High Court Of Madras
M. Ct. Muthiah vs. CIT
Section 5, 28
Asst. Year 1979-80, 1981-82
V.S. Sirpurkar & N.V. Balasubramanian, JJ.
T.C. Nos. 17 to 19 of 1988
10th October, 2002
Counsel Appeared
R. Meenakshisundaram, for the Assessee : T.C.A. Ramanujam, for the Revenue
JUDGMENT
BY THE COURT :
The assessment years involved are 1979-80, 1980-81 and 1981-82 and the Tribunal has referred the following questions of law :
“1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the receipts from lease and sale of horses are assessable as income in the hands of the assessee ?
Whether, on the facts and in the circumstances of the case, the Tribunal was correct in rejecting the assessee’s contention that proceeds from sale of horses are to be considered for assessment only under the head “Capital gains” and not under any other head of income ?
On the facts and in the circumstances of the case, whether the Tribunal was correct in holding that the horses are not personal effects of the assessee ?
Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the entire receipts from the lease of horses accrued in those years when the auction took place, even though the lease was for a period of more than one year ?”
2. We have considered the matter in detail in the judgment of even date in the assessee’s own case in T.C. Nos. 209 and 210 of 1986—M. Ct. Muthiah (HUF-II) vs. CIT (2003) 180 CTR (Mad) 238 : (2003) 259 ITR 194 (Mad), holding that the receipts arising from the sale and lease of the horses arose from the business activity carried on by the assessee. One incidental question that arises in this year is whether the entire income by way of lease of the horses should be assessed on the basis of accrual or on the basis of the income received in those assessment years. Admittedly, the assessee is maintaining the mercantile system of accounting and the entire income accrued in the year of auction and it is not open to the assessee to claim that it should be assessed proportionately in the year of receipts of the income. All the authorities including the Tribunal have taken the same view and held that it should be assessed in the year of accrual, we hold that the view expressed by the Tribunal does not call for an interference. We have held in the judgment in T.C. Nos. 209 and 210 of 1986—M. Ct. Muthiah (HUF-II) vs. CIT (supra) of even date that the Tribunal has taken the view that the income arising from the sale of the horses and lease of horses should be assessed under the head “Business” and not under the head “Other sources”. That finding has become final and the Revenue has not taken steps to challenge the finding of the Tribunal and once we hold that the income is arising under the head “Business” the question of assessment under the head “Capital gain” does not arise. Accordingly, we answer all the questions referred to us in the affirmative, against the assessee and in the favour of the Revenue. No costs.
[Citation : 260 ITR 629]
