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TMI Blog1971 (2) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... a partnership firm dealing in shares, and consists of two partners, Rameshwar Prasad Bagla and Satyanarain Bagla. These two persons and Satyanarain's father, Hari Shanker Bagla, constitute another partnership firm, " M/s. Gangadhar Baijnath ". The assessee held 108 shares of Maheshwari Devi Jute Mills Co. Ltd. (hereafter referred to as "jute mills"), at the commencement of the accounting period corresponding to the assessment year 1951-52. During the course of the accounting period the assessee purchased a number of shares of the jute mills at different rates. The shares were valued at Rs. 100 per share at the close of the accounting period. The assessee claimed a loss of Rs. 4,3 8,291, representing the difference between the purchase price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal and the orders of the income-tax authorities are on the record. Satyanarain Bagla, who is a partner of the assessee-firm, filed an affidavit before the Tribunal, Annexure " E " is a copy of the affidavit of Satyanarain Bagla. In that affidavit it was stated that the exclusive business of the firm has always been to deal in shares. The firm has never acted as managing agents of M/s. Maheshwari Devi Jute Mills Co. Ltd. The object of purchasing shares was not to acquire control over Mills Co. Ltd. In Ramnarain Sons(Private) Ltd. v. Commissioner of Income-tax, the appellant-company was a dealer in shares and securities, and also carried on business as managing agents of other companies. In order to acquire the managing agency of a te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of his view that the shares were purchased by the assessee by way of investment. These circumstances may now be discussed one by one. The assessee is closely associated with the firm "Gangadhar Baijnath". The partners of the assessee-firm are also partners of the firm, Gangadhar Baijnath. The firm, Gangadhar Baijnath, took over the managing agency of the jute mills. In this connection we must remember that the assessee itself was not the managing agent of the jute mills. It is true that the partners of the assessee-firm are also partners of the firm, " Gangadhar Baijnath ". But we cannot overlook the fact that the managing agency was actually held by M/s. Gangadhar Baijnath. Again, the managing agency was not recently acquired. The manag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nreasonable. The Appellate Assistant Commissioner took exception to the fact that the price was settled by mutual negotiation between the investor and the purchaser. It was urged for the department that, if the market rate was available with the stock exchange, there was no justification for settling the rate by negotiation. It is true that the stock exchange-quoted rates were for different dates. But that did not prevent the parties from settling the rate by mutual negotiation. In Commissioner of Income-tax v. National Finance Ltd. it was held that, though it may be true that the intention of one company could not be attributed to another company even though the proprietorship of the companies might be the same, the main question was whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... These circumstances arose some suspicion about the transaction relating to the jute mills. But these circumstances are not sufficient for recording a definite finding that the purchase must have been in the nature of investment. The assessee's claim that the purchase was by way of stock-in-trade may, therefore, be accepted. Next, we have to consider the purchase of shares of Muir Mills. The Appellate Assistant Commissioner noticed two circumstances about this transaction. The department suggested that the shares of Muir Mills Co. Ltd. were purchased by the assessee in order to gain control over the affairs of the company. It is common ground that Indian Textile Syndicate Ltd. was the managing agent for Muir Mills Co. Ltd. In Satyanarain's ..... X X X X Extracts X X X X X X X X Extracts X X X X
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