9911796707
TMI Blog1968 (9) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... d 16 of that clause. The assessment years in question are 1943-44 to 1948-49, excepting the year 1947-48. According to its petition made in the High Court, the assessee company dealt with its assets as follows : The petitioner company purchased during the period 1st July, 1925, to 30th June, 1928, shares of the value of ₹ 1,86,47,789, major portion of which was comprised of shares in the Sassoon Group of Mills. During the year ended 30th June, 1929, the petitioner company promoted two companies known as Loyal Mills Ltd. and Hamilton Studios Ltd. and took over all their shares of the value of ₹ 10 1/2 lakhs. In the year 1930, the petitioner company purchased shares of ₹ 1,33,930. During the period of 9 years from 1st July, 1930, to 30th July, 1939, no purchases were made with the exception of few shares of Loyal Mills Ltd., taken over from the staff of B. D. Sassoon Co. Ltd., who retired from service. In the year ended 30th June, 1940, reconstruction scheme of the Appollo Mills Ltd. took place under which debentures held by the petitioner company in the Appollo Mills Ltd. were redeemed and the proceeds were reinvested in the new issue of shares made by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was not a dealer but merely an investor. Along with the return it filed a letter dated March 6, 1944, in which it stated : The return of total income which was submitted with the company's letter of 25th May, 1943, was prepared in conformity with the ruling of the Income-tax Officer in the 1940-41 assessment that the company was to be assessed as a dealer in investments. Since that return was submitted the Central Board of Revenue has decided that the company is an investment holding company, and accordingly an amended return of total income under section 22(1) of the Indian Income-tax Act is submitted herewith on which the assessment for 1943-44 may be based, as on this particular question the company obviously cannot have one status for excess profits tax and another for income-tax. It was contended by the assessee company that it never carried on any business in the purchase or sale of shares, securities or properties. In support of this contention the assessee company relied on the order of the Central Board of Revenue dated August 18, 1943, passed under section 26(1) of the Excess Profits Tax Act. The Income-tax Officer rejected the plea and held that the invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed by this court by its judgment dated May 22, 1957, and the order of the Bombay High Court dated June 15, 1952, was set aside. It was pointed out by this court that the Appellate Tribunal, in arriving at its finding that the assessee was a dealer and not an investor, had relied on two basic facts, viz., the objects set out in the memorandum of association and the previous assertion made by the assessee-company that it was a dealer in investments and properties and not merely an investor. It was observed that merely because the company had within its objects the dealings in investments, shares and properties, that circumstance did not give it the characteristics of a dealer in shares. The circumstance, though relevant, was not conclusive. It was pointed out in the judgment of this court that the question as to what were the characteristics of the business of dealing in shares or that of an investor was a mixed question of fact and law and what was the legal effect of the facts found by the Appellate Tribunal and whether as a result thereof the assessee could be termed a dealer or an investor was itself a question of law. Accordingly the court formulated the following two ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' E ' and ' F ' of the statement of the case, and detailed explanations, statements M-1 and M-2. The substance of the argument of the appellant was that (1) most of the shares, securities and properties acquired by the assessee-company were the properties of E. D. Sassoon Co. and the family of Sassoons; (2) a large block of shares held by the company consisted of the shares of the Sassoon Group of Mills and the block was held all along since its acquisition before the year 1930 until E. D. Sassoon and Co. and the Sassoons continued to be interested in the said group of mills and they were realised by sale only when E. D. Sassoon Co. and the Sassoons decided to relinquish their interest in the said group of mills ; and (3) neither the mode of acquisition of these shares and properties nor the mode and manner of their disposal have any of the distinctive characteristics of business dealings. On the questions actually formulated by this court upon which the Appellate Tribunal has made a statement of the case it is not possible for us to entertain the argument advanced by Mr. S. T. Desai. It was contended on the contrary by the Attorney-General that, upon the que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not be fettered by that view. In some cases, the point sought to be raised in a reference may turn out to be a pure question of fact and, if that be so, the finding of fact recorded by the Appellate Tribunal must be regarded as conclusive in a proceeding under section 66(1). But it would be open to challenge the conclusion of fact drawn by the Appellate Tribunal on the ground that it is not supported by any legal evidence or material or that the conclusion of fact drawn by the Appellate Tribunal is perverse and is not rationally possible. It is within these narrow limits that the conclusions of fact by the Appellate Tribunal can be challenged under section 66(1). Such conclusions can never be challenged on the ground that they are based on misappreciation of evidence. There is, however, a third class of cases in which the assessee or the department may seek to challenge the correctness of the conclusion reached by the Tribunal on the ground that it is a conclusion on a question of mixed law and fact. Such a conclusion is no doubt based upon the primary evidentiary facts, but its ultimate form is determined by the application of relevant legal principles. To put it differentl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion are not appropriate and do not reflect the real controversy between the parties. It is therefore expedient in the interest of justice that the questions should be modified as suggested by the assessee-company in its petition under section 66(1) of the Act to the High Court and the Appellate Tribunal should be asked to make a fresh statement of the case. For these reasons we allow these appeals and set aside the judgment of the Bombay High Court dated March 2, 1966, and direct the Appellate Tribunal to make a fresh statement of the case on the following questions of law : (1) Whether, on the facts and in the circumstances of the case, the assessee-company can rightly be treated as a dealer in investments and properties; and (2) Whether the profits and losses arising from the sale of shares, securities and immovable properties of the assessee-company can be taxed as business profits. After the Appellate Tribunal has made a statement of the case, the High Court will dispose of the reference in accordance with law. The appellant must pay the costs of this appeal in this court to the respondent. We should like to add that we have not considered whether the High Court h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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