TMI Blog1972 (9) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... with a view to acquire the managing agency and the control of the company or the shares constituted his stock-in-trade ? (ii) Even if the shares in question did not constitute the stock-in-trade of the assessee, whether the profit made on the sale of shares did not constitute capital gain chargeable to income-tax under section 12B of the Act ? " On the first question, the answer of the High Court was that there was no material for the finding that the shares in question were purchased by the assessee with a view to acquire the managing agency and control of the company. It was further held that the shares constituted the stock-in-trade of the assessee. In view of the above, the High Court held in answer to question No. (ii) that the profits made by the sale of shares could not constitute capital gain chargeable to income-tax under section 12B of the Act. The matter relates to assessment year 1947-48, the relevant previous year for which was the Dassera year 2002-2003 corresponding to the period from October 16, 1945, to October 5, 1946. Rameshwar Prasad Bagla, the assessee-appellant, is a partner of firm Agarwal Co. having one-sixteenth share in the firm. Agarwal Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut of the five lakhs shares. The assessee's brother was likewise entitled to an equal number of shares out of those five lakhs shares. The assessee's brother relinquished his rights in the said 31,250 shares in favour of the assessee, as a result of which the assessee obtained 62,500 shares in the India United Mills Ltd. The shares were paid for at the rate of Rs. 16-8-0 per share in 1945. These shares had earlier stood in the name of Bombay Trust Corporation which was a company formed by Sassoon group of companies. After the managing agency of the India United Mills Ltd. had been taken over by Agarwal Co. on December 1, 1943, those shares were transferred between March and August, 1944, in the name of various persons residing in Jaipur. Those persons transferred the said shares in favour of the assessee on January 30, 1945. The assessee borrowed rupees ten lakhs from Agarwal Co. in order to pay for the price of those shares. Out of 62,500 shares acquired by the assessee, he sold 43,700 shares during the period from April 3, 1946, to July 19, 1946. in seven lots. The rest of the shares remained in the possession of the assessee during the relevant year. The sale of 43,700 sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iable to income-tax. In coming to this conclusion the Tribunal observed : " A large number of shares had to be purchased by Agarwal Co. as a result of an agreement with the Sassoons. Agarwal Co. was interested in the managing agency of some mills also which came to them as a result of the same agreement. We think that on the facts produced the purchase of the shares by the assessee was not with a view to deal in those shares but with a view to obtain the managing agency and control of the company. It may also be noted here that if the price ruling at the time of the transfer was to be taken into account, perhaps, there is no profit. The profit has been shown as the transfer is made at the price at which the shares were originally sold by the Sassoons. We think that on the facts before the income-tax authorities the assessee's holding of shares in the India United Mills Ltd. was not the purchase of a stock-in-trade as held by the department. We accept the assessee's appeal and direct that the excess realised on the sale of these shares is not income which is liable to income-tax. " An application was, thereafter, filed on behalf of the respondent for stating a case to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h is partly relevant and partly irrelevant or bases its decision partly on conjectures, surmises and suspicions and partly on evidence, then in such a situation an issue of law arises and the finding of the Tribunal can be interfered with. The finding may also be interfered with if it be found to be so unreasonable that no person acting judicially and properly instructed as to the relevant law could have arrived at it. None of the circumstances justifying interference with the finding of fact of the Tribunal has been shown to exist in this case. In the absence of any such circumstance, the High Court in our view was not justified in interfering with the finding of fact of the Tribunal. The fact that the High Court on appreciation of evidence would have arrived at a conclusion of fact different from that of the Tribunal did not warrant interference with the finding of the Tribunal. The Tribunal in arriving at the conclusion that the purchase of the shares in question by the assessee was with a view to obtain the managing agency and control of the India United Mills Ltd. and that those shares were not purchased as stock-in-trade referred to a number of circumstances. It was found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng agency could not, in the absence of an intention to trade in those shares, be regarded as acquisition of stock-in-trade of the share business. The appellants had undoubtedly purchased the shares of the Dawn Mills with money borrowed at interest, but that circumstance by itself does not evidence an intention to trade in the shares. Nor is the fact that the appellants are dealers in shares and their memorandum of association authorises them to carry on business in shares of any importance in the circumstances of the case. " It was further observed : " Subsequent disposal of some out of the shares by the appellants could also not convert what was a capital acquisition into an acquisition in the nature of trade. " We are, therefore, of the view that the answer given by the High Court to question No. (i) was not correct. In our opinion, there was material for the finding that the shares in question had been purchased by the assessee with a view to acquire the managing agency and control of the India United Mills Ltd. and that the shares did not constitute the stock-in-trade of the assessee. So far as the second question is concerned, we find that it is the common case o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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