TMI Blog1956 (8) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... of these shares at the relevant date was ₹ 1,610 per share. Fifteen hundred and seven of these shares were transferred to the company at the price of ₹ 2,321-8-0 and the balance of 1,000 were transferred to the directors at ₹ 1,500 per share. Two months after this transaction, the assessee company sold 400 shares, and the result of this transaction was that they suffered a loss of ₹ 1,78,438. This loss was claimed by the company as a revenue loss and this claim was allowed by the Tribunal and the Commissioner has come on this reference. Now, in the first place, let us recite the facts which are either admitted or have been found by the Tribunal. The assessee company was a dealer in shares and also did the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd which were purchased for the purpose of acquiring this managing agency and which were not the stook-in-trade of the assessee company could be debited to the revenue account. Surely, even in the course of a business, a capital asset may be acquired, and the acquisition of the managing agency, merely because it was in the course of business, does not necessarily lead to the inference that the managing agency could not be a capital asset. Whether the managing agency was a capital asset or not must be decided independently of the question as to whether it was acquired in the course of the business. If the managing agency was an asset of an enduring character, then it would be a capital asset and if it was a capital asset, then if the shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in order to do the working of managing agents and earn commission; it is an entirely different thing to say that a company deals in managing agencies in the sense that it buys managing agencies and sells them. It is nobody's case that the assessee company's business falls in the latter category. Therefore, if the shares were purchased for the purpose of acquiring this capital asset, in view of the Supreme Court judgment any loss or any profit resulting from the sale of these shares must be debited or credited to the capital account and not to the revenue account. The purchase of the shares must be looked upon as an investment by the assessee company. It is quite possible that having purchased these shares, the assessee company coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the end of the year the assessees valued these shares on the basis of the shares being stock-in-trade, because the valuation was on the well known principle of market or cost price whichever is lower. Further, attention is drawn to the fact that in the subsequent years these shares were sold from time to time. Now, if the finding that the shares did not constitute the stock-in-trade of the assessee company is a finding of fact, then clearly it is not for us to reappreciate the evidence. Even assuming that the circumstances to which Mr. Palkhivala has drawn attention are strong circumstances in favour of his clients, the only question that we have to consider is whether there was evidence or materials to justify the finding of the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nference of fact but can be set aside because it appears that the Commissioners have acted without any evidence or on a view of the facts which could not reasonably be entertained. In making that inference they are to be assumed to have been rightly directed in law as to the characteristics which distinguish an adventure. And Lord Radcliffe puts it a little strongly when he says : Without any misconception of law appearing on the face of the case stated, the facts found may be such that no person acting judicially and properly instructed as to the relevant law could have come to the determination reached ; the Court may then intervene, having no option but to assume that some misconception of law is responsible for the decision. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ire a capital asset out of which it would earn managing agency commission and make profits. Therefore it cannot be said in this case that there was no evidence or no circumstance which could reasonably lead the Tribunal to the conclusion that the shares were not the stock-in-trade of the assessee company. We therefore cannot accede to the application of the assessee that we should ask the Tribunal to frame a question as suggested by the assessees. In our opinion, once the Tribunal came to the conclusion that the shares were not the stock-in-trade of the assessee-company, only one inference in law was possible and that inference was that the loss in respect of these shares was a loss of a capital nature and not of a revenue nature. In view o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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