Law:

Section:

Section 28(i) of the Income-tax Act, 1961 - Business income - Chargeable as - Assessment years 1953-54 to 1956-57 - Whether mere fact that an investment company periodically varies its investment does not necessarily mean profits resulting from such variation is taxable under Act - Held, yes Section 256 of the Income-tax Act, 1961 - High Court - Reference to - Assessment years 1953-54 to 1956-57 - Whether statement of case should contain all facts, whether mentioned by ITO or AAC, which Tribunal accepts and it should not be left to High Court or Supreme Court to discover whether all findings of ITO and AAC had been accepted by Tribunal or not - Held, yes FACTS The assessee's principal activity was investment of its capital in shares and stocks and earned income therefrom in the shape of dividends, interest, etc. It changed its investments by sale of its shares and stocks from time to time. In the accounting years relevant to the assessment years the assessee sold the shares resulting in surplus. The ITO treated the said surplus as taxable income in the relevant assessment year. The Tribunal was of the view that varying the investments was an activity of the assessee in the ordinary course of its carrying on the business and the surplus arising on such variations of the investments must be regarded as having been received in the course of its carrying on of the investment business. On reference, the assessee contended that the sale of 6,900 ordinary shares of 'M' were on account of the relinquishment of the rights of the assessee in the said company, since the control of that company went entirely out of the hands of the assessee. The High Court, however, rejected the assessee's contention and upheld the order passed by authorities below. On appeal to the Supreme Court: HELD Mere fact that an investment company periodically varies its investment does not necessarily mean that the profits resulting from such variation is taxable under the Income-tax Act. Variation of its investments must amount to dealing in investments before such profits can be taxed as income under the Income-tax Officer. The Tribunal had not stated what was the object of the assessee in…

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