Commissioner Of Income Tax, Calcutta v. Karam Chand Thapar & Bros. (P) Ltd

COMMISSIONER OF INCOME TAX, CALCUTTA A v. KARAM CHAND THAPAR & BROS. (P) LTD. FEBRUARY 14, 1989 B [M.H. KANIA AND L.M. SHARMA, JJ.] Constitution of India, 1950---Artic/e 136-Tribunal's decision on question of fact-Such a finding not to be interfered with unless it is ·--+··. based on irrelevant material or perverse. \ C Income-tax Act, 1961: Section 256-Reference io High Court-Question of fact or law-Assessee claiming loss on sale of shares-Whether capital loss, or business loss or genuine or bogus-Only ques-tion of fact-Tribunal's decision final-Tribunal need.not specifically state its taking into account the cumulative effect of the circum.i;tances-D Court not to interfere unless Tribunal's decision is based on irrelevant consideration or perverse. For the assessment year 1959-60, the Income Tax Officer dis-allowed the loss claimed by the Respondent-assessee, on the sale of E certain shares, to its allied concern, on the grounds that the sale price was much below the market quotation and that the motive behind the transactions was to set off the loss against the profits and hence the transactions w.ere not genuine. w.ere not genuine. not genuine. transactions w.ere not genuine. w.ere not genuine. not genuine. On appeal by the assessee the Appellate Assistant Commissioner f "T-- F held that the losses on both the transactions cannot be held to be busi-ness losses. On a 'further appeal by the assessee, the Tribunal observed that the~e was nothing to show that the transactions in questioll had any-thing to do with the control of the companies concerned. It also relied G upon the circumstance that the sales were at the market rates or going rates and held that there was no question. of making a bogus loss. Based on these facts and circumstances, the Tribunal held that the losses in respect of the .sales of the shares in question, were liable to be allowed as business losses. The Commissioner of Income Tax made an application lo the A Tribunal for referring certain questions for the determination of the High Court. The Tribunal declined to refer the questions on the ground that they were not questions of law, which deserved to be referred to the Court for determination. This order of the Tribunal was confirmed by the High Court. This appeal, by special leave, is against the said order of the High Court. Dismissing the appeal, HELD: 1. Where the Tribunal bas come to the conclusion that C the loss incurred by the assessee in the sale of shares held by it was a trading loss and it is not the case of the Department' that in arriving at its decision the Tribunal had taken into consideration any irrelevant material or failed to take into consideration any relevant material, there is no room for interference by the court. It is well settled that the D ·Tribunal is the final fact finding body. The questions whether a particu· lar loss is a trading loss or a capital loss and whether the loss is genuine or bogus are primarily questions which have lo be determined on the appreciation of facts. The findings of the Tribunal on these questions are not liable to be interfered with. unless the Tribunal has taken into E consideration any irrelevant material or has failed to take into con-sideration any relevant material or the conclusion arrived at by the Tribunal is perverse in the sense that no reasonable person on the basis , of the facts before the Tribunal could have come to the conclusion to , -rl.f which the Tribunal has come. l645B-D] C.I. T., Bihar & Orissa v. Dalmia Jain & Co. Ltd., 11972] 83 ITR 438, relied on. _[1990] 2 gH fo qo 41 2 gH fo qo 41 gH fo qo 41 fo qo 41 qo 41 41MART AA, BARAT [1990] 2 gH fo qo 41 2 gH fo qo 41 gH fo qo 41 fo qo 41 qo 41 41 dad HUA Az aae Us aza (Tgaz) fafazs 