The assessee dealt in silver and shares and a substantial part of his holding were kept in silver bullion and shares. His business was run and owned by himself and\u00a0 his accounts were maintained according to the mercantile system. The stocks of silver bars and shares werevalued at cost.<\/p>\n
In the course of the year the appellant withdrew some bars and shares from the business and settled them on certain trusts. The assessee credited the business\u00a0 with the cost price of the bars and shares withdrawn.<\/p>\n
\u00a0<\/p>\n
Whether act of withdrawal resulted in income, profit or gain either to the assessee\u00a0 \u00a0or to his business?<\/p>\n
\u00a0<\/p>\n
The act of withdrawing silver bars and shares was not\u00a0 a\u00a0 business transaction and by that act the business made no profit or\u00a0 gain, nor\u00a0 did\u00a0 it\u00a0 sustain a\u00a0 loss, and the appellant derived no income from it. The assessee may have stored up a future advantage for himself but as the transactions were not business ones and\u00a0\u00a0\u00a0\u00a0 as the assessee derived no immediate pecuniary gain the State cannot tax them,\u00a0\u00a0 for under the Income-tax Act the State has no power to tax a potential future advantage. The State can tax only income, profits and gains made in the relevant accounting year. The business is owned and run by the assessee himself. It is wholly unreal and artificial to separate the business from its owner and treat them\u00a0\u00a0\u00a0 as if they were separate entities trading with each other and then by means of a fictional saleintroduce a fictional profit which in truth and in fact is non-existent.<\/p>\n
\u00a0<\/p>\n
A person cannot make a\u00a0 profit from dealing with himself. (AY.\u00a0 1943-44) (CA\u00a0 No. 144 of 1952 dt. 9-10-1953)<\/p>\n
Editorial: <\/em><\/strong>In CIT v.\u00a0 Hind Construction Ltd (1972) 83 ITR 211 (SC), <\/em><\/strong>the Court\u00a0 held that no one can sell his goods to himself. A sale contemplates a seller and a purchaser. If a person re-values his goods and shows a higher value for them in\u00a0\u00a0 his books, he cannot be considered as having sold these goods and made profits therefrom.<\/p>\n \u201cPeople say true friends must always hold hands, but true friends don\u2019t need to hold hands because they know the other hand will always be there.\u201d<\/em><\/p>\n – Mahatma Gandhi<\/p>\n","protected":false},"excerpt":{"rendered":" S.145: Method of accounting \u2013 A person cannot make a profit from himself- Revaluation is not taxable event. [S.4 , Indian Income -tax Act, 1922, S.13] <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-13425","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-3ux","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/13425","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=13425"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/13425\/revisions"}],"predecessor-version":[{"id":13426,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/13425\/revisions\/13426"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=13425"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=13425"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=13425"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}