COMMISSIONER OF INCOME TAX Vs. RAMNARAIN KAPUR AND CO PVT LIMITED

JUDGEMENT

(1.) THE following question has been referred under section 66(1) of the Indian Income -tax Act for our decision :

(2.) THE assessee is Messrs. Ramnarain Kapur and Co. Private Ltd. in which at the material time the members of the family of Ramnarain Kapur held the controlling shares as indicated below :

(3.) ACTING under these powers the company bought and sold shares of two companies (1) the New Glen Morgan Estates Ltd. and (2) Amalgamated Coffee Estates Ltd. and subsequently sold them resulting in income to the assessee -company. The assessee claimed that this income from the sale of the shares was not liable to the tax as it was merely in the nature of capital gains. It showed the said amounts as profit from capital gains in its returns. On the part of the department the case made out is that the assessee -company was merely dealing in stocks and shares as they were empowered to do under clauses 6 and 7 of the memorandum of association and these were merely business profits in the course of their dealing in stocks and shares.