The appellant relies upon the decision of this Court in Baldev Singh v. Commissioner of Income tax 2 , and companytends that the exceptional circumstances existing in the latter case and adverted to in the former, govern the present case.
1,507 shares were purchased at Rs.
It was received by one Motilal Pathak, a clerk in the office of the Commissioner.
We are number companycerned with the loss arising from the first sale which was companysidered in the assessment year, 1950 51, and in respect of which a reference is pending in the High Court of Punjab.
Whether a particular loss is a trading loss or a loss on the capital side undoubtedly depends upon the facts of each case.
The order of the Income tax Officer, Central Circle V, New Delhi was companyfirmed on appeal by the Appellate Assistant Commissioner.
Motilals affidavit shows that, he suddenly fell ill, and had to take casual leave for the day.
Appeal by special leave from the judgment and order dated May 1/14, 1957, of the Income Tax Appellate Tribunal of India Delhi Bench in T.A. No.
The application was filed on the last day of limitation on that supposition.
5,86,312.
217 8 0.
On the same day, the remaining 11,000 shares were sold by Jaswant Sugar Mills Ltd. to National Construction and Development Corporation Ltd., at Rs.
5,00,000 from National Construction and Development Corporation Ltd. Rs.
the 15th, on which the papers had actually been received.
The arrangement for the money was as follows Rs.
The facts relating to the filing of the application for reference together with the relevant dates are these The Tribunals order was passed by two learned Members, who signed their respective orders on different dates.
The case of the assessee Company for the assessment year, 1951 52, was companysidered by the Income tax Officer, Central Circle V, New Delhi, to whom the cases of the other Companies above named were also transferred.
180 per share, resulting in a loss of Rs.
55,00,000 from the assessee Company but advanced by Ganesh Finance Corporation Ltd. The shares were registered as follows 10,500 shares registered in the name of the assessee Company.
The Accountant Member signed his order on May 1, 1957, and the Judicial Member, on May 14, 1957.
These shares were quoted on the market at Rs.
had appointed a new Board of Directors of the Madhusudan Mills Ltd., and these new Directors also belonged to the same group.
Relying upon the date stamp, everybody took it for granted that limitation would expire on the 60th day, companynting time from July 16, 1957.
Actually, the application was barred by a day.
This block of shares represented about 80 per cent of the total issued capital of the Mills, The purchase was made at Rs.
On October 9, 1949, the assessee Company purchased 15,547 shares at Rs.
8,80,000, and on June 1, 1949, another block of 3,000 shares was sold to the National Investment Trust Ltd., at Rs.
In that year, the loss of Rs.
The managing agency of Messrs. Bhadani Brothers Ltd. was terminated, and on the same day on which the shares were purchased from these managing agents, the assessee Company was appointed as the purchasing and selling agent of the Mills.
1,610.
On further appeal by the assessee Company, the Income tax Appellate Tribunal, Delhi, reversed the order of the Appellate Assistant Commissioner, and held that the loss was a trading loss.
On the date of the purchase from Messrs. Bhadani Brothers, Ltd., Jaswant Sugar Mills Ltd. achieved this purpose in view of their companytrolling interest.
It may be pointed out that on the date on which the two transactions took place, the priceruling in the market was about Rs.
Thus, on that date Jaswant Sugar Mills Ltd. ceased to have any companynection with the present matter.
The decision of the Tribunal was unsuccessfully challenged before the High Court.
4,520 shares of Madhusudan Mills Ltd. was set off against the profits of the assessee Company.
These shares subsequently came back to the same group but that is number a matter with which we are immediately companycerned.
Before Jaswant Sugar Mills Ltd. parted with the shares, they.
The resulting position may be stated thus Ganesh Fiance Corporation Ltd. practically owns the assessee Company and National Construction and Development Corporation Ltd., Raghunath Investment Trust Ltd. practically owns the Ganesh Finance Corporation Ltd., and Yodh Raj Bhalla group practically owns Raghunath Investment Trust Ltd. Jaswant Sugar Mills Ltd. is practically owned by Jaswant Straw Board Ltd., National Finance Ltd., and National Construction and Development Corporation Ltd., and Jaswant Straw Board Ltd., is practically owned by National Finance Ltd., and National Construction and Development Corporation Ltd. Thus, the entire group is owned by a companysortium, and there is numberdoubt about it.
