52,313/ realized in excess by the assessee on the sale of the property in the circumstances narrated above companystitute the profits and gains of the business of money lending carried on by the assessee.
36,303/ was assessed by him with regard to the aforesaid sale.
In the companyrse of that business the assessee lent Rs.
This sale was effected by means of a public auction after dividing the area sold into certain number of plots.
One of the prominent circumstances was that the assessee had paid the sum of Rs.
The assessee had to pay Rs.
on the properties which were the subject matter of mortgage.
40,000/ to one Sri Kishan and his brother in September 1930.
52313/ .
Even after the sale the entire amount was number realized and the shortfall including the companyt came to Rs.
93,313/ .
The High Court took into companysideration the circumstances which had been adverted to by the Tribunal.
In September 1933 the assessee purchased a portion of the mortgaged property for Rs.
Out of this amount a sum of Rs.
32,000/ was adjusted against the mortgage debt leaving a sum of Rupees 8,000/ outstanding on the mortgage.
A net gain of Rs.
On appeal the Appellate Assistant Commissioner differed with the method of calculation adopted by the Income tax Officer and made the necessary modification.
That amount had been debited by the assessee to the money lending account.
In October 1946 the assessee obtained a decree for Rs.
As regards the main question whether the assessee had number companyverted the properties purchased into a capital asset and that the same had ceased to be a trading asset the companyclusion of the Tribunal was that the assessee companysidered the aforesaid asset as a part of his money lending business.
On further appeal the Appellate Tribunal worked out the profits at Rs.
4,758/15/ .
The transaction was one of simple mortgage of immovable properties and the interest was payable according to the terms of the mortgage.
35,000/ .
The assessee claimed this amount as a bad debt which was allowed in a previous assessment.
Between the date of mortgage in September 1930 and the date of sale three years later, the mortgagors had effected further encumbrances.
25,000/ against the mortgagors to be realised by the sale of that portion of the mortgaged properties which had number been sold to the assessee in 1933.
The balance of Rs.
3,000/ was adjusted against the mortgagors share of the loss in a firm which was payable to the assessee.
In 1948 the assessee sold half the area of the land purchased by him in 1933 for Rs.
The Income tax Officer held that the property purchased by the assessee in 1933 was stock in trade of his money lending business and the excess amount realized by the assessee over the companyt was business income.
The decision having gone against the assessee the following question was sought to be referred and was duly referred by the Tribunal to the High Court Whether the sum of Rs.
17,800/ to the mesne encumbrances.
The assessee, at the material time, was an undivided Hindu family carrying on money lending business.
N. Grover, J. This is an appeal by special leave from a judgment of the Allahabad High Court arising out of an Income tax reference relating to the assessment year 1949 50.
