Arun Kumar Mitra, J. - (1.) In pursuance of the direction given by this court on an application under Section 256(2) of the Income-tax Act, 1961, the Tribunal has referred the following question for the opinion of this court: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the appellant was not an investment company within the meaning of Section 109(ii) of the Income-tax Act, 1961, for the assessment year 1982-83, though the income from sources for the relevant previous years exceeded the income from the business of dealing in shares ?" The assessment year is 1982-83 and the previous year ended on December 31, 1981.
(2.) The Assessing Officer while making the assessment under Section 143(3) of the Income-tax Act for the assessment year 1982-83 observed that the assessee's principal business was dealing in shares. The Assessing Officer observed that on December 31, 1980, the assessee had taken on lease the house properties from Woodland Oil Company and S. Valotia and Brothers for office premises at an annual rental of Rs. 22,966 and Rs. 1,980, respectively, as tenant. A part of such properties was sublet to Thomas Duff Company Ltd. The annual rent received from them amounted to Rs. 18,000 and Rs. 6,000, respectively. During the accounting period ending on December 31, 1980, the lease rent paid to the landlord was amounting to Rs. 24,000. The Assessing Officer came to the conclusion that the assessee was neither an investment company within the meaning of Section 109(ii) of the Income-tax Act, 1961, nor a banking company nor an assesses having the principal business of granting loans and advances, still the assessee was deemed to have carried on a speculation business as per the provision of Explanation to Section 73 of the Act. When computing the total income, the Assessing Officer found that the assessee incurred loss in share dealing to the tune of Rs. 4,50,779.
(3.) The Commissioner of Income-tax (Appeals), however, held that the assessee was an investment company within the meaning of Section 109(ii) and, therefore, its loss arising in share dealing could not be considered as speculation loss by invoking the provisions of Section 73(1) read with the Explanation thereto.;