14. Grat, 1989 elo UH Uae Haat wT Tato THo THT: araet afafran, 1961 (1961st 43)—aret 256—aeq fanaa freng—arrant ater afirecor ter at gaa AAT Ie faalt BIA F TAITng fasrd faerar ara fe dat & fara et aris mivare-alta @ a fe Gat-atfa—dat frene avn favor faved|2—a frend F geceta wea wy mraTAT||i: ce —ogeneff-fratfedt 4 fratzr ag1959-60 %faa aaa faut 4 gaaifa at wetfaat at erat feat at sat GaTTay # go aafal & fad FFar TC arg A | alaHT algaa A ze gifs a gelfaat Hear ATT sz fearseaet-fratfedt A araax safes F area F faez aeraw ayaa (adie).RB gaa ala Bree a1 aelaH ayaa (ata) Fe ATA ST Be AATIgeaat-fratfedtAX araEt aia afar & aA adler ati afanrr ay avygana aaa I fast aUFH arate ae facae fastar fae Tat F fara saaa & gf aifaat areare atfaal F wT A waa fee aa & ana safes> gq fafaraa % fans araat argaa 4 afta a saad fear fe ag sfaqaqual BT Sea aaa F aaarey F fare fadfna at| afenwr F seqaaa> aggre & fag oa seq frdfaa wea gu arian qifea fear fag aca seat atfrdfad FLA A FI ATATT TZ ante at fart faafanco ar fafreaa fagga: 3aaunt & qeatHaT TT aaa J AT ate A ae ae g att ag fe a oe, fratglad ayaa fre BLATT ated 2, fafa fanaa sea val & oT aaaten & faseq arate at fadfad eet F ate gt. afaaw H ga fafevay h faegqaat ayad TSA ATATAT F araes feat fe ae afaaer st ag fade & frag Baa THAT all alaraa FH agTaTTy H fau fatfaaVt sea eqrmiag Fgaa alaat Hl afer Ht feat| sea atta H sad fafizay F faeg seaaRqsqraraa & ater at wg| TATA eaTaTAT ara ada afer Hee gy, atafaaifia—sat afaac a ag fasag fraret at fefraifedl & aaa greafer Nat H fear H a aft sors at ag gaat earsifea aris at sic faiserage aaaad, wae fe afew a aaa fafaraa ox qeaa & feet aangareal oe faare feat = aaa ag feat gaara aad ox fart Hea FH aagazal @ aah aTaTAT ae geaaia faa aa at ae qdoargradl 2. ae ata geatad & fe afer aera gat ars aren afar frata gt A oe fe azaralg fafase aif sarathta arf & ar ost aif ate ag fe ear arg ats areafaa& at favor, ger wad VA ser S farsr aaareo aval ar qeaina Hea FRATWaTslat1 a MAT AT TtaT Afaaco A a frome faara F sae aslgeaag fear at aaa aa afantr &feet aara ata Ft frat feat at aTag frat gana araat oz fast Hea A AGT El Vt ar afar sree faravat frag ga at FH agtad a fe at ava afaner F ae A sas AAT ITaté it gfaanra cafes dar frsme adt fata aaa ara fe afar afaprar @| wart es Fag at gearfaa gf fe ara ag at aaafare FH aTaffect y aot frois Fat weit ar afaeare ara Pears ar afeawr yeafaae & sae ala ave Pret argefre qer ae cara adit fear @, afeney| fafasaa at araarqaran date val ay srt tet 81. afe arava aferfro at fascet eq A goa HA gt ag frend frwaar 3 fe afar F foamyfantad aaa at gaara aaa oe. faare feat g aie fest adaa aad axfaatz aét featé at afenrn % fafasaa F geadta ael fear st aKat, Tat aafe afaacm gre faataae fasag aafaa a atga date F afer al aayfroia% fafafascaar ar tase weet Hage Hua Htal slawae? fH gaaafefeafaat & aaah sata av aeat at aagar az fase fear 3, ara fe tarHAT BIE WZR Arar gt;afe afyncr & fata a ag atua aat g fe saymega: tar Rar gat Var aaty aren aal gfe sas fafavaa F seat fear.arg| (tz 7):ce| fafass faa [1972] [1972] 83°argo gto areo 438: agate aaad,fagre att stat aaa stafaat sa dsBoat fafaes;8a|[1970] [1970] 1 sHofro qo 489=[1971]82 at$o ato—-HITo 899:oeSCA AT Be ce aaa (otzaz) falas gary aaaaged (ita), BAT.ne4 1974 & armat fade do 256 FH HaRMT Sea aITAT e arte 16 faaax, 1974 & fatter atx oee FH.faeg at 7e-ohherCo attarat at ate a MAST AG To HUA Az aI Ce aza (seaz) fafaes [eato afar] 43seataat at att aSto Slo Wa, sas afar, FATA wawet, FAT agar & ate st wT Foad amar BT fara ato Ho UAo Hifrat a fear- 2. It is equally well settled that the decision of the Tribunal bas not lo be serntinised sentence by sentence merely lo find out whether all facts G have been set out in detail by the Tribunal or whether some incidental fact which appears on record bas not been noticed by the Tribunal in its