GOWRI TILE WORKS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE questions referred to this court under Section 66 (1) of the Indian Income-tax Act are:

(2.) WHETHER the capital gains of Rs. 81,863 are exempt under the third proviso to Section 12(B)(1)? The assessee is a firm of two partners who were engaged in the business of manufacture and sale of tiles, and the present proceedings relate to the assessment of the year 1948-49 the accounting period being the year ended 12-4-1948. One of the partners of the assessee firm died on 3-4-1946 and the business was stopped on 20-8-1947.

(3.) LEARNED counsel for the Commissioner urged that the expression "by any adjustment made" to the concluding words of the proviso referred to a factual adjustment effected for the purpose of bringing to charge or allowing an exemption in regard to the computation of income under Section 10 and not to a theoretical adjustment without reference to an actual assessment. LEARNED counsel for the assessee however contended that the words which we have underlined, were not confined to cases of actual adjustment for the purpose of computation for an assessment to income-tax but that the adjustment might be made now for the purpose of affording the benefit of it in the computation of the quantum of the capital gain subject to tax.