured a large tract of coal-bearing land parcelled and developed it into a kind of stock-in-trade to be profitably dealt with. The assessee-company extended its business along these lines acquiring fresh fields. In the circumstances, the nature of the business was trading within the objects of the company and not enjoyment of property as landowner. There was also no sale of its fixed capital at a profit. In our opinion, the High Court rightly answered the question against the assessee-company. Appeal dismissed.