Law: Income Tax Act, 1922

Section: 12,2(4)&4(3)(vii)

Income-tax Act (XI or 1922)--- S. 12 read with Ss. 2 (4) & 4 (3) (vii)-Capital gain-Revenue receipt-Assessee receiving a sum of amount, over and above purchase price, as a result of sale of shares after their purchase-Contention that assessee firm neither a dealer in shares nor surplus amount received by it in nature of trade venture as such surplus amount cannot be treated as revenue receipt but capital gain, held, correct. I. T. As. Nos. 2496, 2497, 2498 and 2499 of 1966-67 ref. Pakistan Industrial Credit Investment Corporation Limited v. The Commissioner of Income-tax 1980 P T D 322 and Yousuf Hakimuddin v. The Commissioner of Income-tax 1981 P T D 3 fol. JUDGMENT SAEEDUZZAMAN SIDDIQUI, J.--The following question has been referred to this Court by the Income-tax Tribunal for decision under section 66 (l) of the Income-tax Act at the instance of applicant assessee :- "Whether in the facts and circumstances of the case the Tribunal was right in the holding that the surplus of Rs. 12,78,252 arising or, sale of Karnaphuli Paper Mills shares in the account year ending on 31-1112-1960 was a revenue and not a capital receipt ?" The admitted position in tile case is that the applicant firm which carries on business of Investors and Financiers, disposed of 1,40,000 shares of Karnaphuli Paper Mills Ltd., for a sum of Rs. 26,44,362 between the period 28th of January, to 30th January, 1960. These shares were purchased by the applicant during June, 1955 to February, 1956 for a sum of Rs. 13,36,110. As a result of sale of these shares the applicant received a sum of Rs. 12,73,252 over and above the purchase price. This amount was treated by the Income-tax Officer is a revenue receipt during the assessment year 1961-62 and was added to the profits of the firm and tax was demanded accordingly. The applicant appealed against the decision of income-tax Officer treating the sum of Rs. 12,78,252 as ­revenue receipt to the Income-tax, Appellate Tribunal. It was contended by the assessee that it was neither a dealer in shares nor the surplus of Rs. 12,78,252 received by it on account of the sale of the shares of Karnaphuli Paper was in the nature of a trade venture and,…

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