HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Sir Kikabhai Premchand v. Commissioner of Income-tax (Central), Bombay
Civil Appeal No. 144 of 1952
[1954] SCR 219 ·
Indian Income-tax Act, 1922: sections 13, 66(1); business income computation
Sources & disclosures includedDownload original judgment / order
5-judge bench · Patanjali Sastri C.J. · S. R. Das J. · Vivian Bose J. (majority author) · Ghulam Hasan J. · N. H. Bhagwati J. (dissenting)
Assessment years: Calendar year 1942 (accounting year)
01 · Facts of the case
A sole proprietor trading in silver and shares consistently valued stock at cost. During 1942 he withdrew stock and settled it on three trusts, crediting the business with its cost. Revenue assessed the difference between cost and market value. Good faith was not disputed.
02 · Discussion by the Hon’ble Court
The four-judge majority treated owner and sole business as the same person and found no receipt or realised business gain in a non-business withdrawal. Bhagwati J., dissenting, would have credited market value when stock left the business, viewing withdrawal and realisation alike for this purpose. The majority held that no income arose from the transfers on these facts. Cost entries cancelled the original stock cost and did not require a fictional profit; the alternative computation question did not arise.
Source: Primary report: SCR 222–226 (majority); 229–235 (dissent); SCR 224–227
03 · Judicial decision
The assessee’s appeal was allowed with costs by majority. The dissent’s proposed dismissal was not the operative disposition.
Source: Primary report: SCR 227, 235
04 · Outcome / in whose favour
Assessee. The assessee’s appeal was allowed with costs by majority. The dissent’s proposed dismissal was not the operative disposition.
Source: Primary report: SCR 227, 235
05 · AKHB REVIEW POINT
Keep the historical holding tied to a continuing sole-proprietor business, genuine withdrawal without consideration and the accepted cost method. The majority expressly left dissolution and other entities’ cases open; do not extend it automatically to statutory conversion or deemed-income provisions.
Source: Primary report: SCR 221–226
Source & verification
Download original judgment / order · Open cited source rendition
All seventeen pages and both opinions fully read. SCR 235 begins a separate religious-endowment case after the final order.
Statutory scope
Historical statutory text and assessment period only. Present statutory equivalence and later judicial treatment are not cleared.
Later treatment
Source checked 2026-10-19. Subsequent treatment and current-law applicability have not been comprehensively checked.
Page references identify the supplied PDF; paragraph references identify the judgment unless stated otherwise.
AI disclosure & professional disclaimer
This AKHB research note was prepared with AI assistance from an identified primary report. Independent human review is not represented.
General legal and tax research only; not legal or tax advice. Verify the complete judgment, applicable statutory version and subsequent treatment before reliance. The AKHB REVIEW POINT is editorial analysis, not the Court’s holding. No current-law clearance is claimed.