TMI Blog1973 (5) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... 57. Seth R. Dalmia (hereinafter referred to as " the assessee ") filed a return of his income for the assessment year 1958-59, disclosing an income of Rs. 99,496. In computing this income, he claimed, inter alia, that the loss incurred by him in the earlier years amounting to Rs. 2,52,121 from his business in shares should be set off against the dividend income of Rs. 3,12,734 which he had received during the accounting year. This dividend income represented the dividend received by the assessee from the shareholding in Jaipur Udyog Ltd. The assessee had also claimed allowance of interest amounting to Rs. 1,95,870 which was payable to M/s. Asia Udyog Pvt. Ltd. on the amount borrowed by the assessee for the purchase of the shares of Jaipur U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee was entitled to carry forward and set off losses of the earlier years against dividend income of the assessee in the assessment year 1958-59 ? " It would appear from the assessment order for the year 1958-59, which is made a part of the statement of the case, that the assessee derived income from various sources, such as, income from interest on securities, income from property, income from business and income from dividends. The income from business was from the business of a dealer in shares. It is not disputed that the loss claimed by the assessee amounting to Rs. 2,52,121 represented the loss incurred by the assessee in the earlier years from this business in shares. Under section 24(2) of the Act, the assessee would be entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; and (iii) that in the assessment years 1959-60 and 1960-61 the assessee had offered the income from the sale of these shares for assessment as income from business and the Income-tax Officer had assessed the said income as income from business. It would appear from the assessment order as well as the order of the Appellate Assistant Commissioner that the assessee had purchased the shares in question on April 30, 1955, which fell within the assessment year 1955-56. The exact date when the controlling interest in Jaipur Udyog Ltd. passed from the hands of the assessee to the Jain group is not available on the record and the Tribunal in its order merely stated that-- "the controlling interest in the Jaipur Udyog Ltd. had already pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cogent, clear and unequivocal, and the taxing authorities are not justified in inferring that capital as acquired the character of stock-in-trade merely from the fact that the assessee had dealt with another capital stock as a trading commodity. " In Calcutta Discount Co. Ltd. v. Income-tax Officer, the Supreme Court, while considering the scope of section 34 of the Act, observed as follows : " That the question whether sales of shares were by way of changing the investments or by way of trading in shares had to be decided on a consideration of different circumstances, including the frequency of the sales, the nature of the shares sold, the price received as compared with the cost price, and several other relevant facts.......but wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of shares of Jaipur Udyog Ltd. which he offered for assessment as his income from business and the same was treated and assessed as his income from business. It would thus appear that, as soon as the control of management of Jaipur Udyog Ltd. had passed from the hands of the assessee to Sahu Jain group, he had started selling these shares. The sale of the shares in the assessment years 1959-60 and 1960-61, i.e., within the period of 4 years, is more consistent with the holding of the shares by the assessee as the stock-in-trade than with the holding of the shares by the assessee by way of investment. In any case, there is no positive evidence in support of the stand taken by the revenue that even after the controlling interest in Jaipur Udy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 66(1) of the Act. Even assuming that the question as framed by the Tribunal and referred to this court would necessarily imply that this court could consider whether there was sufficient material before the Tribunal to justify its conclusion, we are of the view that the circumstances which were relied upon by the Tribunal for drawing its conclusion and which have been referred by us in the foregoing paragraphs, do justify the conclusion drawn by the Tribunal that the shares in question were held by the assessee during the accounting year as stock-in-trade. Although the Income-tax Officer appears to have disallowed the assessee's claim for set-off of the losses of earlier years against the dividend income of the present year o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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