HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Commissioner of Income Tax, Bombay v. Chugandas and Co., Bombay
Civil Appeals Nos. 685 and 686 of 1963
[1964] 8 SCR 332 ·
Indian Income Tax Act, 1922: sections 6, 8, 10 and 25(3)
Sources & disclosures includedDownload original judgment / order
3-judge bench · K. Subba Rao, J. · J. C. Shah, J. · S. M. Sikri, J.
Assessment years: 1947-48, 1948-49
01 · Facts of the case
Chugandas & Co. dealt in securities and held them as stock-in-trade. It received substantial securities interest in 1946 and 1947 and discontinued business on 30 June 1947. Revenue denied section 25(3) relief because the interest was computed under section 8 rather than under section 10 as business profit.
02 · Discussion by the Hon’ble Court
The Court distinguished the source of income from the statutory machinery for computing it. Section 25(3) referred to tax charged on a business and was designed to correct the double levy created when the 1922 Act shifted from current-year to previous-year assessment. Once income arose from the taxed business, relief was not confined to amounts computed under the business head; interest on trading securities remained income earned by carrying on that business.
03 · Judicial decision
Revenue’s appeals were dismissed with costs, and the firm retained section 25(3) relief for the interest on securities.
Source: Holding and operative order
04 · Outcome / in whose favour
In favour of the assessee/respondent. The entire relevant business income, including securities interest, qualified for the historical discontinuance relief.
Source: Operative result
05 · AKHB REVIEW POINT
AKHB analysis: where a provision turns on the source or character of income, do not assume the computational head is conclusive. Document how the asset is held and how the receipt arises, while also respecting the exact purpose and limits of the operative provision.
Source & verification
Download original judgment / order · Open cited source rendition
Full 16-page SCR report read and checked. The editorial headnote was distinguished from the judgment text and operative order.
- Exact source bytes, SHA-256 and 16-page count match catalogue asset 1964_8_332_347; the full extracted report and operative pages were reviewed.
- The source verifies Civil Appeals Nos. 685 and 686 of 1963, the stated bench, issues, reasoning and operative result.
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Statutory scope
Section 25(3) was a transitional relief tied to double taxation under the 1918 and 1922 Acts. The case does not create a present discontinuance exemption.
Later treatment
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