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TMI Blog1962 (9) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... of Soora Jute Mills Co. Ltd. were purchased on April 20, 1944, at the rate of ₹ 32 per share from Messrs. Mangani Ram Bangar Co. of Calcutta as follows: 1. Lala Ram Prasad Ji 16,750 shares 2. Lala Ramgopal Ji 8,900 shares 3. Lala Ramratan Ji 1,600 shares 4. Lala Shyamsunder Ji 8,750 shares Total 36,000 shares On February 1, 1945, Lala Shyamsunder Ji purchased 250 shares from Lala Ramratan Ji at the rate of ₹ 32 per share. Thus, the total holding of shares in the name of Lala Shyamsunder Ji came to be 9,000 shares. Lala Ramkishan Ji, the assessee, was a partner in the firm of Messrs. Ramkishan Baldeo Prasad and the 9,000 shares which stood in the name of Shyamsunder Ji were held by the partners of the firm as follows: (a) In the account of Ram Bharosey 1,125 shares (b),,,, Ramkishan 1,125 shares (the assessee) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n its appellate order in precisely the same terms in which it recorded it in the statement of the case, and which have been quoted above. In the Appellate order the Judicial Member recorded his findings as follows: The facts on record clearly show that the assessee and the other persons associated with him entered into profit-making scheme and the object being to acquire the managing agency of the Soora Jute Mills Co. Ltd. In furtherance of this profit-making scheme the shares of the Soora Jute Mills Co. Ltd. were purchased and were ultimately sold at some profit because the market had gone up. In the preceding year the assessee had income from shares of the Hindustan Commercial Bank. The profit of ₹ 1,687 for the preceding year was shown in the return itself by the assessee. It cannot, therefore, be disputed that the assessee was dealing in shares. The assessee's conduct in the preceding year and his conduct in purchasing shares for the purpose of acquiring a managing agency show that the ultimate object was to make profit. This was a profit making scheme and the realisations made by the assessee must be held to be revenue receipt. The Accountant Member, who co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in such a situation it is open to the High Court to go behind the finding and to look into the facts itself and draw its own conclusions. In support of his submission Sri Gulati relied on the decisions of the Supreme Court in Sree Meenakshi Mills Ltd. v. Commissioner of Income-tax [1957] 31 I.T.R. 28 ; [1956] S.C.R. 691. , Liquidators of Pursa Ltd. v. Commissioner of Income-tax [1954] 25 I.T.R. 265 ; [1954] S.C.R. 767 and the decision of the Calcutta High Court in Bhikamchand Bagri v. Commissioner of Income-tax [1962] 44 I.T.R. 746 in which relying on the said decisions of the Supreme Court and on certain other decisions of the same court and of the House of Lords, the Calcutta High Court went behind the finding recorded by the Income-tax Appellate Tribunal, and examined the evidence for itself and recorded its own findings. It seems to me that a similar situation has arisen in the present case and the finding of the Income-tax Appellate Tribunal that the shares were purchased for the acquisition of the managing agency of the Soora Jute Mills Co. Ltd. was without basis and is liable to be disregarded. I, therefore, proceed to examine the evidence for myself. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e group actually succeeded in getting directors of its own in the board of directors. Assessee states that since after all this it was found that the managing agency could not be acquired as the existing managing agency had a long term contract of about 20 years or so with the mills, he along with others of the group sold shares and the transaction was thus not at all in the nature of business. In the first instance, assessee's version as above is not proved, and it is very unlikely that assessee would not have known at the time of purchase of shares the facts about the existing contract of the tenure of the then managing agency. As a shrewd businessman assessee would naturally not have taken the risk of purchasing these shares with a view to acquire the managing agency without finding out the position of tenure of the then managing agency. No evidence of any kind has been offered and assessee relies only on his own statement. Even this much has not been proved that assessee along with other persons as alleged actually obtained 51% interest in the mills by the purchase of 36,000 shares. Assessee has not stated the total number of shares of the mills. Further, there is noth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... himself offered the surplus on the sale of shares of the Hindustan Commercial Bank to be taxed as profits from business and was taxed on that footing. There is a presumption of the continuity of business. There was no evidence to show that the business of share dealing which the assessee had in the preceding year was ever given up by him. The assessee held the shares for about a year and did not sell them immediately as one would have expected him to do if the only object with which they had been purchased was to acquire the managing agency and that object had fallen through. It could not have taken a whole year for the assessee to find out that the existing managing agency had yet a long term to run and would not be available. There is the further fact of the acquisition of another 250 shares by Shyamsunder from Lala Ramrattan Ji in February 1945. It was only when these 250 shares are added to the original holding of 8,750 shares of Shyamsunder that his total holding comes to 9,000 shares out of which the assessee held 1,125 shares. There could be no other motive at all for the purchase of the additional 250 shares in February 1945, except the motive of gain. For all these rea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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