1953 (9) TMI 3

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..... ng others, set out in the memorandum of association :--- " To carry on and undertake any business, transaction, operation or work commonly carried on or undertaken by bankers, capitalists, promoters, financiers, concessionaires, contractors, merchants, managers, managing agents, secretaries and treasurers. To purchase or otherwise acquire, and to sell......... stock, share ..... ...business concerns and undertakings. To invest and deal with the moneys of the company not immediately required for the company's business upon such securities and in such manner as may from time to time be determined." The company held a large number of shares in other incorporated companies and was realising some of its holdings and acquiring large block .....

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..... in the ordinary course of its business and they became its stock-in-trade. The profit on sale of these shares did not essentially arise out of the sale of investment of any surplus funds. It is, therefore, clear that the sale of investments and making of fresh investments are linked up with the business of the company as financiers, inasmuch as investing and realising its holdings when finances were needed is part of the normal business of the company......... There is ample evidence to show that the company did in fact carry on the business of financiers, which is one of the objects mentioned in clause 3(1) of the memorandum of association. The evidence pertaining to the financial transactions of the company, during the relevant accountin .....

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..... usiness. Though that case arose out of the assessment of a banking business, the test is one of general application in determining whether the surplus arising out of such transactions is a capital receipt or a trading profit. The question is primarily one of fact and there are numerous cases falling on either side of the line but illustrating the same principle. On the facts found in regard to the nature and course of the company's business, there can be no doubt that the present case falls on the Revenue's side of the line. Agreeing with the High Court that there was ample material upon which the Appellate Tribunal could arrive at the conclusion which they did we dismiss the appeal with costs. Appeal dismissed.  
Case laws, D .....

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