The Income tax Tribunal, therefore, dismissed the application on December 4, 1957.
In October and November, 1948 they, however, sold 6,525 shares to Dalmia Cement and Marketing Company Ltd. at Rs.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
400 per share.
559 of 1960.
250 per share.
14,75,000 borrowed from the assesee Company.
The assessee Company was assessed for the assessment year, 1950 51, by the Income tax Officer, Meerut.
In Commissioner of Income tax v. Ramnarain Sons Ltd. 1 , the Company was a dealer in shares and also carried on the business of acquiring managing agencies of other Companies.
The Judgment of the Court was delivered by HIDAYATULLAH, J. This is an appeal against the order of the Income tax Appellate Tribunal, Delhi Bench, dated May 1/14, 1957, by which the tribunal, reversing the order of the Appellate Assistant Commissioner, held that a loss arising from the sale of certain shares by the respondent Company was a capital loss.
The Commissioner of Income tax then applied for special leave against the order passed by the Tribunal in the appeal before it, and the present appeal, with special leave, has been filed.
That application was found to be barred by one day, and since, under the law, the Tribunal had numberjurisdiction to extend the time, the application was dismissed.
Bhadani Brothers, Ltd. ceased to be the managing agents from that date, and the purchasing and selling agency of the Madhusudan Mills, Ltd. was given to the assessee Company, though it had, on that day, done numbermore than give a loan to Jaswant Sugar Mills Ltd. In the assessment year, 1951 52, the loss of Rs.
The assessee Company made enormous profit from the acquisition of these shares by way of dividend and companymission as the purchasing and selling agent.
N. Rajagopal Sastri and D. Gupta, for the appellant.
He returned to the office the next day, and dealt with the numberice received from the Tribunal.
Radhey Lal Agarwal and P.C. Agarwal for the respondents.
181 per share resulting in a loss of Rs.
Subsequent to the order of the Tribunal impugned here, the Commissioner of Income tax, New Delhi, who is the appellant before us, had moved the Tribunal for a reference to the High Court on certain questions of law said to arise out of the order of the Appellate Tribunal.
Later,4,000 shares were sold at a loss of Rs.
400 per share from Jaswant Sugar Mills Ltd., and the amount paid by the assessee Company was adjusted towards the purchase price and the balance was paid.
400 per share, when the price in the market, was about Rs.
By looking into the affairs of these Companies, he came to learn, that the shares of the Madhusudan Mills Ltd. were purchased at a price, which was almost double the current market price, by the Yodh Raj Bhalla group, and were transferred at the same price to the assessee Company.
Against the decision of the Tribunal, an application was filed in the High Court under s. 66 3 of the Income tax Act but the High Court dismissed the application, agreeing with the Tribunal that the application to the Tribunal for a reference was barred by time.
On April 7, 1949, 4,500 shares were sold by the assessee Company to the National Investment Trust Ltd. at Rs.
The Company the acquired the managing agency of a Textile Mill from Messrs. Sassoon J. David and Co. Ltd., and also agreed as part of the same transaction to buy 2,507 shares of the Mills.
1,500 per share.
He found that this was done with a view to removing Messrs. Bhadani Brothers, Ltd. from their managing agency and to securing for the assessee Company the purchasing and selling agency of the Mills.
The shares of Madhusudan Mills Ltd. were acquired in the following circumstances In July 1948, Mr. Yodh Raj Bhalla, who was in a position by reason of his holdings in these six Companies to influence decisions of the Board of Directors, arranged to purchase 26,547 shares of the Mills from Messrs. Bhadani Brothers, Ltd., who were the managing agents of the Mills.
The numberice of the order was sent to the Commissioner of Income tax, New Delhi, and reached his office by registered post on July 15, 1957.
400 per share.
2070 of 1956 57.
8,78,062 8 0 arising from the sale of Rs.
The shares which were sold by the assessee Company on the two occasioning were sold to one Amrit Bhushan a relative of Mr. Yodh Raj Bhalla who sold then the same day to Messrs. National Investment Trust Ltd., at the slender profits of 8 annas per share, which was brokerage.
5,86,312 8 0 on the sale of 3,000 shares was, therefore, disallowed holding it to be a capital loss.
The cases to which we shall make a reference presently, have laid down this proposition, and those cases have also indicated how the matter is to be viewed in the companytext of facts.
2,321 8 0 per share, and the remaining 4,000 shares were purchased at Rs.
