HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Commissioner of Income-tax, Central, Calcutta & Another v. Amalgamated Development Ltd.
Civil Appeals Nos. 169 and 170 of 1966
[1967] 3 SCR 263 ·
Indian Income-tax Act, 1922: section 10(2)(xv)
Sources & disclosures includedDownload original judgment / order
3-judge bench; unanimous judgment delivered by V. Ramaswami, J. · J. C. Shah, J. · S. M. Sikri, J. · V. Ramaswami, J.
Assessment years: 1950-51, 1951-52
01 · Facts of the case
Amalgamated Development took over the land-development business, assets and liabilities of Mugneeram Bangur & Co. (Land Department) for Rs.34,99,300 in shares. The predecessor had sold plots while undertaking to lay roads, drains, lighting and sanitary works. For 1950-51 and 1951-52 the company claimed expenditure incurred in completing development, including work benefiting plots sold by the predecessor. A separate plot sale left a balance payable by instalments and secured by a mortgage; the Revenue treated that secured balance as received under the company's cash system. The Tribunal and Calcutta High Court ruled for the company on both issues (SCR pp.264-269; PDF pp.2-7).
Source: Primary judgment: facts
02 · Discussion by the Hon’ble Court
The estate was an integrated development: roads, drainage, lighting and sanitation could not sensibly be allocated only to unsold plots. Completing the predecessor's obligations protected the company's continuing business and goodwill, and the liabilities had not been quantified into the acquisition price. The expenditure was therefore incurred on commercial expediency and was deductible. On the receipt issue, the mortgage deed merely secured the remaining purchase price; it neither discharged the purchaser's debt nor gave the assessee money or a money equivalent. Under the cash system the unpaid secured balance could not be treated as income received (SCR pp.269-272; PDF pp.7-10).
Source: Primary judgment: discussion
03 · Judicial decision
The Court agreed with the High Court's answers on both referred questions and dismissed the Revenue's appeals with costs, with one hearing fee (SCR p.272; PDF p.10).
Source: Primary judgment: decision
04 · Outcome / in whose favour
In favour of Amalgamated Development Ltd. The development expenditure remained deductible and the secured unpaid consideration was not cash-basis income received (SCR pp.269-272; PDF pp.7-10).
Source: Primary judgment: outcome
05 · AKHB REVIEW POINT
AKHB analysis: for assumed development obligations, identify whether the expenditure serves an integrated continuing business and whether the acquisition price already quantified the liability. For cash-basis receipt, ask whether the instrument actually discharged the debtor or merely added security. Keep this decision separate from the 1965 same-party slump-sale appeal (based on SCR pp.269-272; PDF pp.7-10).
Source: Primary judgment: reviewPoint
Source & verification
Download original judgment / order · Open cited source rendition
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Statutory scope
The ruling applies former section 10(2)(xv) of the repealed 1922 Act to assessment years 1950-51 and 1951-52 and a cash-system receipt issue arising from specified sale deeds. It does not determine current deduction, accrual or real-estate accounting rules. No current-law or comprehensive later-treatment clearance was undertaken.
Later treatment
Source checked 2026-10-11. Later judicial treatment and current statutory applicability have not been comprehensively checked; no current-law or citator clearance is represented.
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