9911796707
TMI Blog1956 (4) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... nce grant. The assessee had been purchasing shares and securities from the Fasli year 1336 onwards (corresponding to the assessment year 1930-31). In their statement of the case, the Appellate Tribunal has divided the assessments for the period 1930-31 to 1948-49 into three periods, the years being (i) 1930-31 assessment year to 1940-41 assessment year; (2) 1941-42 assessment year to 1943-44 assessment year; and (3) 1944-45 assessment year to 1948-49 assessment year. During the first period there were purchases of shares year after year, but there were no sales except in the Fasli year 1344 (corresponding to 1938-39 assessment year). The profits arising on the sales in the Fasli year 1344 amounted to ₹ 83,807. That amount was included in the assessee's total income for the year 1938-39 by the Income-tax Officer. The Commissioner of Income-tax confirmed this inclusion by an order under section 33, as it then stood ; but by a revised order dated the 22nd of May, 1941, the Commissioner of Income-tax excluded this sum of ₹ 83,807 from the assessee's total income for 1938-39 on the ground that the amount was capital accretion and not business profits . On the 16th o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 18. The findings of the Appellate Tribunal with regard to the assessment of 1941-42 have been summarised in the statement of the case and will be found at page 4 of the paper book. It is worthy of note, however, that the Appellate Tribunal considered the effect of the arrangement with Mercantile Bank of India Ltd. which the assessee entered into in 1940 and also the advance of ₹ 10,00,000 which the brother of the assessee made to him. On a consideration of all the facts and circumstances the Appellate Tribunal came to the conclusion that the assessee was merely an investor and he converted some of the shares in the accounting year in question for the purpose of a better return and as such he did not do any business. In regard to the assessment year 1942-43, the Appellate Assistant Commissioner excluded the sum of ₹ 39,326 from the total income for that year, relying upon the past history of the case. No profit was derived by the assessee from the sale of shares in the assessment year 1943-44, as there were no sales in that year. I now come to the third period, which is the period in question in those five cases. In their statement of the case, the Appellate Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebruary, 1952, refused to refer the particular questions of law which the assessee wished to be referred to the High Court. The assessee then moved this Court, and this Court by an order dated the 31st of January, 1953, directed the Appellate Tribunal to state a case on the two questions of law which I have quoted at the beginning of this judgment. A statement of the case was then made by the Appellate Tribunal with regard to the two questions of law already indicated by me. We have heard learned counsel for the assessee and learned counsel for the Income-tax Department. It is well to emphasise at this stage the limited scope of the first question of law which we have to answer. It is now well settled that we do not sit in appeal over the decision of the Appellate Tribunal, and it is not for us to determine afresh with regard to the evidence given in the case whether the assessee was merely a prudent investor or was carrying on a business in shares and securities. If there was evidence or material in support of the finding of the Appellate Tribunal, there would be an end of the matter and we must then answer the first question against the assessee. This point, as I have said, is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lordship in exlenso. His Lordship said: Now it may be difficult in given cases to draw a dividing line between what is purely a question of fact and what is a question of law in so far as the question is whether there is present in the case the necessary scintilla of evidence on which a given fact can be based or a fact can be said to be disproved. I use the expression 'necessary scintilla of evidence' because, in my opinion, that embodies what is meant in section 3(i) of the Indian Evidence Act. The question in this case is whether, assuming the burden of proof is on the Income-tax authorities to prove that no genuine partnership exists, there is evidence which can be left to a jury to determine that fact. Now though it may be difficult in given cases to draw the line, nevertheless the law directs that a line must be drawn and their Lordships of the Privy Council have stated on several occasions that suspicion cannot take the place of proof. Accordingly, we have to see whether there are facts here from which an inference that this was not a genuine transaction but a sham one can be drawn . It is well to remember, however, that every inference from facts proved is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , J., in Dunn Trust, Ltd. v. Williams [1950] 31 Tax Cas. 277 at p.484 a decision on which learned counsel for the assessee has relied, this Court must be careful not to depart from the conclusions arrived at by the Income-tax authorities, if those conclusions were justified by the evidence. In Rellim Ltd. v. Vise [1952] ITR Suppl. 51 Wynn Parry, J., said: - The principles of law which govern this case are perfectly clear; and as the matter strikes me it is one which upon examination will be found to raise no more than a very short question-short, but not thereby easy to answer-namely whether or not the Commissioners had evidence before them upon which they could properly make the finding which they did . If I may say so with great respect, in the case before us also the short question is whether or not the Appellate Tribunal had materials before them upon which they could properly make the finding which they did. As the statement of the case sent to us by the Appellate Tribunal has been criticised as being mostly inferential, I would go at once to the order of the Appellate Tribunal dated the nth of May, 19,51, by which the Appellate Tribunal held that the assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir finding. It is not disputed that the law upon this matter is free from doubt, and as was observed by Vaisey, J., in Dunn Trust, Ltd. v. Williams [1950] 31 Tax Cas. 477 at page 485, the locus classicus upon this point is the opinion of the Lord Justice Clerk, in the case of Californian Copper Syndicate v. Harris [1904] 5 Tax Cas .159 at page 165, where the Lord Justice Clerk says: It is quite a well settled principle in dealing with questions of assessment of income tax, that where the owner of an ordinary investment chooses to realise it, and obtains a greater price for it than he originally acquired it at, the enhanced price is not profit in the sense of Schedule D of the Income Tax Act of 1842 assessable to income tax. But it is equally well established that enhanced values obtained from realisation or conversion of securities may be so assessable, where what is done is not merely a realisation or change of investment, but an act done in what is truly the carrying on, or carrying out, of a business. The simplest case is that of a person or association of persons buying and selling lands or securities speculatively, in order to make gain, dealing in such investments as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in view and considered the materials before them in the light of that test. Learned counsel for the assessee has drawn our attention to two circumstances. It has been pointed out that from the statements supplied by the assessee the total purchases for the years in question came to ₹ 44,00,000 in the two accounts. There was no sale of shares in the Fasli years 1350, 1351 and 1352 in either of the two accounts ; in Fasli year 1353 there were sales to the extent of ₹ 61,075 only. In 1354 Fasli there were sales of shares and securities worth ₹ 3,39,174, which included ₹ 2,00,000 worth of Government of India securities, namely, Victory Loans. It was also pointed out that one of the sales in Account No. 2 related to 3% Calcutta Board Trust Debentures which were purchased at a cost of ₹ 9,65,000 in 1353 Fasli and were sold in 1354. Then again, it was pointed out that in the Fasli years 1356, 1357 and 1358 there were no sales in account No. 1 or account No. 2 and in Fasli year 1357 there was some loss in account No. 2 due to the liquidation of some companies amounting to ₹ 11,424. Learned counsel for the asses-see has taken us through some of these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om what the Appellate Tribunal has stated that there were fresh materials before the Appellate Tribunal on which they were entitled to come to a conclusion different from that of their predecessor, and it cannot be said as a matter of law that it was not open to the Appellate Tribunal to come to findings different from those arrived at by the Appellate Tribunal in respect of the 1941-42 assessment. The second question must also be answered against the assessee. Lastly, learned counsel for the assessee has submitted that in very similar circumstances in the case of the Maharajadhiraj of Darbhanga, it was held that he was an investor and the profits made were not business profits. The taxpayer has my sympathy in this case, because different conclusions were arrived at by the Appellate Tribunal for the different assessment years; and if in the case of his brother another conclusion has been arrived at, there is perhaps a case of hardship. Hard cases should not, however, make bad law. The question before us is the short question whether for the five years under consideration there were materials before the Appellate Tribunal from which they could come to the finding at which they ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
