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TMI Blog1969 (8) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... ce shares of Fort William Jute Company Ltd. These shares were purchased on May 22, 1952, at the rate of Rs. 186 per share from Mugneeram Bangur and Co. and were sold on December 23, 1953, at the rate of Rs. 115 per share to the same company. The background in which these transactions took place may be noticed. Kettlewell Bullen and Co. were the managing agents of Fort William Jute Co. Ltd. On May 21, 1952, an agreement was entered into between Kettlewell Bullen and Co. and Mugneeram Bangur and Co. according to which the entire holdings of Kettlewell Bullen and Co. in the managed company (Fort William Jute Co. Ltd.) consisting of 6,920 tax-free cumulative preference shares and 600 ordinary shares were to be sold to Mugneeram Bangur and Co. or their nominees at the agreed price of Rs. 185 per preference share and Rs. 400 per ordinary share. Pursuant to this agreement Kettlewell Bullen and Co. issued a circular letter to all shareholders of Fort William Jute Co. Ltd. informing them of the terms of the agreement and pointing out that Kettlewell Bullen and Co. would tender resignation from the office of the managing agents with effect from July 1, 1952. It was stated in this letter "t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ging agency of Fort William Jute Co. Ltd. by Mugneeram Bangur and Co. or that the shares were acquired by the assessee to relieve the latter of the load of their shares in pursuance of that scheme. The Tribunal was further of the view that even if Mugneeram Bangur and Co. had a controlling interest in the assessee-firm by having a majority of the shares in it no such inference could necessarily be raised that the assessee did not purchase the shares of Fort William Jute Co. Ltd. as a measure of its own activity as a dealer in shares. The Tribunal, however, held that the shares were not acquired in the course of the assessee's share dealing business for the reason that in the profit and loss account for the year ending March 31, 1954, the assessee had made a distinction between its transactions as a dealer and as an investor in shares. The Tribunal found that while the profit on sale of shares out of its stocks-in-trade had been shown and described as such in the profit and loss account, the loss on sale of investment had been shown in the profit and loss account as a loss in investment. From the treatment of the loss given by the assessee in its own profit and loss account the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as a measure of investment. The first contention raised on behalf of the assessee, which is the appellant before us, is that the High Court was not entitled to reverse the findings of fact of the Appellate Tribunal since the department had not challenged the same by means of appropriate proceedings for reference of a question challenging those findings. It is pointed out that the Tribunal had come to the conclusion that there was no evidence to show that the assessee had been made a pawn in the scheme of acquisition of the managing agency of Fort William Jute Co. by Mugneeram Bangur and Co. or that the preference shares had been acquired by the assessee pursuant to that scheme. It is submitted that the Tribunal had thus reversed the view which had commended itself to the Income-tax Officer and the Appellate Assistant Commissioner and to that extent the Tribunal's decision was in favour of the assessee and could not be reversed or set aside by the High Court in the absence of any reference at the instance of the department. It is noteworthy that the question which was referred was couched in general terms and was not limited to or circumscribed by the reasons which had been giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act, the High Court must accept the findings of the Tribunal on the primary question of fact as final although it is open to the High Court to examine whether the Tribunal had applied the relevant legal principles correctly. It is argued that the High Court has not characterised the aforesaid finding of the Appellate Tribunal as perverse or arbitrary and once that finding is accepted there would be no justification for holding that the assessee had been made a pawn in the matter of the scheme of transfer of the managing agency of Fort William Jute Co. Ltd. by Mugneeram Bangur and Co. or Bangur Brothers Ltd. In any case there were several facts which showed that the assessee was not privy or party to the aforesaid scheme. It did not acquire any interest in the managing agency nor was it a subsidiary or associate of Mugneeram Bangur group of concerns. The assessee was connected with the Bangurs only to the extent that out of its four directors two of the directors were Bangurs. In our opinion even if the conclusion of the High Court on the point mentioned above is not taken into consideration the question which was referred had to be answered against the assessee. On admitted and p ..... 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