M/S. KILLICK NIXON & COMPANY vs COMMISSIONER OF INCOME-TAX, BOMBAY

The Supreme Court held that capital gains, while defined as income under Section 2(6C) of the Indian Income-tax Act, 1922, do not qualify for exemption under Section 25(3) as they do not arise from trading activities. The Court emphasized that the Appellate Tribunal must consider all evidence presented regarding asset valuation on January 1, 1939, and cannot merely accept the department's estimates without scrutiny. The appeals from the High Court were partly allowed, affirming the need for a comprehensive evaluation of evidence by the Tribunal.