9911796707
TMI Blog1963 (4) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the original cost of certain shares and securities purchased and sold by the appellant. It was held that in the relevant account year in which the shares were sold and profits made as also in the two preceding years, the assessee was a dealer in shares and securities. In respect of this addition of Rs. 1,23,840 the assessee raised two contentions. The first contention was that it was not a dealer in shares and securities in the relevant account year or in the years past, and that the shares and securities were held by way of investment and the investment surplus was in the nature of a capital receipt. The second contention was that even if the assessee was a dealer in shares and securities in the relevant account year, the Income-tax Officer committed an error in the matter of the computation of profits in not taking the market value of the shares as at the opening day of that year as the cost thereof. These were the two questions along with a third question which were referred to the High Court under section 66(2) of the Act. The third question does not now survive, and therefore we set out below the two questions which fall for decision in this appeal: "(1) In the event of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The tempo of purchases and sales goes up from 1943. There are purchases of fifteen or twenty different dates in 1943. There is a similar number of transactions in 1944. Many of the shares purchased in 1943 have been disposed of in 1944. Several scrips purchased in 1944 have been sold within the year. The number of transactions is, in my opinion, sufficiently numerous to show that the assessee is a dealer in shares. " There was an appeal then to the Tribunal. The Tribunal came to the conclusion that so far as Government securities were concerned the assessee was obliged to keep its large cash invested in Government securities and, therefore, so far as these securities were concerned, the amount realised by their sale was not a revenue receipt and should not be included in the total income of the assessee. It held, however, that the assessee was a dealer in shares in 1944 and as to the computation of the profits made on the sale of the shares, such profits were correctly computed to be the difference between the original cost price of the shares to the assessee at the time of purchase and the price realised at the time of sale, and the Tribunal significantly added that this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , for that decision proceeded on the footing that the assessee of that case converted her investment shares into a stock-intrade and carried on a trading activity as from April 1, 1946, the relevant account year being the financial year 1946-47. If the assessee in the present case was a dealer in 1943, then nothing happened on the opening day of the relevant account year, namely, January 1, 1944, and there is no reason why the market value of the shares on that date should be taken into consideration in computing the profits. Learned counsel for the assessee has, however, pressed an argument which may now be stated. He has submitted that he is not arguing that it was not open to the assessing authorities to consider the question whether the assessee was a dealer in shares in 1944 which was the relevant account year. What he contends is that it was not open to the taxing authorities to consider and find that the assessee was a dealer in shares in 1943, because for all years prior to 1944, the department had already assessed the assessee on the footing that it was an investor of shares and not a dealer and those assessments having become final could be reopened only either under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or did it start the trading activity at an earlier date ? If the assessee was a dealer when the shares sold in 1944 were originally purchased, then obviously the principle in Commissioner of Income-tax v. Bai Shirinbai K. Kooka (Supra) will not apply and the profits will be the excess of the sale price over the original cost price. The extent to which a decision given by an Income-tax Officer for one assessment year affects or binds a decision for another year has been considered by courts several times and speaking generally it may be stated that the doctrine of res judicata or estoppel by record does not apply to such decisions ; in some cases it has been held that though the Income-tax Officer is not bound by the rule of res judicata or estoppel by record, he can reopen a question previously decided only if fresh facts come to light or if the earlier decision was rendered without taking into consideration material evidence, etc. As to the argument based on section 34 and 35, it is enough to point out that the assessment relating to the year 1943 is not being reopened. That assessment stands. What is being done is to compute the profits of 1944, which the assessing authorities co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emporaneous decision in the Broken Hill case (supra) ; and to follow it would involve preferring a decision in which the particular point was either assumed without argument or not noticed to a decision, in itself consistent with much other authority, in which the point was explicitly raised and explicitly determined. " In Installment Supply (P) Ltd. v. Union of India 1962] 2 S. C. R. 644, the court referred to the decisions just mentioned and said that it was well settled that in matters of taxation there would be no question of res judicata On the principle stated above, it seems to us that it was open to the taxing authorities to consider the position of the assessee in 1943 for the purpose of determining how the gains made in 1944 should be computed, even though the subject of the assessment proceedings was the computation of the profits made in 1944. The circumstance that in an earlier assessment relating to 1943, the assessee was treated as an investor would not in our opinion estop the assessing authorities from considering, for the purpose of computation of the profits of 1944, as to when the trading activity of the assessee in shares began. The assessing authorities foun ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
