THE LIQUIDATORS OF PURSA LIMITED vs COMMISSIONER OF INCOME-TAX, BIHAR.

The Supreme Court held that under Section 10(2)(vii) of the Income-tax Act, machinery and plant must have been used during the accounting year for the profits to be taxable. Since the machinery of the sugar factory was not used at all during the accounting year, the second proviso to Section 10(2)(vii) did not apply, and the assessees were not liable for tax on the surplus from the sale of the machinery. The Court emphasized that appellate courts can intervene if a tribunal misunderstands statutory language or makes findings inconsistent with evidence.