TMI Blog1960 (2) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... account which ended on April 12, 1948, for the assessment to Income-tax in the assessment year 1948-49, the income from these items of house property was computed under section 9 of the Income-tax Act, and the quantum under that head was determined at 63,345 dollars. The assessee firm was also assessed to business profits tax under the provisions of the Business Profits Tax Act (21 of 1947), and in that assessment the income from the house properties was included in the income from the business of the assessee. That was ultimately sustained by the Tribunal, and that led to reference of the following question to this court: Whether on the facts and in the circumstances of the case, the income from properties are chargeable to tax under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... What has to be computed for purposes of assessment under section 9 cannot be brought within the scope of section 10 of the Income-tax Act. With reference to the interest on securities what the Supreme Court laid down was: Income from 'interest on securities' falls under section 8 of the Act and not under section 10; it cannot be brought under a different head of income, viz., 'profit and gains of business' under section 10, even though the securities are held by a banker as part of his trading assets in the course of his business. Therefore, the fact that the house properties in question constituted the stock-in-trade or the trading assets of the assessee firm made no difference to the question, was the income from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Tax Act sets out the rules for the computation of the profits for the purpose of the Business Profits Tax Act. The relevant portion of rule 1 of Schedule I provides: The profits of a business during any chargeable accounting period shall be separately computed, and shall, subject to the provisions of this Schedule, be computed in accordance with the provision of section 10 of the Indian Income-tax Act, 1922. Rule 3 in Schedule I runs: Income received from investments or other property shall be included in the profits only as provided in this rule, that is to say, (a) in the case of the business of a building society, or a banking business, insurance business, or business consisting wholly or mainly in the dealing in or hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the levy of business profits tax under section 4 of the Business Profits Tax Act. That, in our opinion, results from the definition of business in section 2(3) and is further emphasized by the definition of profits in section 2(16) of the Business Profits Tax Act. Section 2(16) defines profits: 'Profits' means profits as determined in accordance with Schedule I. We have already set out rule 1 of Schedule I, which like section 2(3) of the Act takes us back to section 10 of the Income-tax Act. Obviously it is not every item of income of a person who carried on a business that comes within the scope of profits assessable to business profits tax. Nor even is every item of income from business within the scope of the charging se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in question, the income from the houses, in the course of his business activities. He had acquired houses as part of his business activities, and he held them as part of the stock-in-trade in the business, though the business was money-lending. Learned counsel urged that it should, in the circumstances of the case, be treated as income from business for purposes of levy of business profits tax. Learned counsel relied on the observation at page 181 in Commissioner of Income-tax v. Calcutta National Bank Ltd [1959] 37 I.T.R. 171. That was a case which dealt with the liability of an assessee to tax under the Excess Profits Tax Act. We have already pointed out that the definition of business in section 2(3) of the Business Profits Tax Act diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , section 2(3) of the Act should have run something on these lines: 'Business' includes trade, commerce or manufacture, or any adventure in the nature of trade, commerce or manufacture or any profession or vocation. And section 2(16) of the Business Profits Tax Act should have run, 'Profits' means profits from a business , without any further reference to the mode of computation of those profits in Schedule I, that is read with section 10 of the Income-tax Act. As we have already pointed out, both the definition of profits in section 2(16) and the definition of business in section 2(3) and rule 1 of Schedule I require that before income is treated as income from a business within the scope of section 4 of the Busine ..... X X X X Extracts X X X X X X X X Extracts X X X X
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