TMI Blog1949 (9) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is found as a fact by the Tribunal and it is admitted by the assessee company that the assessee company had not in the past advanced any such sum in similar circumstances to any other person. The question that arises for our determination is whether this sum of ₹ 5,00,000 constitutes, within the meaning of rule 1(1)(b) of Schedule II to the Excess Profits Tax Act, a debt due to the assessee. If so, it would go to increase its capital as contemplated by Schedule II of that Act. The Tribunal took the view that the business of the company was not money-lending business and therefore the advance made by the assessee company was not in the course of its business and therefore was not a debt contemplated by rule 1(1)(b) of Schedule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s so it would be ultra vires. But I am not prepared to accept that every act which is intra vires of the company is necessarily done in the course of the business of the company. Whether a particular act is done in the course of business or not is really to my mind a question of fact and fact must be determined according to the evidence led and the circumstances of the case. It must be found as to whether the particular act has any connection with the normal business that the company is carrying on and whether it is so related to the business of the company that it can be considered to be performed in the ordinary course of the business of that company. Now, on the facts of this case which the Tribunal has found, the normal activity and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ost price and the sale price of those shares. The contention of the assessee on the other hand was that the sale of the shares merely represented a capital appreciation. The facts there were that the assessee company purchased a large amount of shares of the Rohtas Industries Ltd. The price of these shares went up and then the assessee company sold them at a profit. Thus the Rohtas Industries Ltd. was benefited as the market value of its shares was enhanced. It was also found that the Rohtas Industries Ltd. were working in cooperation with the assessee company in competition with the Associated Cement Co Ltd., which was a rival cement company. In coming at the conclusion that they did, the learned judges of the Patna High Court relied on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r pointed out in the case of Smith v. Anderson [1879] 15 Ch. D. 247, which is cited in this particular judgment, to ascertain the business of a limited liability company one must look first at its memorandum and see for what business that provides and whether its objects are still being pursued. Therefore, it is not sufficient merely to look at the memorandum and to find out for what business it provides; one must look further and determine whether the objects set out in the memorandum are still being pursued by the company. It is perfectly true that in the case of the company before us one of its objects is money-lending; it could have carried on the business of money-lending. But what we have to determine is whether the company has b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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