HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Juggilal Kamlapat, Kanpur v. Commissioner of Income-tax, Lucknow
Civil Appeal No. 1953 of 1968
[1970] 1 SCR 720 ·
Indian Income-tax Act, 1922: characterization of share-sale profits
Sources & disclosures includedDownload original judgment / order
3-judge bench; unanimous judgment delivered by J. C. Shah, Acting C.J. · J. C. Shah, Acting C.J. · V. Ramaswami, J. · A. N. Grover, J.
Assessment years: 1946-47
01 · Facts of the case
The assessee firm bought large blocks of Raymond, Aluminium and J.K. Trust securities, largely with borrowed funds, and sold them soon after at aggregate profit. It claimed capital investment connected with managing agency or support of allied companies. The authorities found sales to outsiders and associates at profit, brokered transactions, rapid turnover and revenue treatment of borrowing cost (SCR pp.720-723; PDF pp.1-4).
Source: Primary judgment: facts
02 · Discussion by the Hon’ble Court
Whether conduct is an adventure in the nature of trade is a mixed question. Here the ruling-price purchases with borrowed money, almost immediate profitable sales in small lots, sales through brokers and unsupported capital-purpose narrative showed a planned commercial scheme. Ramnarain Sons was distinguishable because its fact-finder accepted a real managing-agency acquisition and only a small portion was sold at loss (SCR pp.723-725; PDF pp.4-6).
Source: Primary judgment: discussion
03 · Judicial decision
The Court upheld treatment of the aggregate Rs.3,99,587 profit as revenue income and dismissed the assessee's appeal with costs (SCR p.725; PDF p.6).
Source: Primary judgment: decision
04 · Outcome / in whose favour
In favour of Revenue: all three transaction groups bore the character of commercial trades, not capital investments (SCR pp.724-725; PDF pp.5-6).
Source: Primary judgment: outcome
05 · AKHB REVIEW POINT
AKHB analysis: build classification from contemporaneous conduct—funding, holding period, sales pattern, counterparties, accounting and credible purpose—rather than a post hoc investment label. Treat the result as fact-bound and re-check the current statute (based on SCR pp.723-725; PDF pp.4-6).
Source: Primary judgment: review point
Source & verification
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Statutory scope
The fact-intensive characterization arose under the repealed 1922 Act; it does not decide current capital-gains, business-income or investment-classification rules.
Later treatment
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