Deb, J. - (1.) THIS reference, under Section 66(1) of the Indian Income-tax Act, 1922, relates to the assessment years 1955-56, 1956-57, 1960-61 and 1961-62. The assessee is an investment company. It was formed in 1946. Andrew Yule and Co. held the majority shares of the assessee and is acting as its secretaries. In 1946, the assessee purchased a large number of shares of Calcutta Discount Company Ltd., which held many shares of Andrew Yule and Co. On December 29, 1954, the assessee purchased shares of Andrew Yule and Co. of the value of Rs. 83,38,234 and in December, 1959, Andrew Yule and Co. also purchased all the shares of Calcutta Discount Company.
(2.) THE Income-tax Officer has assessed the assessee on the surplus arising out of the sale of many shares in these assessment years and the appeals filed by the assessee have been dismissed by the Appellate Assistant Commissioner. In the appeals filed by the assessee before the Appellate Tribunal it was submitted on its behalf that it was an investment company and was not a dealer in shares as wrongly found by the authorities below. It was urged that it was formed with the main object of acquiring the holding shares and securities of joint stock companies. In support of the above contentions reliance was placed on certain clauses of its memorandum of association, certain articles of its articles of association, and statements of purchases and sales of investments since its incorporation including certain resolutions filed before the Tribunal. It was also argued that the assessee held shares mostly of companies managed by M/s. Andrew Yule and Co. and in the accounting years it has sold those shares with the intention of changing its investment and, therefore, the surplus arising out of such sales was a capital accretion and not its commercial profit. In support of the above contentions reliance was placed on a number of well-known decisions and it was also argued that the revenue has failed to discharge the burden of proving that the said surplus was taxable in the hands of the assessee. Many documents were filed by the departmental representative before the Tribunal and it was argued that the assessee had changed those investments in the course of its business and, therefore, the said surplus was its business profit and in support of this contention a few cases were cited by accepting the position that the assessee was not a dealer but an investor in shares. After taking into consideration all relevant facts and materials on the record including the cases cited and the submission made before it, the Tribunal has allowed those appeals filed by the assessee.
(3.) THERE was another dispute relating to the quantum of relief which was to be granted to the assessee under Section 49B(b)(ii) of the Indian Income-tax Act, 1922, in the assessment year 1961-62. The assessee, as a shareholder, has received Rs. 5,07,503 as dividend (agricultural) in that year. The gross income of the assessee in that year was Rs. 19,30,326 and the total expenditure to earn it was Rs. 2,02,149 out of which the tax officer, by allocating Rs. 53,147 as the proportionate expenditure on the said dividend income has granted relief at 20% on Rs. 4,54,356 to the assessee. The appeal filed by the assessee was dismissed by the Appellate Assistant Commissioner, but the Tribunal has allowed the appeal filed by the assessee by holding that the relief should be worked out not on Rs. 4,54,356 but Rs. 5,07,503 for the reasons recorded in its order.;