TMI Blog1969 (2) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... ive questions to the High Court of Calcutta under section 66(1) of the Indian Income-tax Act, 1922. Three of those questions which are canvassed in these appeals need be set out. Assessment year 1949-50 " (1) Whether, on the facts and in the circumstances of the case, the sum of Rs. 51,550 was a profit in the nature of revenue and therefore liable to tax under the Indian Income-tax Act ? " Assessment year 1950-51 " (3) Whether, on the facts and in the circumstances of the case, the sum of Rs. 8,756 was a profit in the nature of revenue and was subject to tax under the Indian Income-tax Act ? (4) Whether, on the facts and in the circumstances of the case, the loss of Rs. 34,891 was allowable as a deduction against the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ospecting and proving coal. The sale in such a case was a part of the trading activities of the assessee and such activity could be gathered from the surrounding circumstances as also from the manner in which it was sold, that is, within a very short time after its acquisition and after it was made fit for obtaining a reasonably higher price at the sale... The profits thus acquired cannot be treated as a capital asset. " In answering question No. (4) the High Court observed : " The loss of Rs. 34,891 sustained by the assessee after the sale of Dry Ice Factory at Lahore in September, 1948, cannot be treated as a loss of the business of sale, inasmuch as the Tribunal found as a fact that the loss not having occurred in the relevant acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gain made in an operation of business in carrying out a scheme for profit-making ? " In determining whether the gain is realization of mere enhancement of value or is a gain made in an operation of business in carrying out a scheme for profit-making, no uniform rule can be evolved. It was observed by this court in Janki Ram Bahadur Ram v. Commissioner of Income-tax : " . . . . no single fact has decisive significance, and the question whether a transaction is an adventure in the nature of trade must depend upon the collective effect of all the relevant materials brought on the record. But general criteria indicating that certain facts have dominant significance in the context of other facts have been adopted in the decided cases. If, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... af season commenced. The company never bought dollars for the purpose of resale as a speculation. On the outbreak of war, in September, 1939, the appellant company, at the request of the Treasury, stopped all further purchases of tobacco leaf in the United States, and, as a result, the company had on hand a holding of dollars accumulated between January and August, 1939. On September 30, 1939, the company was ordered under the Defence (Finance) Regulations, 1939, to sell its surplus dollars to the Treasury, and, owing to the rise in the rate of exchange, the sale resulted in a profit to the company. It was held by the Court of Appeal that the profit was liable to be included as profits of its trade under Schedule D, Case I. The taxpayer was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the present case recorded the following findings : " It is no doubt true that this was a single transaction. But we were told by the assessee's counsel that the assessee obtained prospecting licence in the colliery, developed the colliery and then sold out. What was the purpose of obtaining the prospecting licence has not been told to us. The assessee was carrying on business of coal mining. The prospecting of coal is a part of the coal mining business. Therefore, in our opinion, the transaction of prospecting, developing and selling the colliery is a transaction in the nature of a business. Therefore, the profit arising from the sale is a profit in the nature of revenue and has been rightly brought to tax. " Our task would have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss was not a permissible deduction. Section 24 of the Income-tax Act, 1922, in the relevant year of assessment, read follows : " (1) Where any assessee sustains a loss of profits or gains in any year under any of the heads mentioned in section 6, he shall be entitled to have the amount of the loss set off against his income, profits or gains under any other head in that year : . . . . (2) Where any assessee sustains a loss of profits or gains in any year, being a previous year not earlier than the previous year for the assessment for the year ending on the 31st day of March, 1940, under the head 'profits and gains of business, profession or vocation' and the loss cannot be wholly set off under sub-section (1) the portion not so ..... X X X X Extracts X X X X X X X X Extracts X X X X
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