Law: Income Tax Act, 1922

Section: 2,2(4/1),4(I),10,24(1),24(2A)

[Income Tax Act, 1922 (XI of 1922)].........Section 2 (4/1), 4 (I), 10, 24(1), 24 (2A)-Loss-Set off of loss-Investment holding company-Assesee company amongst other businesses acting as investment holding company-Loss arising from change in investments-Whether revenue loss and permissible deduction against other income of assessee-company-Held yes. It cannot be denied that the appellant, apart from other business was also acting as an investment holding company and that the history of its past transactions, noted above, clearly reflects that such gains or losses as were obtained by it in the earlier years were always treated as revenue gains or revenue losses arising from the dealings in shares or from concerting its holdings. Therefore, at this stage, the Department cannot go back on a settled factual position and we shall, therefore, have to proceed from the agreed position that the appellant is an investment holding company and as such its business comprises of amongst others in changing investments. These results sometime in surplus and sometimes in deficits. But since these results are obtainable as a result of regular purchases and sales of stocks and shares, it cannot be denied that the appellant is not dealing in these shares and stock. Although we feel that under the provisions of section 2(4A) of the Income Tax Act stock-in-trade of the investment holding company cannot be treated as a capital asset merely by virtue of this Specialized definition of the term "capital asset", yet we would hold that even if the appellants holdings are treated as a "capital asset" we will have to conclude that the appellant is regularly carrying on the business of dealings in "capital asset" and, therefore, these capital as-sets would become in its case, the stock-in-trade and such stocks-in-trades are themselves excluded from the definition of "capital assets". It would therefore, be a futile exercise to attempt by forcing these dealings into the domain of capital gains or capital losses. These always were the dealings of business nature from which the income remained assessable under section 10 of the Income Tax Act. Any reference to the provisions of section 24 (2A)…

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