9,26,708/ and 2 it had discontinued one of the businesses which the firm was doing namely dealing in stocks and shares.
T. Desai, R. J. Kolah, D. H. Dwarkadas, M. L. Bhakta, K. Verma, J. B. Dadachanji, O. C. Mathur and Ravinder Narain for the appellants in C.A. No.
26 of 1969 and respondent in C.A. No.
1919 This was a year of huge loss and numbertax was charged.
162/69.
1086 Sen, J. Ramamurthi, B. D. Sharma, R. N. Sachthey and S. P. Nayar, for the respondent in C.A. No.
B.T.C. Ltd. Bombay shows 1088 this on the instructions from the House, only and these items may therefore be disregarded for the income tax purposes.
Clause 4 of the articles of association of the companypany provided that the assessee companypany shall forthwith enter into the agreement mentioned in cl, 3 of the, Memorandum of Association with such, modifications, if any as the directors shall approve.
26/69 and appellant in C.A. No.
On June 30, 1961 the agreement referred to was finally executed by the assessee companypany.
There is also numbermaterial on record which would justify the Income tax Authorities or the Tribunal in companying to the companyclusion that the shares and stocks which were transferred to the assessees companypany were only intended to be held as investments.
WHETHER on the facts and in the circums tances of the case the loss suffered on the sale of property in Shanghai was allowable as a revenue deduction out of profits of the year?
Appeals by certificates from the judgment and order dated October 13, 14 and 16, 1967 of the Bombay High Court in Income tax Reference No.
162 of 1969.
This claim was rejected by the Income tax Officer on the ground 1 that in the year 1921 the, assessee claimed and obtained a deduction in respect of appreciation in shares and securities amounting to Rs.
A partnership firm hereinafter referred to as the firm companyprising of some of the members of the Sassoon family was carrying on business under the name and style of E. D. Sassoon Co. for a number of years prior to 1920 at Bombay, Calcutta, Karachi, Hongkong, Shanghai, London, Manchester, Basra and the Persian Gulf.
For the year 1920 there was huge profit and the shares and securities were transferred to the assessee companypany at the then market value of the shares and securities Over Rs.
The Judgment of the Court was delivered by Jaganmohan Reddy, J. These two appeals are by certificate against the judgment of the High Court of Bombay answering four out of the five questions referred to it in favour of the assessee and one question in favour of the revenue.
The said agreement provided inter alia for purchase of the business of the said firm and its assets including shares, and debentures for valuable companysideration therein set out at the market price prevailing on 31st December 1920 which purchase was to be companypleted on or before that date.
9,76,708/ was excluded but income from dividend and securities amounting to Rs.
9,00,000/ of losses were claimed by the said firm as a result of revaluation and allowed by the Income tax authorities in the assessment of the said firm for the year 1920 The said firm was being held by the Department to be a dealer in shares and securities and the profit was brought to tax.
The applicant companypany neither intended originally to do the business, number took over the business of dealing in securities from the old firm.
1920 There was numberpositive.
4,31,32,212/ and by the end of December 1922 these investments had risen to Rs, 10,43,78,511/ .
It appears that pursuant to the said agreement the companypany took over the business of the said firm and also purchased shares and securities worth Rs.
9,26,730 5 8 shown under the head depreciation in shares and securities.
3,23,78,494/ .
On 8th September 1920 and 4th December 1920 two companypanies were incorporated in Bombay the former was known as the Bombay Trust Corporation Ltd. and the latter as E. D. Sassoon Co. Ltd. hereinafter called the assessee companypany .
The Bombay Trust Corporation carried on business in Bombay which companyprised mainly the business of dealers in shares, securities and foreign exchange.
33,40,057 under S. 25 3 of the Act.
CIVIL APPELLATE JURISDICTION Civil Appeals Nos.
At the relevant time during the companyrse of the assessments the assessee companypanys accounts were examined by the examiner of accounts who made the following numbere on 12th October, 1922 With regard to the second item it would be seen from the last years B form put up herewith with the companypany is a habitual dealer of shares has set off against profits of 1920 the loss of shares and securities depre ciation .
12,85,408/ was number taken into account, and was assessed in the hands of B.T.C. Limited.
companypany is entitled to claim exemption under Section 25 3 of the Act?
3,70,943/ the amount transferred to the Superannuation Fund against income of the year?
3,28,112/ book entry securities being valued at the end of the year and appreciation or depreciation brought into account.
By the end of 1921 investments in shares and securities had risen to Rs.
This companypany B.T.C. had by the end of December 1920 investments in shares and securities to the extent of Rs.
1,93,79,521 3 1 at market value as on 31st December 1920.
According to the Income tax Officer in the accounting year 1921 there was numberdealing in shares and securities.
6,55,895/and Rs.
9,26,713 on its valuation at the market rate.
26 and 162 of 1969.
At the end of the year 1921 as was done by the predecessor firm in the year 1920 the assessee companypany valued the securities and shares at the prevailing market rates which showed an appreciation of Rs.
The assessee companypany was incorporated with several objects one of which was To acquire and take over as a going companycern the business number carried on at Bombay, Calcutta, Karachi, Hongkong, Shanghai, London, Manchester, Basra and Bagdad and all or any of the assets and liabilities of the proprietors of that business in companynection therewith, and with a view thereto, enter into the Agreement referred 1087 to in clause 4 of the Companys Articles of Association and to carry the same into effect with or without modification.
2,92,672/ trans ferred after the liquidation of the companypany as against the profits of the companypany ?
98 of 1962.
W14ETHER on the facts and in the circumstances of the case the assessee companypany is entitled to set off the loss of Rs.
9,27,708 67 will have to be taxed this year.
On the above report the Income tax Officer endorsed on the 23rd December, 1922 as follows NOTE Shares and securities of Rs.
Hence appreciation of Rs.
This is based on the order of the Income tax Officer numberwithstanding the fact that the examiner of accounts had pointed out that the companypany is habitual dealer in ,,hares and stocks and that the appreciation will have to be taxed.
WHETHER on the facts and in the circums tances of the case the assessee companypany is en 1089 titled to claim a sum of Rs.
3,28,825/ suffered in 1948 as against profit of 1949 50 ?
The Tribunal in appeal though it held that the firm was assessed to tax under the Act of 1918 nevertheless negatived the relief on the ground that the assessee companypany did number intend to do the business of dealing in securities acquired from the old firm.
As the assessment to tax on the share dealings was a basic requirement for exemption under S. 25 3 and that number having been established the question of granting any relief under the said provision did number arise.
WHETHER on the facts and in the circums tances of the case the assessee companypany is en titled to deduct Rs.
Though these facts have been given in the statement of the case, as we shall presently show, they are number germane for the deter mination of the questions before us.
On an application by the assessee companypany for reference under s. 66 1 the following five questions were referred to the High Court WHETHER on the facts and in the circums tances of the case the assessee.
The assessee companypany appealed and the Appellate Assistant Commissioner held that on the evidence it was clear that the business which was discontinued in the year of assessment was number charged to tax under the Act of 1918 on the income from share dealings either for the accounting years 1918 or 1919, 1920 ,or for the accounting year 1921.
In the year of assessment 1949 50 the assessee companypany discontinued its business and claimed exemption on Rs.
It may be mentioned that the firm was being assessed for the year 1921 22 under the Income tax Act 1918 on the income of the, ,accounting year 1921 and for the assessment years 1922 23 to 1948 49 the assessee companypany was being assessed under the Act of 1922.
