TMI Blog1967 (12) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... 42 ordinary shares and 40,000 deferred shares. Each share was of the face value of Rs. 5. The deferred shares would be entitled to dividend only after payment of the prescribed rate of dividend to preference shares. On April 9, 1946, the assessee, which was also a company incorporated in February, 1946, became the managing agents of Loyal Textile Mills under an agreement for the purpose entered into on April 17, 1946. During the year ended April 30, 1947, the assessee acquired 320 ordinary shares and 250 preference shares of Loyal Textile Mills. On October 10, 1947, the assessee made a further acquisition of 39,000 deferred shares for a total consideration of Rs. 39,000. In 1954, the assessee agreed to make over its managing agency to Karam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated that the purchase of the deferred shares did not constitute a business in dealing in shares. The revenue as well as the Tribunal have found that the assessee has made sales of shares in 1947, 1948, 1950, 1953, 1954 and 1955. They have also found that no dividends were at any time declared on the deferred shares. They are all of the view that, in view of these facts, the assessee took the opportunity of making a profit, when there was the offer to purchase the managing agency as well as the deferred shares and that it had not been proved by the assessee that its sole object in acquiring these shares was to augment the voting strength of the managing agency company. Before us, the argument for the assessee is that the Tribunal in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar in excess of their market price to facilitate the acquisition of the managing agency, a capital asset was acquired, and the intention in purchasing these shares was not to purchase them as stock-in-trade of the business in shares. But, in the case before us, the facts do not show that the assessee in acquiring the deferred shares had a similar intention of winning controlling power. As we noticed at the outset, the total number of shares which the assessee had acquired by October 10, 1947, were only 39,570, while the number of shares issued by Loyal Textile Mills amounted to 1,18,412. Nor does it appear that when the assessee purchased the deferred shares, they did so at a higher price than the then market rate. It is also significant th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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