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TMI Blog1978 (4) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had not been treated as a dealer in shares. In the assessment year in question transactions in such purchase and sale of shares resulted in a profit of Rs. 3,21,837-9-0 on sale of certain shares and also a loss of Rs. 71,462-15-0 on sale of other shares. The assessee disclosed in its return a sum of Rs. 86,601 as capital gains. The Income-tax Officer, however, assessed as business profits a sum of Rs. 2,50,375 holding that the same was realised on sale of shares as a trading profit. The Income-tax Officer based his findings on the following : (a) One of the objects of the assessee was to take part in the formation of other companies. (b) The assessee sold the shares of different companies in furtherance of such object. (c) Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sary. Dealing in shares was not an integral part of such business and, therefore, any profit arising from sale of shares would not be a trading profit or a receipt in the nature of revenue. The Tribunal further noted that the assessee with holdings of the value of over Rs. 80 lakhs in most of the years had transactions involving less than 10% of its total holdings. From the number of transactions involved having regard to the size of the holdings the Tribunal found that the assessee had merely changed a few of its investments and did not embark on a business of dealing in investments. The number of transactions were not so large as to suggest a regular business but were in the nature of variation of investments. The Tribunal accordingly rej ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to determine their nature. In support of his contentions Mr. Sen cited Commissioner of Income-tax v. Clive Row Investment Holding Co. Ltd. [1977] 107 ITR 600 (Cal) for the following observation of a Division Bench of this court, at page 608 : " A company may deal in shares for different purposes. (a) it may deal in shares for the purpose of carrying on the business of buying and selling securities ; (b) it may also deal in shares for the purpose of investment and invest its capital in shares ; (c) such investment may be made in certain cases for obtaining the control of another company. If the business consists of buying and selling shares, then whatever surplus the company receives from such business must necessarily be a revenue rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Court at page 476 of the report : " We are unable to answer the question referred because the mere fact that an investment company periodically varies its investment does not necessarily mean that the profits resulting from such variation is taxable under the Income-tax Act. Variation of its investments must amount to dealing in investments before such profits can be taxed as income under the Income-tax Act. In Bengal and Assam Investors Ltd. v. Commisssoner of Income-tax [1966] 59 ITR 547 (SC), this court held that the mere fact that a company is incorporated to carry on investment does not show that it is carrying on business." (b) Ashoka Viniyoga Ltd. v. Commissioner of Income-tax [1968] 70 ITR 381 (Cal). The facts in this case we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as follows : (a) Whether a particular loss was a capital loss or a revenue loss was a mixed question of law and fact. (b) The Tribunal was justified in drawing the inference that the loss was a capital loss. (c) The fact that the assessee had shown the shares as investment shares in its books as also in its balance-sheet was a relevant but not a conclusive circumstance at which the Tribunal could have relied for drawing the inference that the loss was a capital loss. In the present case, we find that the Tribunal has relied upon the following facts in coining to the conclusion that the surplus in the hands of the assessee by reason of the transactions in shares was a capital gain and not a business profit. (a) The assessee was car ..... X X X X Extracts X X X X X X X X Extracts X X X X
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