MURUGAPPA CHETTIAR MR L Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AT a partition of a Nattukottai Chettiar undivided family carrying of money-lending business at Kuala Lumpur in 1947, the sub-family, which is the assessee, was allotted for its share of the family properties 34 items of real property. Certain items of money-lending transactions and some outstandings were also allotted to the assessee. It is not in dispute that the items of real property so allotted had been acquired by the larger family in the course of its money-lending transactions and in the hands of that family had formed part of the stock-in-trade of the money-lending business.

(2.) DURING the account years relevant to the assessment years 1948-49, 1950-51 and 1952-53, the assessee sub-family sold some of the 34 items referred to above and some other properties which it had acquired in the course of its own money-lending transactions. Treating all these items of properties on the same footing, viz., as stock-in-trade of the assessees money-lending business, the Income-tax Officer brought to tax the profits on the sales of these items during the above : said assessment years. In appeal, the Appellate Assistant Commissioner set aside these assessments, taking the view that those items of real property, which fell to the share of the assessee at the family partition, formed capital assets in its hands. The department appealed to the Tribunal. The Tribunal set aside the order of the Appellate Assistant Commissioner and restored the assessments. The Tribunal took the view that capital might also take the shape of stock-in-trade and that as these items of properties formed the stock-in-trade of the larger family and the divided members of that family continued to carry on the money lending business, those assets became the stock-in-trade of the business of the divided members.

(3.) PARAGRAPH 21. - For the foregoing reasons, we have to humbly hold that it was the new money-lending business that the assessee started at Kaula Lumpur with the opening of its books as aforesaid, that it was the new business as an off-shoot of a similar business that the larger family had carried on before eat the same place, Kuala Lumpur."