Dipak Kumar Sen, J. - (1.) This reference is under Section 256(1) of the Income-tax Act, 1961, is at the instance of the revenue, the relevant assessment year is 1963-64, the corresponding previous year ending is 31st December, 1962. The assessee is one M/s. Central Kurkhend Coal Co. Ltd. The facts which have been found and/or are matters of record may be shortly set out as follows :
(2.) On the 17th January, 1962, the assessee purchased 7,000 unquoted shares of one Parshva Properties Ltd. for a consideration of Rs. 7,17,500 at the rate of Rs. 102'50 per share. Bank charges amounting to Rs. 387 were incurred in the process, the total cost amounting to Rs. 7,17,887.
(3.) Dividend was declared shortly after the purchase by the said company at the rate of Rs. 31.20 per share and the assessee received from its purchase a gross dividend of Rs. 2,18,400. Tax amounting to Rs. 65,520 was deducted from this gross dividend and accordingly the net dividend amounted to Rs. 1,52,880. Between 3rd March and 19th March, 1962, the assessee sold all the 7,000 shares at prices varying from Rs. 95 to Rs. 96. The total amount realised by the assessee on such sale was Rs. 6,61,485, thus incurring a loss of Rs. 56,402. Taking into account the dividend received, a profit of Rs. 96,800 was made by the assessee in the entire transaction.;