TMI Blog1963 (4) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... urities worth ₹ 9,55,994. But only a few months after, he sold away the same at a small loss. The excess amount realised by the sale of securities was, however, assessed in the assessment year 1939-40 by the Income-tax Officer. But the Appellate Tribunal, on appeal, took the view that those transactions were merely in the course of change of investment and there was no business motive, and held that the surplus was not assessable to income-tax. From the sale proceeds, referred to above, the assessee opened an account under the head Account of ₹ 48 lakhs floating in the share market . In 1939 also, the assessee purchased shares and debentures in that account to the extent of ₹ 34,14,000. These shares and debentures, however, were sold by the assessee in October, 1939, for ₹ 5,75.723; in 1940, for Rs, 29,58,677 and in 1941 for ₹ 64,201. By the first two sales, the assessee got a profit of ₹ 1,17,064 and ₹ 25,133 respectively. But in the third sale, he incurred a loss of ₹ 1,642. The surplus amounts received by the assessee were accordingly assessed by the Income-tax Officer, in the assessment years 1940-41 and 1941-42. On appeal, the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax Act as receipt of casual and non-recurring nature not arising from business or adventure in the nature of business? (2) Whether in the facts and circumstances of the case the amount of rent of houses forming part of the impartible property is assessable in the hands of the assessee? M.J.C. 346: (1) Whether the excess receipt of ₹ 33,481 realised by the assessee on the sale of gold is exempted from being taxed under the provisions of section 4(3)(vii) of the Income-tax Act as receipt of casual and non-recurring nature not arising from business or adventure in the nature of business? (2) Whether in the facts and circumstances of the case the amount of rent for house forming part of the impartible property is assessable in the hands of the assessee? (3) Whether the amount of ₹ 88,522 received by the assessee as profit realised on the sale of shares and securities is liable to be taxed in his hands? The Income-tax Appellate Tribunal, accordingly, stated the case and referred it to this court for its opinion on the questions of law referred to above in the two cases. At the time the cases were originally heard, this court, after hearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s explanation. This court, therefore, directed that the Appellate Tribunal should consider the question and reach a clear finding of fact with respect to both the matters. Both the cases therefore, were referred back to the Income-tax Appellate Tribunal under section 66(4) of the Income-tax Act requiring the Income-tax Appellate Tribunal to submit to the High Court a clear statement of facts found by it on the above points. The Income-tax Appellate Tribunal, accordingly, has drawn up the statement of the case under the above section and has referred the same to the High Court. The Appellate Tribunal, after considering the complete picture of the assessee's transactions from 1937 to 1947, came to the conclusion that right from the commencement, the assessee had been indulging in purchase and sale of shares as shares as a dealer in shares and that the purchase and sale of gold were merely transactions indulged in by the assessee in a scheme of profit making. Mr. P.R. Das, appearing for the assessee, has placed before us the orders of the Appellate Tribunal with respect to the assessment years 1939-40, 1940-41 and 1941-42 in which on a consideration of the sale and purchase of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the view taken by his predecessor in the previous years, must have some new materials and facts before him. It has, therefore, to be seen in the present case whether, on the facts and circumstances disclosed before the income-tax officials, the finding of the Appellate Tribunal was justified or not. The Appellate Tribunal has observed that the frequency with which the assessee purchased and sold shares, the interval between the purchase and sale being only a few months in several cases, coupled with the fact that a sum of ₹ 48, 00,000 was reserved by the assessee for this activity all pointed to the inference that the assessee was indulging in the business of purchase and sale of shares and securities. It has pointed out that in the present case an additional circumstance, which proved that the assessee was a dealer in shares and not an investor in shares, was the fact that the assessee borrowed nearly 5 lakhs of rupees on pledge of gold for purchase of shares and securities. Apart from that, the assessee himself admitted in ground No. 4 of the grounds of appeal for the year 1946-47 that the overdraft loan was utilised for the purchase of shares. It has also pointed out that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank and depositing the same in the Central Bank of India at Gaya. From the records of the case, it also appears that, even after the purchase of gold in July, 1940, the assessee had in his hand cash amounting to several lakhs. The income-tax authorities, therefore, rightly took the view that, if the motive for the purchase of gold was preservation of the liquid assets of the assessee by converting them into gold, then he would not have kept in his hand cash amounting to several lakhs or deposited the money in the Central Bank of India at Gaya. The Income-tax Appellate Tribunal has also pointed out that, in fact, there was no panic