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TMI Blog1965 (7) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... ies which had formed the business assets of the erstwhile family. It appears that from 1951, the assessee no longer acquired any property. In 1952, he stopped money-lending and the last realisation of the outstandings was on May 31, 1956. On November 23, 1956, he sold the said property and realised $ 8,200 in excess over the purchase price. The assessee claimed that this excess realisation was a capital accretion not chargeable to tax. The Income-tax Officer being of the view that the assessee should be treated as a dealer in properties during the accounting year, held that the excess realisation was a revenue receipt. In forming that view, he purported to follow an earlier order of the Appellate Assistant Commissioner in respect of this very assessee relating to previous years. On appeal, the Appellate Assistant Commissioner of Income-tax considered that the property that was sold in November 1956, like the other properties allotted to his share at the partition, constituted the stock-in-trade in his money-lending business and the profits made by sale of the property were, therefore, assessable to tax. He found that the assessee continued the money-lending business by making furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ceased to carry on after 1952, at any rate when on May 31, 1956, he had made the last realisation of the outstandings in the money-lending business, and that lastly, unless something was done to the properties which had been allotted to his share at the partition which would clearly invest them with the character sought to be imputed to them by the department, they should be deemed to continue to have the same character as they bore at the partition. Learned counsel urges there is no evidence on record to justify a finding that the property here in question ever formed part of the stock-in-trade of the assessee's money-lending business or business in property. On the other hand, learned counsel for the revenue urges that the question whether the appellant was carrying on business in property or money-lending and whether the property was the stock-in-trade is one of fact and that if the factual conclusion in regard to that matter drawn from proved facts appears reasonable and possible, this court should not interfere with the Tribunal's findings. On that basis, he says that the facts found by the Tribunal did justify its conclusion. It is not contended for the revenue that at par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Officer was of the view that the assessee should be treated as a dealer in property, a view which the Tribunal accepted, the Appellate Assistant Commissioner does not appear to have gone that far, but was only prepared to hold that the properties must be deemed to have continued as stock-in-trade in the money-lending business. One fact which has been stressed for the revenue and which has been relied on by the Tribunal is that the assessee himself had dealt with sales of some of these properties from the assessment year 1953-54 on the footing that they constituted only his stock-in-trade and had duly transferred the profit or loss therefrom to his Adayam account from time to time. We are of the view that this conduct, as it is described at the Bar, can hardly support the view that on that account he can be said to have carried on business as a dealer in property or because he was making realisation of the outstandings, he was carrying on a business in money-lending in which the stock-in-trade included the property in question. In our opinion, the facts disclosed in the order of the Tribunal as well as in the statement of the case do not support the Tribunal's finding that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness. The assessee sold some of these items of properties and some other properties which it had acquired in the course of its money-lending business which it had started after the partition. The Income-tax Officer brought to tax the profits arising on the sale of the properties treating all the properties on the same footing, i.e., as stock-in-trade of the assessee's money-lending business. This court held that there was no material to show that the money-lending business of the assessee formed part of the earlier business of the assessee or that the properties had been treated as the stock-in-trade of the assessee's business. What is even more important in that case to note is that this court considered that the circumstance, the income from the properties had been utilised in money-lending business, could not convert the capital from which it arose, into stock-in-trade of the money-lending business itself. The principle of these two decisions, we think, applies to the facts before us. We may also notice a recent judgment of this court, to which one of us was a party, in Alagappa Chettiar v. Commissioner of Income-tax . In this case too, the facts were more or less similar except ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conclusive in proceedings under section 66(1). If, however, such a finding of fact is based on an inference drawn from primary evidentiary facts proved in the case, its correctness or validity is open to challenge in reference proceedings within narrow limits. The assessee or the revenue can contend that the inference has been drawn on considering inadmissible evidence or after excluding admissible and relevant evidence; and, if the High Court is satisfied that the inference is the result of improper admission or exclusion of evidence, it would be justified in examining the correctness of the conclusion. It may also be open to the party to challenge a conclusion of fact drawn by the Tribunal on the ground that it is not supported by any legal evidence; or that the impugned conclusion drawn from the relevant facts is not rationally possible; and if such a plea is established, the court may consider whether the conclusion in question is not perverse and should not, therefore, be set aside. It is within these narrow limits that the conclusions of fact recorded by the Tribunal can be challenged under section 66(1)." These observations were reiterated and applied in Saroj Kumar Mazumda ..... X X X X Extracts X X X X X X X X Extracts X X X X
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