ASHOK MARKETING LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN this case the assessee is a public limited company with a paid-up share capital of Rs. 5,00,000/-. It deals principally in goods manufactured by the Dalmia Jain Group, namely, the Rohtas INdustries Ltd., S. K. G. Sugar Mills Ltd. and Dalmia Cement Ltd. The main business of the Company is to sell commodities like cement and sugar on commission basis and also directly to the customers on its own account. IN the course of the accounting year ending on the 31st August, 1949, the assessee dealt in Government securities. On the 28th February, 1949, the assessee sold securities of the face value of Rs. 62,00,000/- to the Dalmia Cement and Paper Marketing Co. Ltd.

(2.) IT was argued before the Tribunal on behalf of the assessees that the transactions in the purchase and sale of Government securities were authorised by the Memorandum of Association. The Tribunal did not accept this argument and held that the dealings in Government securities were not authorised by the Memorandum of Association. The Tribunal also took the view that even if the dealings were intra vires of the Company, it could not be said that the transactions were performed by the assessee Company in the ordinary course of its business. Accordingly, the Tribunal disallowed the claim of the assessee for setting off the loss of Rs. 30,847-14-0 against the other income of the assessee for the accounting year.

(3.) I agree.