what were the characteristics of the business of dealing in shares or that of an investor was a mixed question of fact and law and what was the legal effect of the facts found by the Appellate Tribunal.
The assessee companypany thereupon obtained special leave to appeal to this Court.
the objects set out in the Memorandum of Association and the previous assertion made by the assessee companypany that it was a dealer in investments and properties and number merely an investor.
It was pointed out by this Court that the Appellate Tribunal in arriving at its finding that the assessee was a dealer and number an investor, had relied on two basic facts, viz.,
The assessee companypany took the matter in appeal to the Appellate Assistant Commissioner who dismissed the appeal and upheld the order of the Income Tax Officer.
The appeal was allowed by this Court by its judgment dated May 22, 1957 and the order of the Bombay High Court dated June 15, 1952 was set aside.
83,833 representing sterling investments handed over to the creditors of the petitioner companypany in part repayment of the loan taken from them in the year ended 30th June, 1931, shares of the value of Rs.
During the period of 9 years from Ist July, 1930, to 30th July, 1939, numberpurchases.
of the value of Rs.
Appeals from the judgment and order dated March 2, 1966 of the Bombay High Court in Income tax Reference No,.
In the year ended 30th June, 1940, reconstruction scheme of the Appollo Mills Ltd. took place under which debentures held by the petitioner companypany in the Appollo.
In the year 1930, the petitioner companypany purchased shares of Rs.
The Judgment of the Court was delivered by Ramaswami, J. These appeals are brought by certificate from the judgment of the Bombay High Court dated March 2, 1966 in Income Tax Reference No.
2,794 made by the petitioner companypany during the year ended 30th June, 1941, Rs.
Prior to 1940 the assessee companypany made a claim every year being treated as a dealer in investments and properties but this companytention was repelled by the Income Tax authorities and upto the assessment year 1939 40 the assessee companypany was assessed on the basis of being an investor but it appears that for the assessment years 1940 41, 1941 42 and 1942 43 the Income Tax department accepted the plea of the assessee companypany and treated it as a dealer in shares, securities and immovable properties and assessed it on that basis.
and whether as a result thereof the assessee companyld be termed a dealer or an investor was itself a question of law.
In accordance with the direc tion of this Court the Appellate Tribunal made a statement of the case on June 12/13, 1962.
were made with the exception of a few shares of Loyal Mills Ltd. taken over from the staff of D. Sassoon Co. Ltd., who retired from service.
655 of 1967.
The Appellate Tribunal rejected the assessees claim that it was showing itself as a dealer in shares, securities and immovable properties under a misapprehension and without appreciation of the companyrect facts.
The application was rejected by the Appellate Tribunal on the ground that numberquestion of law arose out of its order.
T. Desai, D. Dwarkadas and S.S. Javali, for the appellant K. Daphtary, Attorney General, R. Gopalakrishnan, R.N. Sachthey and B.D. Sharma for the respondent in all the appeals.
Consequently, the Tribunal held that the assessee companypany was a dealer in shares, securities and properties and dismissed the appeals.
Thus the grounds on which the case was decided against the assessee companypany were 1 that the assessee claimed to.
73 of 1962.
73 of 1962 was heard by the High Court which by its judgment dated March 2, 1966 answered both the questions.
34,954 during the year ended 30th June, 1946.
Tax Officer rejected the plea and held that the investments were held by the assessee companypany as the stock intrade of its business which it carried on during the previous year and also in the preceding years.
45,000 in the Loyal Mills Ltd., sold to the members of the staff and shares of the value of Rs.
The case was therefore remanded to the High Court for directing the Appellate Tribunal to state a case on the aforesaid questions of law under s. 66 2 of the Act.
against the assessee companypany and in favour of the Commissioner of Income Tax.
For these years and for the assessment year 1943 44 the assessee companypany made its return in that basis.
