Badridas Daga v CIT
Rule established
Interest on securities held as stock-in-trade is taxable under 'Profits and Gains of Business' and not under 'Income from Other Sources'.
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.
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'.
How to use it in an exam
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).
Source
Source: (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.