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1 - 4 of 4 (0.22 seconds)E. D. Sassoon And Company Ltd vs The Commissioner Of Income-Tax,Bombay ... on 14 May, 1954
7. I now come to the main issue, viz., whether the assessees are at all liable to tax on the sale of these lands. On behalf of the assessees reliance was placed upon three authorities, namely, Sercon (P.) Ltd.'s case (supra), CWT v. Officer-in-Charge (Court of Wards) [1976] 105 ITR 133 (SC) and Subhadra v. Narasji Chenaji Marwadi AIR 1966 SC 806. The second case relates to wealth-tax and third does not relate to taxation laws at all. Only the first case is material, but the language of Section 2(14) is quite clear. Capital asset according to this definition means property of any kind held by the assessee whether or not connected with his business or profession, except what is specifically exempted therein. Clause (ii) deals with agricultural land. Only such agricultural lands are exempted, which are not situated in an area, which is comprised within the jurisdiction of municipality or a cantonment board and which has population of not less than 10,000 according to the last preceding census. Now the assessee has not seriously disputed that the lands in question are situated within the municipal limits of Piparia town and the population of the town is more than 10,000 according to the last census.
Commissioner Of Income-Tax, Calcutta vs Rai Bahadur Hardutroy Motilal Chamaria on 7 April, 1967
5. Notice of the hearing of these appeals was sent to the assessees, whose representatives submitted written arguments in support of the various grounds raised therein. I have gone through these arguments and heard the departmental representatives. The first question for my consideration is as to whether the income arising to the assessees should be taxed as business income or income from capital gains. As I have mentioned above in the first year, the ITO had only taxed the income as capital gains and not as business income. It was only in the later year that he formed an opinion that the assessee had entered upon a regular activity of developing the land into plots and his/its activity amounted to regular business activity rendering it/him liable to tax under the head 'Income from business or profession'. To my mind, the AAC's order in the first two years is not correct in law. Firstly, it has been held by the Supreme Court in CIT v. Rai Bahadur Hardutroy Motilal Chamaria [1967] 66 ITR 443 that it was not open to the AAC to travel outside the record of the case itself. No doubt, under Section 251(1)(a) the AAC or the Commissioner (Appeals), as the case may be, has unlimited powers to set aside the assessment and refer the case back to the ITO for making a fresh assessment in accordance with the directions given by him and after making such further inquiries as may be necessary, but the order of the AAC should be on the basis of the material on the record and ordinarily the AAC is not expected to direct the ITO to collect fresh material for the purpose of enhancing the assessment which in normal course of events would be done by the Commissioner on proceedings under Section 263 of the Act. It goes without saying that the effect of taxing the income of the assessee as business income instead of capital gains as has been proposed by the ITO definitely amounted to enhancement, since the effect thereof would be to deny some of the exemption available to the assessee under Section 80T. In any case the order of the AAC is bad on the ground that there was nothing more left for enquiry by the ITO, because on she same material in the later year, the AAC has dismissed the appeals of the assessees altogether. It means that the material on record was sufficient to hold that the income from the sale of this land was taxable under the head 'Income from business' and if there was enough material already, there was no fun in restoring the matter back to the file of the ITO. The AAC should have been courageous enough to enhance the assessments and revise the head under which the income in question should be taxed. The fact that he did not do so, shows that he was not fully satisfied about the existence of sufficient material and the procedure adopted by him is rather abnormal, because in his opinion more material was required, to change the head 'Income from other sources' in question.
Section 263 in The Income Tax Act, 1961 [Entire Act]
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