TMI Blog1963 (4) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... es found that it began in 1943. On that finding the profits were correctly computed and the answer given by the High Court to the question of the computation of the profits was correctly given. - Appeal No. 445 of 1962 - - - Dated:- 10-4-1963 - DAS, S.K., SARKAR, A.K. AND HIDAYATULLAH, M., JJ. For the Appellant: R. J. Kolah and I.N. Shroff For the Respondent: K. N. Rajagopal Sastri, and R.N. Sachthey JUDGMENT The judgment of the court was delivered by S. K. DAS J.-This is an appeal on a certificate of fitness granted by the High Court of Bombay under section 66A(2) of the Indian Income-tax Act, 1922. The New Jehangir Vakil Mills Co. Ltd., Bhavnagar, appellant before us and called the assessee, carried on the business of manufacturing and selling textile piecegoods at Bhavnagar in the former Bhavnagar State. The present appeal is concerned with the assessment year 1945-46, the account year being the calendar year 1944. In the said assessment year the Income-tax Officer concerned added to the taxable income of the assessee a sum of Rs. 1,86,931 (which was later reduced to Rs. 1,23,840) as a revenue receipt, representing an amount by which the sale price exceeded th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares in different years by the assessee and came to the conclusion that the assessee was a dealer in shares at least from the year 1942 by reason of the frequency and multiplicity of the transactions which the assessee conducted since that year. It further pointed out that the assessee had sold certain shares out of a block of shares in the year 1943, and after taking out the price of the shares realised in 1943, the remaining amount was shown in the balance sheet as the value of the remaining shares in each block. The value of such shares as shown in the balance sheet for 1943 was not the cost price of the assessee. In some cases it was below cost. As a result of this valuation in the balance sheet, the profits from the sale of shares during 1945-46 would be Rs. 1,23,840. If, however, the difference between the sale price and the market value of the shares as on the first day of the account year was taken into account, the results might be different. On the basis of the aforesaid remand report the Appellate Assistant Commissioner examined the records of the transactions and observed : "There are five different transactions of purchase and two transactions of sale in 1942. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omputation of profits it pointed out that if the assessee was a dealer in 1943 also, then it was not open to the assessee to say that the market value of the shares as on the opening day of the year 1944 should be taken as the cost of the shares. Accordingly, the High Court answered both the questions against the assessee. Learned counsel for the appellant has addressed us at length on both questions. However, it appears to us that by reason of the reframing of the second question, the two questions really merge into one, namely, was the assessee a dealer in shares in 1943 and continued to be such a dealer in 1944 which is the relevant account year? The question no doubt has two aspects. Firstly, there is the aspect whether there is any evidence to justify the finding that the assessee was a dealer in shares in 1943. Secondly, there is the aspect as to how the profits made from the sale of shares in 1944 should be computed in the assessment year 1945-46. It is, however, manifest that if the assessee was a dealer in 1943 also, then the principle laid down by this court in Commissioner of Income-tax v. Bai Shirinbai K. Kooka [1962] 46 I. T. R. 86 (S. C.) will not apply, for that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a dealer in 1943. The High Court has also summarised the various transactions in which the assessee indulged in the year 1943. Having regard to the frequency and nature of those transactions, it was open to the taxing authorities to come to the conclusion that the assessee was a dealer in shares in 1943. We are not prepared to say that the rule of "no evidence" can be applied to the present case. We, therefore, consider that the High Court correctly answered the question relating to this aspect of the case. Now, as to computation of profits. Though it is true that the question which directly arose before the taxing authorities in the present case was whether the assessee was a dealer in 1944, the question of the position of the assessee in 1943 also arose in determining how the profits made in 1944 should be computed. It is not, therefore, quite correct to say that the position of the assessee in 1943 was completely outside the scope of the assessment proceedings of 1945-46. In determining or computing the profits made by the sale of shares in 1944, the assessing authorities had to go into the question-did the assessee start its trading activity on January 1, 1944, or did it star ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revious litigation no express decision had been given whether the beneficiaries were joint owners, it being assumed and admitted that they were, the matter so admitted was so fundamental to the decision then given that it estopped the Commissioner. The latter decision was distinguished in Society of Medical Officers of Health v. Hope 1960] A. C. 551. Both the decisions were again considered by the Judicial Committee in Caffoor v. Income-tax Commissioner [1961] A. C. 584. The decision in Broken Hill Proprietary Co.'s case [1926] A. C. 94 was approved and the principle laid down was that in matters of recurring annual tax a decision on appeal with regard to one year's assessment is said not to deal with eadem question as that which arises in respect of an assessment for another year and consequently not to set up an estoppel. As to the decision in Hoystead's case (supra) it was stated : "Their Lordships are of opinion that it is impossible for them to treat Hoystead's case (supra) as constituting a legal authority on the question of estoppels in respect of successive years of tax assessment. So to treat it would bring it into direct conflict with the contemporaneous decision in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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