HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Commissioner of Income-tax and Excess Profits Tax, Hyderabad v. V. Jagan Mohan Rao and Others
Civil Appeals Nos. 893-898 and 1381-1386 of 1966
[1970] 1 SCR 726 ·
Indian Income-tax Act, 1922: sections 10(2)(xv), 22(2), 34, 41 and 66(2)
Sources & disclosures includedDownload original judgment / order
3-judge bench; unanimous judgment delivered by V. Ramaswami, J. · J. C. Shah, Acting C.J. · V. Ramaswami, J. · A. N. Grover, J.
Assessment years: 1944-45, 1945-46, 1946-47
01 · Facts of the case
The assessee HUF bought a spinning mill while the vendor's sons contested title. It later paid Rs.1,15,000 to settle their claim and obtained deposited mill income. After the Privy Council held the vendor had been absolute owner, the officer reopened and treated the payment as capital (SCR pp.727-731; PDF pp.2-6).
Source: Primary judgment: facts
02 · Discussion by the Hon’ble Court
The Privy Council decision was definite information under historical section 34; valid reopening reached the entire escaped income for the year. The compromise payment perfected title to the mill and removed a capital-asset defect. Reference to accumulated profits in the settlement calculation did not create a severable revenue component (SCR pp.732-735; PDF pp.7-10).
Source: Primary judgment: discussion
03 · Judicial decision
Revenue's appeals were allowed to the stated extent, the assessee's appeals dismissed, the entire payment held capital and no costs awarded (SCR p.735; PDF p.10).
Source: Primary judgment: decision
04 · Outcome / in whose favour
In favour of Revenue on reopening breadth and expenditure character (SCR pp.732-735; PDF pp.7-10).
Source: Primary judgment: outcome
05 · AKHB REVIEW POINT
AKHB analysis: separate the information triggering reopening from the income reachable after valid initiation. For character, ask whether the payment acquires or perfects the enduring income-producing asset; a settlement calculation referencing profits is not itself decisive (based on SCR pp.732-735; PDF pp.7-10).
Source: Primary judgment: review point
Source & verification
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Statutory scope
The repealed section 34 framework and historical capital/revenue analysis do not state current reassessment law.
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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