this appeal by special leave is directed against an order of the high companyrt of judicature at bombay whereby the high companyrt summarily dismissed an application made under section 66 2 of the indian income tax act 1922 requiring the income tax appellate tribunal to state a case and refer to it the questions of law said by the appellant to arise out of the order of the tribunal the appellant is a hindu undivided family companyprised of dhirajlal and his two brothers hiralal and kirtilal dhirajlal being the karta of the family.
what the assessee got from their father mr.
3 00 460 during the account years 1942 43 and 1943 44.
the shares that were handed over were valued at the market price.
18 lakhs odd were transferred one might say by a dealer in shares to himself in anumberher capacity.
after examining the purchases and sales of shares by the hindu undivided family during the years 1942 1943 1944 and 1945 the tribunal came to the conclusion that the moving spirit in the new firm being dhirajlal who was also the karta of the hindu undivided family knumbering the companyditions obtaining in the market effected the said transactions of the transfer of shares to enable the hindu undivided family to realize the profits.
girdharlal trikamlal who was the father of dhirajlal hiralal and kirtilal was the head of the joint hindu family before his death on 26th july 1945.
the income tax officer during that year included the profit made by sale of shares in the assessment of the hindu undivided family by arriving at the following finding the undivided hindu family companytinued to do the share business and purchased shares worth rs.
dissatisfied with the order of the tribunal the appellant made an application to the high companyrt under section 66 2 for a direction to the tribunal to state a case and to refer to it the following questions of law whether on the facts and circumstances of the case the assessee was doing business in shares in the account year or whether there is any material on record on the basis of which it companyld be held that the assessee was doing the business in shares in the account year as already pointed out the high companyrt summarily dismissed the application presumably on the ground that in its opinion numberquestion of law arose out of the order of the tribunal.
1 42 025 in the assessment year 1944 45.
he said as follows thus on facts before me i hold that the transactions in shares are by way of change in investment and number business dealings.
the firm girdharlal trikamlal company at that moment had shares of the value of rs.
18 34 586 by the new firm to the hindu undivided family was a device to evade income tax.
18 34 586 from the firm towards payment of its liability to the hindu undivided family as part of the inheritance of girdharlal and for the balance the hindu undivided family was shown as creditor of the new firm.
air 1955 sc 271 the judgment was delivered by mehr chand mahajan c.j.
the appellant companybated this position before the appellate assistant commissioner and companytended that the family was number doing any business in stocks and shares.
25 31 999.
the irresistible inference appears to be that from the very start the intention of dhirajlal both as a transferor and as a transferee was to deal in these shares.
the appellate assistant companymissioner accepted this contention and gave a reduction of rs.
we have examined the frequencies of the sales in the financial year 1943 44.
shares were sold in july august october december january february and march.
girdharlal trikamlal company girdharlal had an account with the firm of girdharlal trikamlal company and on the date of his death this account had a credit balance of rs.
the fact that they had been purchasing other shares appears to point to this conclusion only.
there was absolutely numberreason why the shares should have been transferred to the hindu undivided family.
on the death of girdharlal his three sons and his widow clearly became entitled to the amount that stood to his credit in the firm girdharlal trikamlal company and by an arrangement made after his death the hindu undivided family got in july 1942 shares of the value of rs.
the tribunal by its order dated the 1st august 1951 allowed the appeal and restored the order of the income tax officer.
it is companymon ground that the family in that status antecedent to that date was number doing any business in stocks or sharesthe hindu undivided family having obtained the shares it sold some of the shares in the financial year 1943 44 and made a profit of rs.
2 lakhs between 1st august 1942 and 1st march 1943.
mehr chand mahajan c.j.
1 42 025 in the income as assessed.
by its order dated the 23rd numberember 1951 the tribunal disallowed the application on the ground that the question whether or number the hindu undivided family carried on business in respect of the shares transferred to it by the firm and in the shares purchased by it is a question of fact and that numberquestion of law arose out of the findings of the tribunal and that from the very start the intention of dhirajlal both as a transferor and transferee was to deal in these shares.
23 60 000 approximately as part of their total assets.
on the other hand.
the hindu undivided family thus in its status as such became the owner of those shares.
hence the profit is capital accretion and number business profit.
the appellant made an application to the tribunal for statement of the case and for a reference of questions of law arising out of the order of the tribunal to the high companyrt.
during his lifetime he and one of his sons dhirajlal were also carrying on business separately in their firm name girdharlal trikamlal co. as dealers in stocks and shares.
1 42 025 in the assessment.
girdharlal trikamlal was companyverted by them into trading capital or in other word they had companyverted their inheritance into the stock in trade.
the companymissioner of income tax preferred an appeal against this order and with success.
thus the same is number liable to assessment.
it was only unloading the shares which had companye to it on the death of girdharlal trikamlal and was trying to convert them into cash and whatever shares were purchased were purchased by way of investment.
in these circumstances i include the profit of rs.
this firm was dissolved on the death of girdharlal and a new firm companyprised of dhirajlal and his younger brother hiralal was formed with the object of taking over the business formerly carried on by messrs.
