COMMISSIONER OF INCOME-TAX, MADRAS vs EXPRESS NEWSPAPERS LTD., MADRAS

The Supreme Court held that the second proviso to Section 10(2)(vii) of the Income-tax Act, 1922, applies only to machinery used in business during the accounting year, and not to machinery sold during winding up proceedings. The Court ruled that since the machinery was sold after the business was closed, the amount of Rs. 2,14,090 could not be assessed to income-tax. Additionally, the Court clarified that profits from business and capital gains are distinct concepts under the Income-tax Act, thus excluding capital gains from the provisions of Section 26(2).