45,262.50.
The shares acquired after 1st April, 1954 were held as trading stock.
Aggrieved by the said decision of the Appellate Assistant Commissioner, the assessee filed second appeal before the Tribunal.
Besides the sale OF equity shares of the said companypany and shares of other companypanies stated above, the assessee had also sold some of his original shares of the said companypany held by him.
During all these years the purchases and sales is equity shares of the said companypany were more marked than the purchase and sale of other shares.
The question that the High Court had to answer was as follows Whether, on the facts and in the circumstances of the case, the assessee was a dealer in shares in the accounting periods relevant to the assessment years 1959 60 and 1960 61?
The second point on this aspect is that for subsequent years for which Special Leave Nos.
1078 From the Judgment and Order dated 10th August, 1971 of the Bombay High Court in Income Tax Reference No.
1 lakh.
198.75 on 4th June, 1956 and that a result of this depreciation she suffered a capital loss in the old shares to the extent of Rs.
The chart would indicate the position in this respect 1 2 3 4 5 Financial No of Value No.
These will have to be disposed of along with these appeals.
Besides purchasing and selling equity shares of the said companypany, the assessee had also dealt in preference shares of the said companypany.
Therefore, it was number, according to the companynsel for the revenue, on any divergence of finding or any different inference being drawn from the said findings but because of decision of the Bombay High Court and out of deference to it, the assessee had to be treated as an investor.
In the premises, the assessees companytention was that the sales of the said shares were neither effected voluntarily number with a view to make any profit number under a profit making scheme, but were effected under companypelling circumstances and as numberassessee companyld be a trader by companypulsion, the assessee was number a trader in respect OF these shares.
According to the statement of the case, the purchases and sales of shares of the said companypany were few and far between upto the financial year 1953 54, but these became larger in number and at close intervals in the next few succeeding years.
Against payment of cash, the assessee got 1875 equity shares and against his interest in the partnership firm, he got 53, 486 equity shares.
1080 On these facts the assessee companytended before the Income Tax Officer that the assessee was only an investor and number a dealer in shares but this companytention was rejected by the Income Tax Officer and the Appellate Assistant Commissioner.
1,65,581.
The sales were also made to purchase a house in Denmark and for which permission had been obtained from Reserve Bank of India to remit Rs.
The Accountant Member, therefore, was of the view that it was number possible to accept the submission of the assessee that the shares were sold only to reduce the overdraft taken from the bank.
It may be mentioned, while on this aspect, that during the first few years apart from the years in question i.e. 1959 60 and 1960 61, i.e. from the assessment years 1955 56, 1956 57, 1957 58 and 1958 59, the assessee had been treated by the revenue as an investor in shares and was number taxed on the dealings of these shares.
The maximum number of shares held by the assessee was little over 56,600 and this number went down progressively from the assessment year 1953 54 to assessment year 1958 59 by about 15,000.
This would appear from the assessment order for 1959 60.
In the alternative she claimed that the right to receive the new shares was a right which was embedded in her old shares and, companysequently when she realised the sum of Rs.
During the next few accounting years upto the financial year 1953 54, the assessee acquired 2,994 shares of the said companypany and sold 1,550 shares.
The findings of the Tribunal for those two years are 1083 also the subject matter of Special Leave Petition 8292 and 8293.
37,630 which she was entitled to set off against the capital gains of Rs.
CIVIL APPELLATE JURISDICTION Civil Appeal Nos.
The High Court disposed of these references on 10th August, 1971 and in 1986 i.e. nearly after 28 years of the years of assessment we are posed with the question whether in respect of certain transactions in those years the assessee was a dealer or an investor and companysequentially whether the income arising from the sale of shares by the assessee is to be taxed on revenue account of capital account.
Gauri Shankar and Ms. A. Subhashini for the Appellant.
The assessee had sold shares of Andhra Cement Co. in the financial year 1954 55, made purchases of shares of S.C.C. and I.C.C. in the years 1955 56, 1956 57 and 1958 59 and also of shares of India Cement Co. and National Carbon in 1955 56 and also sold shares of Guest Keen Williams and Indian Cement in 1958 59.
Of Sale year shares Rs.
124 of 1963.
Before the Tribunal it was companytended on behalf of the assessee 1 that the assessee never purchased equity shares of the said companypany from any outsider or any stranger except in a few cases from close friends or from members of the staff just to accommodate them 2 that the shares that were acquired by the assessee were only right shares issued by the companypany to its existing shareholders 3 that the assessee had to meet huge personal expenses and tax liability in the relevant accounting periods 4 that the assessee had an overdraft account and he wanted to keep the said overdraft account within reasonable limit 5 that the assessee wanted to nurse his investments in the companypany and 6 that the assessee had to and was forced and companypelled by circumstances to sell some of the shares acquired by him.
124 of 1963.
The said question was referred by the Tribunal to the High Court at the instance of the asseessee.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. These appeals by certificate arise from the judgment and decision of the High Court of Bombay dated 10th August, 1971 in Income Tax Reference No.
The assessee, H. Holck Larsen, was a partner in the firm of M s Larsen Toubro hereinafter referred to as the said companypany unto 1946.
The question involved in these appeals is familiar in direct tax laws.
The points in companytroversy are short.
The right shares acquired in those three years were 6,111, 6102 and 1,256 whereas the assessee had sold from time to time right shares which were 13,955, 7661 and 5,050 respectively.
1954 55 NT of 1974 etc.
The dealings in the right shares by the assessee keeping in the background these were right shares and effect of number subscription the value of the original shares were number fully appreciated by the Tribunal.
The Income tax Officer, however, held that profit was the intention of the assessee for acquisition of the shares.
In companysiderations of his interest in the firm, the assessee was allotted shares of the companypany.
On 8th February, 1946/7th February, 1946, that partnership was companyverted into a private limited companypany 1079 of the same name.
T. Desai, H. Salve, Ravinder and Ms. A.K. Verma for the Respondent.
Assessment years involved are 1957 58 and 1958 59.
But the adjudication is pending for long.
Shares Price ending acquired sold Rs.
It was further emphasised that the market price was lower on the date of sale and there was numberprofit motive.
This is an aspect which requires to be taken into companysideration in companyjunction with other factors in answering the question.
