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TMI Blog1971 (2) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... ari Shanker Bagla, constitute another partnership firm, " M/s. Gangadhar Baijnath ". The assessee held 108 shares of Maheshwari Devi Jute Mills Co. Ltd. (hereafter referred to as "jute mills"), at the commencement of the accounting period corresponding to the assessment year 1951-52. During the course of the accounting period the assessee purchased a number of shares of the jute mills at different rates. The shares were valued at Rs. 100 per share at the close of the accounting period. The assessee claimed a loss of Rs. 4,3 8,291, representing the difference between the purchase price of the shares and valuation at the close of the year. Again, the assessee purchased 1,983 ordinary shares and 546 preference shares of the Muir Mills Co. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tribunal, Annexure " E " is a copy of the affidavit of Satyanarain Bagla. In that affidavit it was stated that the exclusive business of the firm has always been to deal in shares. The firm has never acted as managing agents of M/s. Maheshwari Devi Jute Mills Co. Ltd. The object of purchasing shares was not to acquire control over Mills Co. Ltd. In Ramnarain Sons(Private) Ltd. v. Commissioner of Income-tax, the appellant-company was a dealer in shares and securities, and also carried on business as managing agents of other companies. In order to acquire the managing agency of a textile mill, the apellant-company purchased from Sassoon David and Co., which were the managing agents thereof, 1,507 shares of the mill at the rate of Rs. 2,32 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y associated with the firm "Gangadhar Baijnath". The partners of the assessee-firm are also partners of the firm, Gangadhar Baijnath. The firm, Gangadhar Baijnath, took over the managing agency of the jute mills. In this connection we must remember that the assessee itself was not the managing agent of the jute mills. It is true that the partners of the assessee-firm are also partners of the firm, " Gangadhar Baijnath ". But we cannot overlook the fact that the managing agency was actually held by M/s. Gangadhar Baijnath. Again, the managing agency was not recently acquired. The managing agency was acquired by " Gangadhar Baijnath " as far back as the year 1930. It has not been shown that there was any special reason for the, assessee acqui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chaser. It was urged for the department that, if the market rate was available with the stock exchange, there was no justification for settling the rate by negotiation. It is true that the stock exchange-quoted rates were for different dates. But that did not prevent the parties from settling the rate by mutual negotiation. In Commissioner of Income-tax v. National Finance Ltd. it was held that, though it may be true that the intention of one company could not be attributed to another company even though the proprietorship of the companies might be the same, the main question was whether a particular loss made by the company was a capital or a revenue loss. The transaction must be regarded as one on the capital side if the shares were neve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finding that the purchase must have been in the nature of investment. The assessee's claim that the purchase was by way of stock-in-trade may, therefore, be accepted. Next, we have to consider the purchase of shares of Muir Mills. The Appellate Assistant Commissioner noticed two circumstances about this transaction. The department suggested that the shares of Muir Mills Co. Ltd. were purchased by the assessee in order to gain control over the affairs of the company. It is common ground that Indian Textile Syndicate Ltd. was the managing agent for Muir Mills Co. Ltd. In Satyanarain's affidavit it was stated that the Indian Textile Syndicate Ltd. acquired the managing agency of the Muir Mills in the year 1947. The appointment was for a peri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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