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Issues involved:
Income-tax assessment of a company for the assessment year 1957-58 regarding the treatment of profit from sale of shares as business income or capital gains. Summary: The High Court of Calcutta addressed the issue of income-tax assessment of a company for the assessment year 1957-58, specifically focusing on the treatment of profit from the sale of shares as either business income or capital gains. The company held shares in various companies valued at Rs. 81,69,853, comprising both "quoted investments" and "unquoted investments." The Income-tax Officer assessed a sum as business profits, while the Appellate Assistant Commissioner considered it as capital gains. The Tribunal ultimately concluded that the profit from the sale of shares was not a trading profit but rather a capital gain, based on various factors including the company's business objectives and the nature of its share transactions. The Tribunal's decision was challenged through an application under section 66(1) of the Indian Income-tax Act, 1922. The Court considered arguments from both the revenue and the company's counsel regarding the nature of the company's activities and the relevant clauses of its memorandum of association. The revenue contended that the company was carrying on the business of dealing in shares, while the company argued that it was functioning as an investment company and not a dealer in shares. In support of their positions, both parties cited relevant legal precedents. The revenue emphasized the potential business activities permitted by the company's memorandum of association, while the company highlighted decisions that supported its stance as an investment company rather than a dealer in shares. Ultimately, the Court upheld the Tribunal's findings, stating that the profit realized from the sale of shares should be treated as capital gains, considering the company's business nature and the specific circumstances of the transactions. The Court ruled in favor of the company, emphasizing that the Tribunal's conclusions were based on valid evidence and legal principles. In conclusion, the Court answered the question in favor of the company, determining that the amount realized from the sale of shares should be assessed, if at all, as capital gains. The decision was made based on the established facts and legal interpretations presented during the proceedings.
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