K. M. S. REDDY, COMMISSIONER OF INCOME-TAX, KERAL vs THE WEST COAST CHEMICALS AND INDUSTRIES LTD. (I

The Supreme Court held that the profits from the sale of chemicals and raw materials during the winding up of a company are not liable to income tax under the Income Tax Act, as the sale was not part of ordinary trading but a realization sale. The Court emphasized that the company had not engaged in sustained trading of chemicals prior to winding up, and thus, the profits amounting to Rs. 1,15,259 were not taxable. The decision referenced Doughty v Commissioner of Taxes, (1927) A.C. 327, affirming that a winding up sale does not constitute trading.