Section 2(13) — the law in short
What the courts have decided on section 2(13), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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Janki Ram Bahadur Ram v CIT
Supreme CourtHelps taxpayer
I bought a factory that had nothing to do with my line of business, never ran it, and sold it within months at a large profit. Is that profit business income?
No, not on these facts. The Supreme Court held the purchase was an isolated transaction unrelated to the assessee's business in iron scrap and hardware, and that a profit motive is not decisive, since an accretion to capital does not become taxable income merely because the asset was bought in the expectation of selling it at a profit. It is for the Revenue to bring the profit within the charge. Even accepting that the assessee got a good bargain and would have sold on a favourable offer, that alone could not support an inference of an adventure in the nature of trade. The High Court's answer was discharged and a negative answer recorded.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.