INVESTMENT LIMITED Vs. COMMISSIONER OF INCOME TAX CALCUTTA

JUDGEMENT

(1.) The appellant is a public limited company incorporated in 1948 under the Indian Companies Act, 1913. At the commencement of the year of account 1952-53, the company held Government securities of the value of Rs, 1,93,30,958 and shares of public limited companies of the value of Rs. 64,54,529. During the course of the year the company sold Government securities valued at Rs.92,50,000 and realized a sum of Rs. 79,78,055.50. The company also purchased Government securities of the Value of Rupees 1,00,00,000 and out of those sold securities of the value of Rs, 69,00,000 earning a profit of Rs. 21,024.

(2.) In proceedings for assessment of income-tax for the assessment year 1953-54, the company claimed allowance for the loss suffered in the sale of the securities. The claim was disallowed by the Income-tax Officer. He held that "it was no part of the business of the company to deal in securities'', that the transactions in securities did "not appear to be a normal business venture of the company'', and that the memorandum and articles of association of the company prohibited transactions of sale of securities and on that account the loss was of a casual nature. The Appellate Assistant Commissioner agreed with the Income-tax Officer on the following grounds:-

(3.) The Income-tax Appellate Tribunal held that the securities were not held as stock-in-trade of the company's business, and dismissed the appeal filed by the company. At the instance of the company, the following question was referred by the Tribunal to the High Court of Madhya Pradesh: