- (1.) This appeal by special leave is directed against the judgment of Allahabad High Court whereby that Court answered the following two questions in a reference made to it under Section 66 (2) of the Indian Income-tax Act 1922 (hereinafter referred to as the Act) : "(i) Whether there was material for the finding that the shares in question were purchased by the assessee with a view to acquire the managing agency and the control of the company or the shares constituted his stock-in-trade (ii) Even if the shares in question did not constitute the stock-in-trade of the assessee, whether the profit made on the sale of shares did not constitute capital gain chargeable to Income-tax under Section 12-B of the Act - On the first question, the answer of the High Court was that there was no material for the finding that the shares in question were purchased by the assessee with a view to acquire the managing agency and control of the Company. It was further held that the shares constituted the stock-in-trade of the assessee. In view of the above, the High Court held in answer to question No. (ii) that the profits made by the sale of shares could not constitute capital gain chargeable to Income-tax under Section 12-B of the Act.
(2.) The matter relates to assessment year 1947-48, the relevant previous year for which was the Dassera year 2002-2003 corresponding to the period from Oct. 16, 1945 to Oct. 5, 1946.
(3.) Rameshwar Prasad Bagla, the assessee-appellant, is a partner of firm Agarwal and Co. having one-sixteenth share in the firm. Agarwal and Co., consisted of six groups of partners, viz., (1) Morarka Group, (2) Khetan Group, (3) Saksaria Group, (4) Poddar Group, (5) Bagla Group, and (6) Kantilal Nahalchand. The Bagla Group consisted of the assessee and his brother.;