Commissioner of Income Tax vs Manna Lal Nirmal Kumar Surana

On an application filed u/s 256(1) of the Income Tax Act, 1961, the Tribunal has referred the following questions for the opinion of this court :

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is justified in holding that the gain of Rs. 11,650 resulting from the sale of jewellery, precious stones etc. was not assessable as the business profit ?"

The assessee HUF filed return of income on 11-9-1979 declaring total income of Rs. 11,220. Notice was issued u/s 143(2) of the Income Tax Act, 1961. The item, which has been sold was declared under the Voluntary Disclosure Scheme showing value of Rs. 4,350. The special bench of the Tribunal as well as Tribunal in this case found that assessee has not carried on any business in jewellery, precious stone etc. and when the asset was declared, the item in question was treated as capital asset. Unless the asset is converted into stock-in-trade account, there is no question of treating the profit on sale of such item as business profit.

We find no infirmity in the order of Tribunal. In the result we answer the question in affirmative i.e., in favour of the assessee and against the revenue.

Reference so made stands disposed of accordingly.