TMI Blog1970 (4) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... ompanies Act, 1913. At the commencement of the year of account 1952-53, the company held Government securities of the value of Rs. 1,93,30,958 and shares of public limited companies of the value of Rs. 64,54,529. During the course of the year the company sold Government securities valued at Rs. 92,50,000 and realised a sum of Rs. 79,78,055.50. The company also purchased Government securities of the value of Rs. 1,00,00,000 and out of those sold securities of the value of Rs. 69,00,000 earning a profit of Rs. 21,024. In proceedings for assessment of income-tax for the assessment year 1953-54, the company claimed allowance for the loss suffered in the sale of the securities. The claim was disallowed by the Income-tax Officer. He held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reon was a capital loss, is, in law, justified ?" The High Court recorded their answer in the affirmative. The Tribunal held that the loss suffered by the sale of securities was of a capital nature. That finding is not one of fact. This court has held in Commissioner of Income-tax v. National Finance Ltd.: " Whether a particular loss is a trading loss or a loss on the capital side, depends on the facts of each case. The question, however, is not one of pure fact but a mixed question of fact and law; and the decided cases indicate how the matter is to be viewed in the context of the facts. The problem must be approached in such cases in the light of the intention of the assessee, having regard to the legal requirements which are ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of securities ". In the assessment year 1954-55 the company was allowed a loss of " Rs. 26,078 resulting from redemption of securities ". In the assessment year 1955-56 the company was allowed a loss of Rs. 2,675 resulting from sale of shares. In the assessment year 1953-34 the company had no taxable income from the cinematograph theatre, because against the receipts were set off the depreciation and repair charges, and the entire receipts of the company were from interest and dividends. The loss which the company suffered in the account year 1952-53 relevant to the assessment year 1953-54 arose from transactions relating to sale of 3% 1970-75 Loan. The company purchased securities of the face value of Rs. 92,50,000 in two lots between J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the loss was capital, relying mainly upon certain findings recorded by the Appellate Assistant Commissioner and confirmed by the Appellate Tribunal. It is true that the company commenced business in 1948 and purchased 3% 1975 Loan of the value of Rs. 92,50,000 between July, 1948, and March, 1949. The company purchased other Government securities and stocks and shares of public limited companies. Some of the securities were redeemed in 1951-52. In 1952-53 the company sold securities of the value of Rs. 92,50,000 and securities of the face value of Rs. 1,00,00,000 were purchased. No investigation was made by the Income-tax Officer whether the redemption of securities in 1951-52 was on maturity or for other reasons. Nor did he investigate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntal authorities on the view that he should have adopted a different method of keeping account or of valuation. The method of accounting regularly employed may be discarded only if, in the opinion of the taxing authorities, income of the trade cannot be properly deduced therefrom. Valuation of stock at cost is one of the recognised methods. No inference may, therefore, arise from the employment by the company of the method of valuing stock at cost, that the stock valued was not stock-in-trade. Nor is the description of stock in the balance-sheet as " investments " decisive. The transactions in securities and shares, it is true, were not frequent, but they were of very large amounts. In the year of account 1952-53 the transactions of sale an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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