Law:

Section:

Appeal      to      Supreme      Court-      Direct      appeal      from      Appellate      Ltd. Tribunal-Maintainability-Power to grant special leave in excep tional cases-Loss in shares-Trading loss or capital loss-Whether questions of fact or law-Guiding principle-Primary intention of purchaser-Companies under same management-Purchase of large block of shares at high price to acquire controlling interest and agency rights in another company-Sale of shares to company of same group at loss-Right to set-off loss-Intention of one company-Whether can be imputed to another company.   Whether a particular loss is a trading loss or a loss on the capital side, depends on the facts of each case. The question, however, is not one of pure fact but a mixed question of fact and law : and the decided cases indicate how the matter is to be viewed in the context of the facts. The problem must be approached in such cases in the light of the intention of the assessee, having regard to the legal requirements which are associated with the concept of trade or business.   Six companies including A & Co., B & Co. and C & Co., belonged to the same group of individuals, the Y. R. B. group. A & Co. were financiers and dealers in shares. A person who by reason of his holdings was in a position to influence the decisions of the board of directors of these six companies arranged for the purchase of a large block of shares held by the managing agents of M. S. & Co., another prosperous company at the price of Rs. 400 per share, while the market price was only Rs. 252. The shares were purchased by B. & Co. in July 1948, out of moneys advanced as a loan by A & Co. Soon after the purchase, the old managing agency of M. S. & Co. was terminated and a new board of directors from the Y. R. B. group was appointed to that company. A & Co. were appointed as the purchasing and selling agents of M. S. & Co. from the date of the purchase of the shares by B & Co. and A & Co. made good…