TMI Blog1973 (5) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... that the loss of Rs. 36,035 incurred by the assessee-company on sale of preference shares of S. K. G. Sugar Co. Ltd. and Bengal Jute Co. Ltd. was a loss of capital nature ? " The year in question is the assessment year 1959-60 for which the previous year is the year ending 31st March, 1959. For that year a return was filed showing a total income of Rs. 20,063. The assessee-company is a dealer in shares. Before the Income-tax Officer, the assessee claimed deduction on account of loss of Rs. 36,035 consisting of alleged loss of Rs. 26,565 on sale of 1,000 preference B shares of, S. K. G. Sugar Co. Ltd. and of loss of Rs. 9,470 on sale of 250 preference shares of Bengal Jute Co. Ltd. The Income-tax Officer found that 1,000 shares of S. K. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Officer disallowed this loss also as not arising in the ordinary course of business. The Income-tax Officer also found that this was also an inter-company transfer of investment and had been done with a view to create artificial losses. There was an appeal to the Appellate Assistant Commissioner. Before the Appellate Assistant Commissioner, it was contended that the assessee had all along been held to be a dealer in shares and the shares under consideration had all along been treated by the assessee as a stock-in-trade and the dealings in shares was its main business. This contention was not opposed, it appears, before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner further observed that the shares had bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aforesaid cases in fact had taken place and at real prices. There was an appeal to the Tribunal. The Tribunal noted the findings of the Income-tax Officer as well as the findings of the Appellate Assistant Commissioner, referred to hereinbefore, and observed that, on the facts found by the Appellate Assistant Commissioner, it saw no reason to interfere with the findings in regard to the share-dealing losses which arose in the first year, viz., the assessment year 1958-59, with which we are not concerned in this reference. As regards the second year, that is the year in question with which we are concerned, viz., the assessment year 1959-60, the Tribunal observed that the shares were preference shares and it had been held for a long p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alf of the department to the contrary, had accepted the position that the shares in question, viz., the preference shares of S. K. G. Sugar Co. Ltd. and Bengal Jute Co. Ltd., had been acquired as a stock-in-trade of the assessee in its share-dealing business. Furthermore, it appears, in respect of these shares the assessee had been treated as a dealer in shares. Indeed in the statement of the case which has been filed before this court after hearing both the parties, the Tribunal records that the assessee is a dealer in shares. Therefore, it appears that the facts that emerged in this case were that the assessee was a dealer in shares and it was contended before the Appellate Assistant Commissioner and nothing was shown to the contrary by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the sale are dealt with by the assessee, these ingredients and other factors are some of the principles that the courts have laid down which should determine the question whether a particular transaction is in realisation of investment or sale in the ordinary course of business. It is observed by the Supreme Court in Investment Ltd. v. Commissioner of Income-tax, that the mere length of time might not be a determining factor. The Supreme Court had also considered this question in the case of New Era Agencies (Private) Ltd. v. Commissioner of Income-tax. There the Supreme Court was dealing with the preference shares ; this fact has to be noted, because in this case we are concerned with preference shares and these shares had been hold f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Appellate Assistant Commissioner and that finding has not been disturbed. (ii) The shares were sold and purchased in the regular manner, namely, through a broker. (iii) The sale proceeds were realised and the moneys were put in the bank and purchases were made. This, however, is consistent with the fact of the assessee being either an investor or a trader in shares. It was contended before the Appellate Assistant Commissioner that the assessee had all along been treated as a dealer in shares in respect of these shares and these shares had been treated as stock-in-trade of the assessee. The Appellate Assistant Commissioner seems to have accepted the contention and the Tribunal has not negatived this contention. (iv) Therefore, the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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