Taxation lawHead of incomeSupreme Court of India

Badridas Daga v CIT

(1958) 34 Income Tax Reports 10 (SC)19581 min read
The case in brief30-second read
Facts
The assessee, a money-lender, held government securities as stock-in-trade of his business. Interest earned on these securities was assessed under 'Income from Other Sources'. The assessee contended it should be assessed under 'Business Income'.
Issue
Under which head should interest on securities held as stock-in-trade be taxed?
Held
The Supreme Court held that where securities are held as stock-in-trade of a business, interest thereon is assessable under 'Profits and Gains of Business or Profession' and not under 'Income from Other Sources'. The character of the receipt depends on the character of the asset in the assessee's hands.
Principle
Interest on securities held as stock-in-trade is taxable under 'Profits and Gains of Business' and not under 'Income from Other Sources'.
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Facts

  • The assessee, a money-lender, held government securities as stock-in-trade of his business. Interest earned on these securities was assessed under 'Income from Other Sources'. The assessee contended it should be assessed under 'Business Income'.

Issue

  1. Under which head should interest on securities held as stock-in-trade be taxed?

Held

  • The Supreme Court held that where securities are held as stock-in-trade of a business, interest thereon is assessable under 'Profits and Gains of Business or Profession' and not under 'Income from Other Sources'. The character of the receipt depends on the character of the asset in the assessee's hands.

Ratio decidendi

Interest on securities held as stock-in-trade is taxable under 'Profits and Gains of Business' and not under 'Income from Other Sources'.

Exam use

How to use it in an answer

Cite as authority: "Interest on securities held as stock-in-trade is taxable under 'Profits and Gains of Business' and not under 'Income from Other Sources'." (Badridas Daga v CIT, 1958).

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Citation

Badridas Daga v CIT (1958) 34 Income Tax Reports 10 (SC)

Reported: (1958) 34 Income Tax Reports 10 (SC). This is an educational summary, not the judgment itself. Cite the reported version in professional or academic work.