9911796707
TMI Blog1968 (9) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... 1929, the petitioner company promoted two companies known as Loyal Mills Ltd. and Hamilton Studios Ltd. and took over all their shares of the value of Rs. 10 1/2 lakhs. In the year 1930, the petitioner company purchased shares of Rs. 1,33,930. During the period of 9 years from 1st July, 1930, to 30th July, 1939, no purchases were made with the exception of few shares of Loyal Mills Ltd., taken over from the staff of B. D. Sassoon & Co. Ltd., who retired from service. In the year ended 30th June, 1940, reconstruction scheme of the Appollo Mills Ltd. took place under which debentures held by the petitioner company in the Appollo Mills Ltd. were redeemed and the proceeds were reinvested in the new issue of shares made by the Appollo Mills Ltd. Out of the purchase of the value of Rs. 2,794 made by the petitioner company during the year ended 30th June, 1941, Rs. 2,000 was the value of shares of the Loyal Mills Ltd., taken over from the retiring staff. In the year ended 30th June, 1943, the petitioner company took over from the David Mills Co. Ltd. shares of the Associated Building Co. of the value of Rs. 56,700. After this there were no purchases at all to this date excepting purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, and accordingly an amended return of total income under section 22(1) of the Indian Income-tax Act is submitted herewith on which the assessment for 1943-44 may be based, as on this particular question the company obviously cannot have one status for excess profits tax and another for income-tax." It was contended by the assessee company that it never carried on any business in the purchase or sale of shares, securities or properties. In support of this contention the assessee company relied on the order of the Central Board of Revenue dated August 18, 1943, passed under section 26(1) of the Excess Profits Tax Act. The Income-tax Officer rejected the plea and held that the investments were held by the assessee company as the stock-in-trade of its business which it carried on during the previous year and also in the preceding years. The assessee company took the matter in appeal to the Appellate Assistant Commissioner who dismissed the appeal and upheld the order of the Income-tax Officer. The assessee, thereafter, appealed to the Income-tax Appellate Tribunal and the same contentions were urged on behalf of the assessee company. The Appellate Tribunal rejected the assessee' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that merely because the company had within its objects the dealings in investments, shares and properties, that circumstance did not give it the characteristics of a dealer in shares. The circumstance, though relevant, was not conclusive. It was pointed out in the judgment of this court that the question as to what were the characteristics of the business of dealing in shares or that of an investor was a mixed question of fact and law and what was the legal effect of the facts found by the Appellate Tribunal and whether as a result thereof the assessee could be termed a dealer or an investor was itself a question of law. Accordingly the court formulated the following two questions of law as arising out of the order of the Tribunal: " (1) Whether there are any materials on the record to support the finding of the Income-tax Officer that the assessee-company was a dealer in shares, securities and immovable property during the assessment year in question ? (2) Whether the profits and losses arising from the sale of shares, securities and immovable properties of the assessee-company can be taxed as business profits ? " The case was therefore remanded to the High Court for directin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Co. and the Sassoons continued to be interested in the said group of mills and they were realised by sale only when E. D. Sassoon & Co. and the Sassoons decided to relinquish their interest in the said group of mills ; and (3) neither the mode of acquisition of these shares and properties nor the mode and manner of their disposal have any of the distinctive characteristics of business dealings. On the questions actually formulated by this court upon which the Appellate Tribunal has made a statement of the case it is not possible for us to entertain the argument advanced by Mr. S. T. Desai. It was contended on the contrary by the Attorney-General that, upon the questions actually referred, the answer must be against the assessee-company. It was said that there were at least two materials on the record to support the finding of the Appellate Tribunal that the assessee-company was a dealer in shares, securities and immovable properties during the assessment year in question. The first is that in its own memorandum dated October 2, 1942, the assessee-company contended that it was a dealer in shares and investments and set out various reasons in support of its contention. The second ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not rationally possible. It is within these narrow limits that the conclusions of fact by the Appellate Tribunal can be challenged under section 66(1). Such conclusions can never be challenged on the ground that they are based on misappreciation of evidence. There is, however, a third class of cases in which the assessee or the department may seek to challenge the correctness of the conclusion reached by the Tribunal on the ground that it is a conclusion on a question of mixed law and fact. Such a conclusion is no doubt based upon the primary evidentiary facts, but its ultimate form is determined by the application of relevant legal principles. To put it differently, the proper construction of statutory language is always a matter of law and, therefore, the claim of the assessee that the profits and losses arising from the sale of shares, securities, etc., cannot be taxed as profits of a business involves the application of law to the facts found in the setting of the particular case. In dealing with findings on such questions of mixed law and fact the High Court must no doubt accept the findings of the Tribunal on the primary questions of fact; but it is open to the High Court to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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