COMMISSIONER OF INCOME-TAX, MADRAS vs AJAX PRODUCTS LTD. THROUGH ITS LIQUIDATOR

The Supreme Court upheld the High Court's decision that the second proviso to Section 10(2)(vii) of the Indian Income Tax Act, 1922, was not applicable as there was no business activity in the accounting year 1955. The Court emphasized that the legal fiction in the proviso is limited and should not be extended beyond its intended purpose. The Tribunal's estimate of the sale value of the company's assets was deemed invalid due to lack of material support, affirming the High Court's interference in the matter.