HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Karam Chand Thapar & Bros. (P) Ltd. v. Commissioner of Income-tax (Central), Calcutta
Civil Appeals Nos. 1594-1595 of 1968
[1969] 3 SCR 796 ·
Indian Income-tax Act, 1922: sections 6, 24(1), 24(2) and 66(1)
Sources & disclosures includedDownload original judgment / order
3-judge bench; unanimous judgment delivered by J. C. Shah, J. · J. C. Shah, J. · V. Ramaswami, J. · A. N. Grover, J.
Assessment years: 1949-50, 1950-51
01 · Facts of the case
The assessee company carried on several businesses, including coal mining and a Dry Ice Factory at Lahore. It obtained a Chirimiri Colliery prospecting licence from the State of Korea in 1944, prospected and developed the colliery, and sold it, earning Rs.51,550 in accounting year 1948-49 and Rs.8,756 in accounting year 1949-50. Revenue, the Tribunal and the High Court treated both gains as business profits. Separately, the assessee sold its Dry Ice Factory in September 1948; the buyer took possession on 1 October 1948, but the price was finally settled only in December 1949, producing a Rs.34,891 loss. The authorities and High Court denied that loss in AY 1950-51 (SCR pp.797-799; PDF pp.2-4).
Source: Primary judgment: facts
02 · Discussion by the Hon’ble Court
For the colliery, the Court distinguished mere realisation of an investment from a trading operation undertaken for profit. No single fact or uniform rule was decisive, and even an isolated transaction could be revenue where intimately related to the taxpayer's normal business. On the Tribunal's findings that the assessee already conducted coal mining and that prospecting, developing and selling the colliery formed part of that business, the two gains were taxable (SCR pp.799-801; PDF pp.4-6). For the factory loss, section 24(1) permitted a loss arising under one head in a year to be set off against income under another head in that year, while section 24(2) addressed unabsorbed business loss carried forward. Because the sale price was not settled until December 1949, no loss accrued earlier; it arose in accounting year 1949-50 and was deductible in the AY 1950-51 computation under section 24(1), despite cessation of the factory business (SCR pp.801-803; PDF pp.6-8).
Source: Primary judgment: discussion
03 · Judicial decision
The Court affirmed the High Court's answers that the two colliery gains were revenue and taxable. It discharged the High Court's answer on the Dry Ice Factory loss and answered that question in the affirmative and for the company. The appeals were allowed in part; there was no Supreme Court costs order, and the High Court costs order remained (SCR p.803; PDF p.8).
Source: Primary judgment: decision
04 · Outcome / in whose favour
Mixed final result. Revenue retained taxation of the Rs.51,550 and Rs.8,756 colliery gains; the assessee obtained deduction of the Rs.34,891 factory loss in AY 1950-51 (SCR pp.801, 803; PDF pp.6, 8).
Source: Primary judgment: outcome
05 · AKHB REVIEW POINT
AKHB analysis: classify an isolated asset transaction by its relationship to the taxpayer's established operations, development activity and profit-making purpose rather than by frequency alone. For a sale loss, identify when the legally relevant amount became fixed before analysing continuity or carry-forward; a later price settlement may place accrual in a year different from possession or transfer. Present separate issues and results distinctly when the appeal is split (based on SCR pp.799-803; PDF pp.4-8).
Source: Primary judgment: reviewPoint
Source & verification
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Statutory scope
The judgment applies the business-income and loss set-off provisions of the repealed Indian Income-tax Act, 1922. The outcome is tied to the Tribunal's factual findings and the accrual timing of a 1949 price settlement. It does not establish current capital/revenue classification or current loss set-off treatment, and no 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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