till 1942 and that panic started only after the Japanese invasion of India in 1943. So far as the sale of gold is concerned, the case of the assessee is that, when the victory of England was in sight, he converted the gold, which was lying as unproductive into cash. But this case of the assessee is belied by his own statement in his affidavit dated the 8th March, 1946, marked as exhibit V, in which he stated that in the year 1944 the prospects of victory became much brighter and the speedy defeat of the enemy almost as a matter of course, but still t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... direction to the Appellate Tribunal to investigate the point and come to a clear finding whether the explanation of the assessee was right and whether he had pressing necessities to the extent of about ₹ 50,00,000 during the period in question. Mr. P.R. Das has pressed an argument that, even after the remand order, the statement furnished by the Appellate Tribunal does not show that the directions given by this court were carried out. I, however, do not find any substance in this argument. The statement submitted by the Appellate Tribunal shows that it has considered all the four items of necessities as well as the statement filed by the assessee, referred to above. With respect to the contributions to war fund, the finding of the Appellate Tribunal is that there was no necessity for the sale of gold for purchasing the victory bonds, inasmuch as immediately after their purchase those bonds were sold with profit. So far as the payment of income-tax is concerned, it has held that the assessee was required to pay a sum of ₹ 5,19,286-5-0 as income-tax. It also found that the assessee had to pay ₹ 2,70,000 to Rai Bahadur S.K. Gupta and had to spend over the marriage e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the amount of income-tax payable by the assessee in the statement of case submitted by it to this court. The question whether or not the gold was sold only for the pressing necessities of the assessee is a question of fact, and it is a too well established principle of law that this court in a reference under section 66 of the Income-tax Act will not interfere with a finding of fact arrived at by the Tribunal if it is based on a view which is reasonable and probable even though this court, on a consideration of the evidence, may reach to a different conclusion. It was pointed out in a Bench decision of this court in Raja Bahadur Vishweshwara Singh v. Commissioner of Income-tax [1956] 30 ITR 202 , that if the Appellate Tribunal has come to a finding upon the evidence and the facts and circumstances of the case that the assessee was a dealer in shares and that the purchase and sales of shares made by him were done in the course of his business in dealing in shares and the profits made by him thereby during a particular period are assessable as profits from business, the High Court cannot sit in appeal over the decision of the Tribunal, but can only consider whether there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... each and every item of the pressing necessities for which the gold was alleged to have been sold by the assessee with reference to the evidence on record and the conduct of the assessee in selling the gold at a time when its price showed a tendency of going down, and, therefore, the conclusion reached by the Tribunal cannot be said to be based on no material. On the basis of the decisions referred to above, therefore, this court cannot interfere with the finding of the Tribunal on the question referred to above. Question No. 1, therefore, in both the cases must be answered in the affirmative in favour of the department and against the assessee. Question No. 2.-The question which is common to both the cases relates to the assessment in respect of the amount of rent for houses. The income-tax authorities held it to be taxable and their decision was affirmed by the Income-tax Appellate Tribunal. No argument has been advanced on behalf of the assessee before us in respect of the said question doubting the correctness of the decision of the Appellate Tribunal. This question, therefore, should also be answered in the affirmative in favour of the department and against the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, also is answered in the affirmative in favour of the department and against the assessee. Mr. P.R. Das, appearing for the assessee, has relied on two Supreme Court cases, Ramnarain Sons ( P.) Ltd. v. Commissioner of Income-tax [1961] 41 ITR 534 and Kishan Prasad and Co. Ltd. v. Commissioner of Income-tax [1955] 27 ITR 49 (SC). In the first case the assessee company, in order to acquire the managing agency of a textile mill, purchased from the managing agents 1,507 shares of the mill at ₹ 2,321-8-0 per share at a time when the market price of the shares was ₹ 1,610. The remaining 1,000 shares of the mill held by the managing agents were acquired by the directors of the assessee company. Two months thereafter, the assessee company sold 400 of those shares at a loss of ₹ 1,78,438 and this loss was claimed by the assessee as a trading loss. It was held that the loss incurred by the sale of 400 shares was loss of a capital nature, inasmuch as by purchasing the shares far in excess of their market price to facilitate acquisition of the managing agency a capital asset was acquired by the assessee, and the intention in purchasing the shares was not to acquire ..... X X X X Extracts X X X X X X X X Extracts X X X X
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