TMI Blog1957 (3) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... as running under the management of Lala Jaswant Rai whereas the assessee was in charge of the manufacturing section of the Jaswant Sugar Mills. On 12th December, 1940, when the assessee had attained majority, he purchased 100 more shares of the Straw Board Mills Ltd. from Chiranji Lal at the rate of Rs. 75 per share, the face value of the shares being Rs. 100 each. In June, 1941, the Straw Board Mills Ltd. declared a divided of 12 1/2 percent on the shares for the year 1940. In 1942, a dividend of 20 per cent. was declared for the proceeding year 1941 and, in June, 1943, a dividend of 40 per cent. was declared by the Straw Board Mills Ltd. for the proceeding year 1942. Then, in July, 1943, the Jaswant Sugar Mills and all the shares of the Straw Board Mills Ltd. belonging to Lala Jaswant Rai, the assessee and other members of their family were sold to one Seth G.M. Khemka of Calcutta. As a result of this sale, the price fetched by the 100 shares of the assessee, which had been purchased by him in 1940, came to Rs. 500 per share. There thus accrued to the assessee a profit of Rs. 425 per share on these 100 shares. The question arose whether this profit earned by the assessee in the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal, Shri G.S. Pathak appearing on behalf of the assessee has drawn our attention to the material on the record indicating that some of the findings of fact given by the Tribunal and relied upon by them were either not relevant to the question which the Tribunal had to consider, or were without any material whatsoever. The first fact relied upon by the Tribunal, which is coupled with the fifth fact mentioned above, relates to a plea, which, according to the Tribunal, was put forward by the assessee, that he had purchased those shares in order to qualify himself as a director of the Straw Board Mills Ltd. It appears, however, that this question did not arise because the plea, which was taken by the assessee in his affidavit, was not to the effect that the 100 shares had been purchased by him for the purpose of qualifying himself as a director but were purchased as an investment pure and simple out of his surplus funds. The affidavit did mention that, after the purchase of those 100 shares, the assessee had become a director but no case had been specifically put forward by him in the affidavit to the effect that the intention of purchasing the shares was to qualify as a director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee must have known the state of affairs of the mills takes us no farther. This circumstance also only leads to the conclusion that, at the time of the purchase of the shares, the assessee was aware of the fact that the investment would be a profitable one and it can also be held that he knew that the shares would rise in price. The next fact mentioned above as No. 5 is the mere possibility taken into consideration by the Tribunal that the assessee might have got some shares transferred in his favour by his father instead of purchasing them from some other person. The Income-tax Appellate Tribunal have not taken notice of the fact that even the 100 shares, which had been purchased by the assessee, were obtained by him from one of his close relations, Chiranji Lal. Further, as we have said earlier, this point was relevant only if the assessee's case had been that he had obtained those shares in order to qualify himself as a director whereas this was not really his case. The real case put forward by him was that he had purchased the shares as an investment. The circumstances discussed so far, therefore, give no indication at all that the assessee's explanation that he had p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances, held that the rejection of an affidavit filed by an assessee was not justified unless the assessee had either been cross-examined or called upon to produce documentary evidence in support of the affidavit sworn by him. Their Lordships held : "No further documents or vouchers in relation to those entries were called for, nor was the presence of the deponents of the three affidavits considered necessary by either party. The appellants took it that the affidavits or these parties were enough and neither the Appellate Assistant Commissioner, nor the Income-tax Officer, who was present at the hearing of the appeal before the Appellate Assistant Commissioner, considered it necessary to call for them in order to cross-examine them with reference to the statements made by them in their affidavits. Under these circumstances it was not open to the Revenue to challenge the correctness of the cash book entries or the statements made by those deponents in their affidavits." In the instant case, these remarks fully apply, so that we have to hold that it was not open to the Tribunal to reject the plea taken by the assessee in his affidavit merely on the ground that no doc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and not with a view to obtain profit by their sale. The circumstances, under which the shares were sole, thus do not at all support the view that those had been purchased by the assessee with the intention of selling them at a profit. On the other hand, it would appear that the assessee's contention that they were purchased as an investment is supported by the circumstances to a much greater extent. The only other point left for our consideration is that relating to the purchase and sale by the assessee of shares in some other concerns. Here, again, Shri Pathak has drawn our attention to the fact that the Tribunal have gone wrong in stating the facts inasmuch as, out of the two purchases of shares made by the assessee in the years 1942 and 1943, only one was an admitted purchase for the purpose of selling the shares at a profit whereas the other was a purchase admittedly for the purpose of investment in the shares for earning income on the investment and not for the purpose of making profits by selling the shares at a higher price. The purchase in 1941 of the share of Shri Gopal Paper Mills Ltd. was admitted by the assessee to be a venture which he entered into for earning prof ..... X X X X Extracts X X X X X X X X Extracts X X X X
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