- (1.)THE Additional Commissioner of Income-tax, Rajasthan, Jaipur, has moved these applications under Section 256(2) of the Income-tax Act, 1961 (hereinafter referred-to as "the Act"), for directing the Income-tax Appellate Tribunal, Jaipur, to state the case and refer to this court for opinion the following question of law arising out of its consolidated order dated May 6, 1972, passed in Income-tax Appeals Nos. 1886, 1887, 1888 and 4499 of 1970-71 for the assessment years 1962-63, 1963-64, 1964-65 and 1965-66 :
"Whether the Tribunal had any material to come to the conclusion that the assessee was holding the securities as its stock-in-trade ?"

THE Additional Commissioner of Income-tax had first moved an application before the Tribunal under Section 256(1) of the Act requiring the Tribunal to refer the following question :

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the securities were held by the assessee as stock-in-trade and the same were exempt from tax ?"

According to the Tribunal, the question proposed by the Additional Commissioner of Income-tax really comprised of the following two questions :

"1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the securities were held by the assessee as its stock in-trade.

2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the income from such securities was exempt from tax?"

THE Tribunal by its order dated October 9, 1972, held that the first part of the question referred to above, namely, whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the securities were held by the assessee as its stock-in-trade could not be referred for the opinion of this court for the reason that the finding of the Tribunal that the securities that were held by the assessee as part of its stock-in-trade and not by way of investment of its surplus funds, was a finding of fact which was based on the various facts relating to the deposits, cash and bank balances and other fluid resources of the assessee and no question of law can be said to arise out of the said finding. THE Tribunal, however, referred the question arising out of the second part of the question referred to above. Feeling aggrieved by the order of the Tribunal refusing to make a reference in respect of first part of the question above referred, the Additional Commissioner of Income-tax has filed this application.

(2.)WE have heard Shri R. N. Surolia, the learned counsel for the Department, and Shri S. M. Mehta, the learned counsel for the assessee, and we have also carefully perused the order passed by the Appellate Assistant Commissioner and the Tribunal in the appeals filed by the assessee. In our opinion, the Tribu-nal was justified in holding that the finding recorded by the Tribunal that the securities were held by the assessee as part of its stock-in-trade and not by way of investment of its surplus funds, is a finding of fact which is based on the various facts relating to the deposits, cash and bank balances and other fluid resources of the assessee and no question of law can be said to arise out of the said finding. In this context, we may refer to the decision of the Supreme Court in CIT v. Associated Industrial Development Co. (Pvt) Ltd. [1971] 82 ITR 586 wherein it has been held that the question as to whether a particular holding of shares is by way of investment or forms part of stock-in-trade of the assessee is a question of fact. In the circumstances, it must be held that the question as framed in the application cannot be regarded as a question of law which arises out of the order of the Tribunal dated May 6, 1972. The applications filed by the applicants are, therefore, dismissed.