- (1.) This is an appeal by the assessee by special leave and the question for decision is whether questions of law, if any, arise out of the order of the Appellate Tribunal.
(2.) The facts giving rise to the appeal are that the Petitioner company was incorporated on July 29, 1924 as an investment company, the object of which are set out in cl. III of the Memorandum of Association and more particularly in sub-cls. 1, 2, 15 and 16 of that clause. The assessment years under review are 1943-44 to 1948-49, excepting the year 1947-48. According to its petition made in the High Court of Bombay, the petitioner company dealt with its assets as follows; "The Petitioner Company purchased during the period 1st July 1925 to 30th June 1928 shares of the value of Rs. 1,86,47,789 major portion of which was comprised of shares in the Season Group of Mills. During the year ended 30th June 1929 the Petitioner Company promoted two companies known as Loyal Mills Ltd. and Hamilton Studios Ltd. and took over all their shares of the value of Rs. 10 1/2 lacs. In the year 1930, the Petitioner Company purchased shares of Rs. 1,33,930. During the period of 9 years from 1st July 1930 to 30th July 1939 no purchases were made with the exception of a few shares of Loyal Mills Ltd. taken over from the staff of E. D. Sassoon and Co. Ltd. who retired from service. In the year ended 30th June 1940 reconstruction scheme of the Appollo Mills Ltd., took place under which debentures held by the Petitioner Company in the Appollo Mills Ltd., were redeemed and proceeds were reinvested in the new issue of shares made by the Appollo Mills Ltd. Out of the purchases of the value of Rs. 2,794 made by the Petitioner Company during the year ended 30th June 1941 Rs. 2000/- was the value of shares of the Loyal Mills Ltd. taken over from the retiring staff. In the year ended 30th June 1943 the Petitioner Company took over from the David Mills Co. Ltd. shares of The Associated Building Co. of the value of Rs. 56,700/-. After this there were no purchases at all to this date excepting purchases of the value of Rs. 34,954 during the year ended 30th June, 1946." The sales are contained in para. 3 (b) which may be quoted: "In relation to the purchases made by the Petitioner company as stated above no appreciable sales of shares were made during the period 29th July 1924 to 30th June 1942 the sales made in the year ended 30th June 1929 of the value of Rs. 1,29,333 included shares of the value of Rs. 45,000 in the Loyal Mills Ltd. sold to the members of the staff and shares of the value of Rs. 43,833 representing sterling investments handed over to the creditors of the Petitioner Company in part repayment of the loan taken from them in the year ended 30th June 1931 shares of the value of Rs. 7,48,356 were handed over to the creditors in payment of the loan granted by them. From the year ended 30th June 1943 E.D. Sassoon and Co. Ltd., started relinquishing the managing agencies of the various mills under their agency and the shares held by the Petitioner Company in the Sassoon Group of Mills were handed over to the respective purchasers of the Mills agencies." This gives the history of the acquisition and disposal of shares and also how the various transactions were entered into and why Prior to 1940 the assessee company made a claim every year for being treated as a dealer in investments and properties but this contention was consistently repelled and up to the assessment year 1939-40 the assessee company was assessed on the basis of being an investor but it appears that for the assessment year 1940-41 and the two following years 1941-42 and 1942-43 the Department accepting the plea of the assessee company treated it as a dealer in shares, securities and immovable properties and assessed it on that basis. For these years and for the assessment year 1943-44 the company made its Return on that basis. But after the Return had been filed for the year 1943-44 the assessee company withdrew its Returns and filed a revised Return on March 7, 1944, contending that it was not a dealer but merely an investor. Along with the Return it filed a letter dated March 6, 1944, in which inter alia it stated: "The Return of Total Income which was submitted with the Company's letter of 25th May 1943 was prepared in conformity with the ruling of the Income- Tax Officer in the 1940-41 assessment that the company was to be assessed as a dealer in investment. Since that Return was submitted the Central Board of Revenue has decided that the Company is an investment Holding Company and accordingly an amended Return of Total Income under S. 22 (1) of the Indian Income-Tax Act is submitted herewith on which the assessment for 1943-44 may be based, as on this particular question the company obviously cannot have one status for Excess Profits Tax and another for Income-tax." It was also contended that it never carried on any business in the purchase or sale of shares, securities or properties and therefore prayed that in view of the order of Central Board of Revenue made on its application under S. 26(1) of the Excess Profits Tax Act it should be assessed for income-tax purposes as an investor and not as a dealer.
(3.) The Income-tax Officer rejected this plea and "held the investments as the stock-in-trade of its business therein which it carried on during the 'previous year' also" The company took an appeal to the Appellate Assistant Commissioner which was dismissed and the order of the Income-tax Officer upheld. It then appealed to the Income-tax Appellate Tribunal, Bombay, where the same contentions were raised but were repelled. The Tribunal said: "The company having itself raised the point in all the prior years that it was a dealer in investments and properties, it would appear to be difficult to understand why the company now seeks to get the position changed and desires the Income tax Officer to treat it as if it was not dealing in shares, securities and immovable properties." ;