- (1.) In respect of assessment years 1949-50 and 1950-51 the Income-tax Appellate Tribunal referred five 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 income of the assessee for the assessment year 1950-51 -
(2.) The appellant - a limited Company incorporated under the Indian Companies Act, 1913 - carries on business as Managing agents, dealers in shares and stocks, stores and spare parts of machinery and acts as insurance agents and manufacturers of carbon dioxide. It also works certain coal mines. The Company obtained a prospecting licence from the State of Korea for the Chirimiri Colliery in 1944 and after prospecting for coal sold the colliery and thereby earned a profit of Rs. 51,550 in the account year 1948-49 and Rs. 8,756 in the account year 1949-50. The Income-tax Officer brought the profits arising out of the sale of the colliery to tax as business profits. The order was confirmed in appeal by the Appellate Assistant Commissioner and the Income-tax Appellate Tribunal.
(3.) The Company conducted a Dry Ice Factory at Lahore. The factory was sold in September 1948 to the Indo-Pakistan Corporation Ltd. The purchaser took over the factory on October 1, 1948, but the price was finally settled in December 1949. By the sale the Company suffered a loss of Rs. 34,891. The Company claimed to deduct this loss from its income assessable to tax in the assessment year 1950-51. The Income-tax Officer disallowed the claim. The Appellate Assistant Commissioner agreed with that view, and the Tribunal confirmed the order.;