JALDU MANIKYALA RAO Vs. COMMISSIONER OF INCOME TAX MADRAS
LAWS(APH)-1955-1-23
HIGH COURT OF ANDHRA PRADESH
Decided on January 20,1955

JALDU MANIKYALA RAO Appellant
VERSUS
COMMISSIONER OF INCOME-TAX, MADRAS Respondents


Referred Judgements :-

INLAND REVENUE V. LIVINGSTONE [REFERRED TO]
BALGOWNIE LAND TRUST LTD. V. COMMISSIONER OF INLAND REVENUE [REFERRED TO]
GANGARAJU V. COMMISSIONER OF INCOME TAX [REFERRED TO]
ALEXANDER D M VS. COMMISSIONER OF INCOME TAX [REFERRED TO]



Cited Judgements :-

KANWARLAL MANOHARWAL VS. COMMISSIONER OF INCOME TAX [LAWS(MAD)-1975-4-20] [REFERRED TO]
JALDU MANIKYALA ROW VS. COMMISSIONER OF INCOME TAX [LAWS(APH)-1963-9-18] [REFERRED TO]


JUDGEMENT

- (1.)J . (1) This reference is made at the istance of this assessee and the question to be answered by in is formulated as follows :
"Whether the sum of Rs. 75,040.00 is a receipt not from business but only of a casual and non-recurring nature exempt under S. 4 (3) (vii), Income-tax Act ?"

(2.)Having regard to the nature of the question, it is necessary to state the material facts which have a bearing on the character of the transaction leading to the receipt by the assessee of the sum in question. The assessee is a trader interested in several lines of business. He does business in timber, tiles, furniture, ironware and hardware, some in partnership with others and some entirely on his own. He also owns seagoing schooners and other boats jointly with others which are plied for transaport of cargo as well as passengers. He belongs to a family of bankers and traders, he and his brothers having been described by the Appellate Assistant Commissioner of Income-tax as being the foremost business man of Masulipatam.On 29.8.1941, by a registered deed of transfer, he purchased for a sum of Rs. 62,500.00 a 25/26th share in a final mortgage decree for sale. His assignors were one Mutha Sarvarayadu and his sons. The decree itself was for a sum of above Rs. 2,60,527.00. It is recited in the assignment deed that Sarvarayadu and his sons were in embarrassed circumstances, that they were under pressure to meet the demands of their creditors, that the execution of the decree was stayed under the provisions of the Madras Act 4 of 1938 pending an application for scaling down of the decretal debts, and that as there was no immediate prospect of realising their share of the decretal amount, they were transferring their interest in the decreeto the assessee with a direction to him to pay off their creditors.The assessee also undertook to pay off his assignors the balance, if any, that might be still outstanding with him alter the discharge of their obligation. To enable him to pay the creditors of the assignors, it appears that the assessee borrowed some moneys at interest from his brother Venkatasubba Rao and one Nagapotha Rao, both of whom are bankers and money-lenders by profession. By October 1943, the assessee had paid off all the debts he had undertaken to pay and on 29.5.1944 he paid the balance of consideration still due to the assignors. In the meanwhile, he instituted proceedings in court for the execution of the decree and brought to sale some of the mortgaged properties. As a result of the execution proceedings, the assessee realised on 14.8.1944 a sum of Rs. 1,51,540.00 for his share of the decree.The amount, so realised exceeded the price paid by him for the purchase of the decree by a sum of Rs. 89,040.00. Deducting the sum of Rs. 10,000.00 for the expenses of realisation and another sum of Rs. 4,000.00 which the assessee had to pay his assignors by way of interest from the above sum, the Income-tax Officer treated the balance of Rs. 75,040.00 as gains or profits of an adventure or concern in the nature of trade and computed it in the assessment year 1945-46 as part of the income of the assessee in the previous year ending with 31.12.1944. Before the Income-tax Authorities and the Appellate Tribunal, the assessee contended unsuccessfully that this sum is not a receipt arising from business and is only one of a casual and non-recurring nature coming within the exemption of S. 4
(3.)(vii).(3) Before we consider the contentions raised on behalf of the assessee we would like to observe that, in our view, the issue raised is essentially one of fact. Unless the finding thereon is vitiated by a wrong view of the law, by consideration of inadmissible evidence or refusal to consider admissible evidence, it is not open to sub-stitute a finding of our own for that of the ultimate Tribunal of fact, though we might ourselves be inclined to come to a different conclusion on the same evidence.
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