Law: Income Tax Act, 1922

Section: 2,2(14),4(3)(vii)

[Income Tax Act, 1922 (XI of 1922)].....Sections 2(14), 4(3)(vii)--Business-Adventure in the nature of trade-Banking company- Profits derived from sale of shares and bonus shares-Transactions not directly connected with the trade or business- Whether adventure in the nature of trade-Held no; Looking to the circumstances involved, it cannot be said that the purchase of the shares was merely a commercial proposition or with the avowed object of selling them one day at profit. With the advantage of hindsight, it can be said that the management of the respondent-Bank guaging the tempo of the time were astute enough to invest their securities in real guilt-edged securities and reaping some considerable profit in the bargain. But it was not in the line with their business. It also appears that the respondents were not allowed to purchase shares from the deposits when even the restricted permission was accorded, and the shares had been purchased from the capital of the bank. The Appellate Tribunal found that the purchase and the sale were not in the course of their business, for it was not an adventure in the nature of trade, and the conclusion arrived at by it was absolutely in order. B. Banks (Nationalisation) Act (XIX of 1974)-Section 5(5)-Ownership, management and control of all banks transferred to and vested in the Federal Government under the Act-Corporate character of the banks maintained-Immunity from payment of income tax, whether can be claimed- Held no; Cases referred to:- Punjab Co-operative Bank v. Commissioner of Income Tax (1940) 8 I.T.R 635; California Copper Syndicate v. Harris (5 Tax Cas. 159); Leeming v. Jones (15 Tax Cas. 333) ; Bologonie Land Trust Ltd. v. Commissioner of Inland Revenue (14 Tax Cas. 684); Commissioners of Inland Revenue V. Fraser (1942) S.C. 493; Commissioners of Inland Revenue v. Scotch Automobile and General Insurance Co. (16 Tax Cas. 381) and Commissioners of Inland Revenue v. Reinhold (34 Tax Cas. 389). JUDGMENT [The judgment of the court was delivered by AGHA AlI HYDER J].- The Income Tax Appellate Tribunal, as directed on an application of the Income Tax Commissioner, Karachi, under Section 66(2) of the Income Tax Act, has,…

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