From the year ended 30th June, 1943, D. Sassoon Co. Ltd., started relinquishing the managing agencies of the various mills under their agency and the shares held by the petitioner companypany in the Sassoon Group of Mills were handed over to the respective purchasers.
But after the return had been filed for the year 1943 44, the assessee companypany withdrew its return and filed a revised return on March 7, 1944, companytending that it was number a dealer but merely an investor.
The reference being Income tax Reference No.
The appellant companypany, hereinafter called the assessee companypany, was incorporated on July 29, 1924, as an investment companypany, the objects of which are set out in el.
CIVIL APPELLATE JURISDICTION Civil Appeals Nos.
Mills Ltd., were redeemed and the proceeds were .reinvested in the new issue of shares made by the Appollo Mills Ltd. Out of the purchases of the value of Rs.
73 of 1962.
1,33,930.
III of the memorandum of association and more particularly in sub cls 1, 2, 15 and 16 of that clause.
56,700.
101/2 lacs.
The Appellate Tribunal held that in the case of the assessee companypany number only the Memorandum of Association gave the power to the companypany to deal in investments but the case of the companypany all along in the past was that it was a dealer in investments and properties.
1,86,47,789 major portion of which was companyprised of shares in the Sassoon Group of Mills.
Ltd., taken over from the retiring staff.
Whether the profits and losses arising from the sale of shares, securities and immovable properties of the assessee companypany can be taxed as business profits. ?
651 to.
After this there were numberpurchases at all to this date excepting purchases.
Along with the return it filed a letter dated March 6, 1944 in which it stated The return of Total Income which was submitted with the Companys letter of 25th May 1943 was prepared in companyformity with the ruling of the Income tax Officer in the 1940 41 assessment that the companypany was to be assessed as a dealer in Investments.
The sales are companytained in paragraph 3 b which states In relation to the purchases made by the petitioner companypany as stated above numberappreciable sales of shares were made during the period 29th July, 1924 to 30th June, 1942, the sales made in the year ended 30th June, 1929, of the value of Rs.
Since that return was submitted the Central Board of Revenue has decided that the Company is an Investment Holding Company, and accordingly an amended Return of Total Income under Section 22 1 of the Indian Income tax Act is submitted herewith on which the assessment for 1943 44 may be based, as on this particular question the companypany obviously cannot have one status for Excess Profits Tax and another for Income taX. It was companytended by the assessee companypany that it never carried on any business in the purchase or sale of shares, securities or properties In support of this companytention the assessee companypany relied on the order of the Central Board of Revenue dated August 18, 1943 passed under s. 26 1 of the Excess Profits Tax Act.
The assessment years in question are 1943 44 to 1948 49, excepting the year 1947 48.
Accordingly the Court formulated the following two .questions of law as arising out of the order of the Tribunal 1 Whether there are any materials on the record to support the finding of the Income Tax Officer that the assessee companypany was a dealer in shares, securities and immovable property during the assessment year in question?
The assessee thereafter appealed to the Income Tax Appellate Tribunal and the same companytentions were urged on behalf of the assessee companypany.
During the year ended 30th June, 1929, the petitioner companypany promoted two companypanies known as Loyal Mills Ltd., and Hamilton Studios Ltd. and took over all their shares of the value of Rs.
of the mills agencies.
1,29,333 included shares of the value of Rs.
The assessee companypany then made an application under s. 66 2 of the Act to the Bombay High Court which dismissed the application by its order dated June 15, 1952.
The Income.
7,48,356 were handed over to the creditors in payment of the loan granted by them.
2,000 was the value of shares of the Loyal Mills.
The assessee companypany then applied to the Appellate Tribunal under s. 66 1 of the Income Tax Act, 1922, hereinafter called the Act for a reference of the following questions of law for the opinion of the High Court Whether on the facts and in the circumstances of the case the assessee companypany can rightly be treated as a dealer in investments and properties and Whether the profits and losses arising from the sale of shares, securities and immovable properties of the assessee companypany can be taxed as business profits.
