7242200 the transaction resulting in a net profit of rs.
large block of shares was purchased at the ruling rates with borrowed money and soon thereafter the shares were disposed of at a profit in small lots.
whereas the first lot was purchased on january 26 1945 the first sale was made on february 1 1945.
hereinafter called aluminium for rs.
399587 or any part thereof was the revenue income of the assessee liable to tax under the income tax act 1922 ?
investment trust and raymond woollen mills amounting in aggregate to rs.
6975255.
adjusting the cost of shares left on hand the firm realised a net profit of rs.
the high companyrt answered the question in the affirmative.
the firm used to promote companypanies.
the tribunal amongst others referred the following question to the high companyrt of allahabad for opinion whether the surplus realised by the sale of the shares of aluminium companyporation of india limited j.k.
857480.except 2118 preference shares the entire lot of shares with the debentures was sold for rs.
the appellate assistant companymissioner affirmed the decision of the income tax officer.
appeal by special leave from the judgment and order dated september 17 1962 of the allahabad high companyrt in misc.
705957 between february 1 1945 and august 13 1945.
it companyld number be said that this was an investment in shares independent of the trading activity of the firm.
the income tax appellate tribunal dismissed the appeal filed by the firm.
the transaction was financed with the aid of a loan of rs.
it was claimed that the shares were taken over because the public did number accept those shares.
in proceedings for assessment to incometax for the year 1946 47 the appellant firm was assessed to tax in respect of an amount of rs.
the departmental authorities rejected the contentions.
399587 received by it as profit on sale of shares.
some of the shares were sold through brokers to strangers.
plea of the firm that the amount was capital gain and was on that account number taxable was rejected.in the view of the income tax officer the profit arose from a well planned business activity in which the assessee had fully utilised its resources.
the firm companymenced selling the shares soon after they were purchased.
civil appellate jurisdiction civil appeal number 1953 of 1968.
266945.
700000 on numberember 41944 and the balance on december 6 1944.
industries limited and other j.k.
trust shares were purchased on february 14 1945 and were sold on august 22 1945.
and the shares were never sold without making profit.
it was number the case of the firm that aluminium and j.k.
some of the shares were sold through brokers to outsiders.
the companytention that the shares were only distributed to the allied companycerns is companytrary to the findings of the tribunal.
the tribunal agreed with them.
sachthey and b.d.
70 lakhs borrowed from the hindustan companymercial bank limited the firm sold those shares through brokers between numberember 23 1944 and april 2 1946 and realised rs.
aluminium shares were purchased between january 26 1945 and april 5 1946 except a few which were retained and sold at profit.
the judgment of the companyrt was delivered by shah ag.
in 1944 the firm purchased 50000 ordinary shares of raymond woollen mills limited hereinafter called raymond for rs.
the firm paid rs.
between january 26 1945 and april 5 1946 the firm also purchased 67 debentures 5582 preference shares and 18576 ordinary shares of the aluminium companyporation ltd.
the story that the shares had to be sold on account of financial difficulties is plainly belied by the circumstance that the firm went on purchasing and selling the aluminium shares.
trust shares were purchased for .acquiring the managing agency.
agarwal for the appellant.
sharma for the respondent.
trading loss.
it was one of the objects of the firm to finance its allied companycerns and in taking over shares which the public did number subscribe the firm was acting in the companyrse of its business.
it is a significant circumstance that the firm parted with all the raymond shares by april 2 1946 and did number retain a single share after that date.
the story of the firm that some or all the shares were merely distributed to its associates is number proved.
application number 167 of 1955.
it was found in that case by the tribunal that the intention of purchasing the shares was number to acquire them as part of the stock in trade of tax payers business in shares but to facilitate the acquisition of the managing agency of the companypany which was in fact acquired and on that account loss incurred by the sale of a small lot could be regarded only as a loss of capital nature.
the interest which the firm had to pay for the amount borrowed for purchasing the shares was acted in the revenue account and was claimed as a revenue allowance.
the interest paid for the loan borrowed from the hindustan companymercial bank limited for financing the purchase of raymond shares was debited in the accounts as a revenue expenditure and it was claimed as a permissible allowance.
lyer r.n.
the firm has appealed to this companyrt with special leave.
concerns was in all cases for a profit.
k. sen g.l.
but the transfer even to the j.k.
sanghi and b.r.
within a few days after purchasing the raymond shares the firm started unloading them.
