Judgment

GROVER, J.:- The sole question for determination in this appeal by special leave is whether on a true interpretation and construction of the second proviso to Section 10 (2) (vii) of the Income-tax Act, 1922, sale of the assets of an assessee effected for the purpose of closing down the business would be covered by that proviso and would be assessable as profit.

2. The assessee was running the business of plying buses in the name of Kumar Motor Service. During the assessee s previous year which was the year ending August 16, 1959 the buses had been plied for part of the year but they were sold between August 16, 1958 and January 13, 1959. Two of the buses had been sold for Rs. 78,000 and the other four for Rs. 35,000, the total consideration received being Rs. 1,13,000. The assessee claimed a payment of Rs. 2,000 as brokerage. The Income-tax Officer fixed a sum of Rs. 25,000 as the route value and held this amount to be a capital gain assessable to tax. On the balance of Rs. 86,000 he worked out the profits in the following manner:-

Sale price of 6 buses Rs. 86,000

Written down value of six buses Rs. 36,712

Rs. 49,288

The income-tax Officer consequently assessed the sum of R