9911796707
TMI Blog1953 (9) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... rt was delivered by PATANJALI SASTRI, C.J.--- This is an appeal from a judgment of the High Court of Judicature at Calcutta answering a question referred to it by the Income-tax Appellate Tribunal under Section 66 of the Indian Income-tax Act, 1922. The appellant is a private limited company incorporated in the year 1935 under the Indian Companies Act with the following objects, among others, set out in the memorandum of association :--- " To carry on and undertake any business, transaction, operation or work commonly carried on or undertaken by bankers, capitalists, promoters, financiers, concessionaires, contractors, merchants, managers, managing agents, secretaries and treasurers. To purchase or otherwise acquire, and to sell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other companies. For this purpose, it had to vary its holdings from time to time and quite a number of shares held by the company have been of a speculative character. To hold these investments and to finance several companies (managed or otherwise) the appellant company had to resort to obtaining loans and overdrafts. It is, therefore, clear that shares were acquired by the appellant company in the ordinary course of its business and they became its stock-in-trade. The profit on sale of these shares did not essentially arise out of the sale of investment of any surplus funds. It is, therefore, clear that the sale of investments and making of fresh investments are linked up with the business of the company as financiers, inasmuch as invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aling in securities as by itself would amount to the carrying on of a business of buying and selling securities. It would be enough if such sales were effected in the usual course of carrying on the business or, in the words used by the Privy Council in Punjab Co-operative Bank Ltd. v. Income-tax Commissioner, Lahore, if the realisation of securities is a normal step in carrying on the assessee's business. Though that case arose out of the assessment of a banking business, the test is one of general application in determining whether the surplus arising out of such transactions is a capital receipt or a trading profit. The question is primarily one of fact and there are numerous cases falling on either side of the line but illustrating the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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