The material facts in the statement of the case were as follows.
2,13,150/ was a business profit and so the Court called for a supplementary statement of the case and a supplementary statement of the case was submitted to the Court by the Tribunal.
The assessee is a public limited companypany and it is companytrolled by the Birlas.
10/ each 76,00,000 fully paid up.
100/ 37,50,000 each paid up at Rs 25/ each redeemable at par at the companypanys option after specified date by giving one Years numberice .
The assessee companytended that the amount re presented capital gain as the shares were purchased by way of investment and that the same cannot be taxed as revenue receipt.
He companyfirmed the order.
1.29,214/ as loss on account of its dealing in shares of M s. Titagarh Paper Mills Ltd. it also claimed Rs.
From the judgment and order dated the 10th January, 1968 of the Madhya Pradesh High Court at Jabalpur in Misc.
These purchases were authorized by a resolution of the assessee dated 7 2 1951.
the assessee applied for certain shares of the Gwalior Rayon Silk Manufacturing Weaving Company Limited hereinafter referred to as the Rayon Company , also a companypany companytrolled by the Birlas.
S. Desai, B. B. Ahuja and S. P. Nayar, for the appellant.
C. Chagla, B. Sen, A. K. Chitale, A. K. Verma, Ravinder Narain J. B. Dadachanji and O.C. Mathur, for respondent.
For the assessment year 1956 57 accounting year ending on 31 3 1956 , the Income Tax Officer sought to assess the amount on the basis that it was profit accruing to the assessee from an adventure L in the nature of business.
This companypany was floated on 25 8 1947 with a paid up capital of Rs.
8,72,500/ as application money on the 25th and 21th February, 1951, and paid Rs.
10/ each.
in the past, dealt in shares as business transaction and had claimed for the assessment year 1951 52 Rs.
1 50,000 Ordinary shares of Rs.10/. each 3,75,000 with paid up at Rs.
The Income Tax Officer rejected the companytention.
5 lakhs made up of 50,000 ordinary shares of Rs.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
7,60,000 Ordinary shares of Rs.
When the reference came up for hearing before the High Court, the High Court found that although the Tribunal was of the view that the question referred was a mixed question of law and fact, it had number stated all the facts and circumstances on which it based its companyclusion that the profit of Rs.
1,17,25,000/ made up as follows Rs.
The question referred was Whether the inference of the Tribunal that the profit of Rs.
The assessee sold a part of its stock viz.,
The assessee then went up in appeal before the Appellate Tribunal.
Civil Case No.
the assessee filed in appeal before the Appellate Assistant Commissioner.
The High Court, in its judgment, said that there was numberprovision in clauses 10, 12, 13, 28 and 29 of paragraph 3 of Memorandum of Association of the assessee which authorised the carrying on of the business of purchasing and selling shares, although some of these clauses did authorise the assessee to acquire and sell shares in other similar companypanies.
in the year ending 31 12 1951, the Rayon Company issued certain new shares for paid up capital of Rs.
1,50,000 6 preference shares of Rs.
2,13,150/ in the profit and loss account without taking it to any reserve account or specifically set it apart for any other purpose the assessee had purchased the shares from borrowed funds and number with money readily available to it the assessee did number make the sales on account of any pressing necessity to meet existing liabilities but had in fact kept a part of the sale proceeds as liquid cash in the United Commercial Bank Ltd. the assessee had.
2,13,150/ .
The assessee which was interested in the Rayon Company and which had already purchased 1,000 ordinary shares, subscribed for 3,49,000 shares of the new issue and paid Rs.
221 of 1962.
The Judgment of the Court was delivered by MATHEW, J. This is an appeal from the judgment of the High Court of Madhya Pradesh in a reference made at the instance of the assessee M s. Sutlej Cotton Mills Supply Agency Ltd. hereinafter referred to as the assessee by the Income Tax Appellate Tribunal hereinafter referred to as the Tribunal under s. 66 1 of the Indian Income Tax Act.
26,17,500/ as final call money on 10 8 1951.
2,13,150/ arising from the sale of 1,58,200 shares of the Gwalior Rayon Silk Manufacturing Weaving Co. Ltd., is assessable as business profit is companyrect ?.
1,58,200 shares at a profit of Rs.
6,30,000/ as loss on account of devaluation of the shares of M s. Pilani Investment Corporation though that was number allowed there had recently grown a business practice of investing large sums of money in shares in new ventures with an eye on their appreciation for obtaining by sale substantial pro fits in future.
1877 of 1970.
2/8/ each.
