Harries, C.J. - (1.) This is a reference under Section 66, Income-tax Act, made by the Income-tax Appellate Tribunal at the instance of the assessees. The following question has been formulated for the opinion of the Ct. : "In the facts and circumstances of the case, is the surplus realised by the Co. on the sales of shares & Securities a taxable income ?"
(2.) The assessees Messrs Indra Singh & Sons Ltd. are a private limited Co. incorporated under the Companies Act. It was incorporated in the year 1935 & sometime later it took over from Sardar Sir Indra Singh & Sons the Managing Agency of a Co. known as the Indian Steel and Wire Products Ltd. The memorandum of association of this Co. contained among others the following objects : To carry on & undertake any business, transaction operation or work commonly carried on or undertaken by bankers, capitalists, promoters, financiers, concessioners, contractors, merchants, managers, managing agents, secretaries & treasurers. To purchase or otherwise acquire, & to sell ....... ......stocks, shares.........business concerns and undertakings. To invest & deal with the moneys of the Co. not immediately required for the Co.'s business upon such securities & in such manner as may from time to time be determined.
(3.) The Appellate Tribunal have found that during all material times the Company carried on inter alia the following businesses : (1) Managing Agents of the Indian Steel & Wire Products Ltd. (2) Managers of the Assam Bengal Cement Co. Ltd., as the controlling shareholder of the Eastern Corporation Ltd. who were the Managing Agents of the Assam Bengal Co. Ltd. (3) Secretaries & Treasurers of the Khandesh Spinning & Weaving Mills Ltd. (4) Financiers of the Jamshedpur Engineering & Machine Manufacturing Co. Ltd., a Co. in which Sir Indra Singh & his sons have a controlling interest. (5) The Aira Sugar Factory owned by the Co. The Co. acquired by transfer from Sir Indra Singh various shares & securities in the Indian Steel & Wire Products Ltd., the Indian Iron & Steel Co., the Tata Iron & Steel Co. Ltd. & the Tata Power Supply Co. Ltd. In the year 1937-38 the assessee Co. as share-holder of the Indian Iron & Steel Co. Ltd., acquired a large number of right, shares & debentures in the Steel Corporation of Bengal Ltd. In the years 1937-38 & 1938-39 the assessee Co. acquired principally by allotment the following shares : 1937-38 : 83,000 ordinary shares valued at Rs. 1,24,500. 1,38,000 deferred shares valued at Rs. 1,58,000 of the Assam Bengal Cement Co. Ltd. 22 shares of the Eastern Corporation Ltd., the managing agents of the Assam Bengal Cement. Co. Ltd., valued at Rs. 2,200. 1938-39 : 50,000 ordinary shares valued at Rs. 2,72,500 of the Assam Bengal Cement Co. Ltd., 1,000 shares of the New Standard Bank Ltd., valued at Rs. 10,000. In the accounting year 1936-37 the assessee Co. sold 1,940 ordinary shares & 4,785 deferred shares of the Indian Steel & Wire Products Ltd.;