judg-ment. H the court, on a fair reading of the judgment of the Tribunal, finds that it bas taken into account all relevant material and bas not taken into account any irrelevant or impermissible material in basing its conclusious, the decision of the Tribunal is not liable lo be interfered with, onless, of H A course, the conclusions arrived at by the Tribunal are perverse. [645D- 'r F] 3 •. In the instant case, the Tribunal has taken note of, all the relevant circumstances which appear on record and which were refer-red to by the Departmental Representatives before the Tribunal. It has B not taken into account any material which could be said to' be irrelevant '1' in arriving at its conclusions. In considering whether the shares of Bharat Starch & Chemicals Ltd. and Greaves Cotton & Co. Ltd. were held by the assessee as stock-in-trade or as capital, the Tribunal has i,. ;_ taken into account the fact that the assessee was earlier treated by the Department as a dealer in shares, that circumstances cannot be C regarded as irrelevant. The decision arrived at by the Tribunal cannot besaidtobeperverse. [645F-HJ >(- Karam Chand Thapar & Bros. (P) Ltd. v. Commissioner of Income-tax (Central), Calcutta, [1971 I 82 I. T.R. 899; referred to. 4. It is not necessary for the Tribunal to state in its judgment specifically or in express words that it has taken into account the cumulative effect of the circumstances or has considered the totality of X . facts, as if that were a magic formula; if the judgment of the Tribunal E shows that it has, in fact, done so, there is no reason to interfere with the decision of the Tribunal. [6468-CJ CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1119 (NT) of 1975. . From the Judgment and . Order dated 16.12.1974 of the Calcutta~~ High Court in LT. Reference No. 256of 1974. S.C. Manchanda, Ms. A. Subhashini and K.C. Dua, for the Appellant. Dr. D .. Pal, Ms. M. Seal, Ms. Mridula Ray and H.K. Dutt, for the Respondents. The Judgment of the Court was delivered by KANIA, J. This is an appeal filed by the Commissioner of Income-tax, Calcutta, by Special Leave against an order of a Division Bench of the Calcutta High Court declining to direct the Income-tax Appellate Tribunal (h~reinafter referred to as "the Tribunal") to refer to the Court for determination of certain questions raised by the Com-missioner of Income-tax. vato atfaat—faae sig sat ag adler atarax ayaa, eaHTT AHAPA SEI AAA Hl Gs carats F giea H fares grea at & frat arqaxatta afaaun (faa gat art ‘afsawr’ sat wat @) a ag fate 2a & saarzFeat wat & fe ae araHe AIgat great sorw ae sfara seal Hl aAaETTW Hw& fav araar earareara at fafa az|| 2. sa atta & xated dfaare al aaa & fa Ho aeal ar aera aayarama @1 searai-faatfedt + fratir ag 1959-60 % far aad fray &ay Tat F alT-ara sa gifa Ht Hetfaat ar arar fear at sax gare wayHf area cara Us Shana fafats ate wey area vs Hod} fafyts % afaqzae H farsa st garg al1 seaet-fratfedt 4 gana ge ay A urea eery dsafaace fafats #2500 wat sat as ay UN KIA aT Ho to gray us aefafats ar FSF1 A MAT 22 Hea, 1958 Hrads aw F ale 31 ary, 1959at ay mea| rapa |r A THA 26,465 aU ai dag araHe afsard aaa attr wl ga aTaTe TT aTATT HT fear fe oft Har faaa aaa 2.50 vqeafaa a1 78 8 wafe 31 ATF, 1959 syararx seafua aa 8.06 Rau wfMAT AT| aiaTHe afasrd > ga ofefeafaal ar at aada far fe Haz va vatST BY TS AT aH fratfedt wr agas aqeaa sale are qq aT Haat aaraet afar + ag dfterin agar fe faaa tae gafae fear qar arfree fa fraiteat aft ar ata az at att ee areafan fear} wr Hageqt fear at aHat| seaet-fraiel Ader ater us saat fafete & ot3000 Hat 4 Bratt, 1959 a Has FoAho aratdsaa fafaze A aTTalt gq AeragIe TX 47,878 vq $5 GA wl arf ar arar fRar yt: araHzafaard tag afufratfea fear fe a tae Marge go at ate ga gg ®fraamredta erat BT Bt ae Tey| HaKe afaara F ae afeeatr aqatar fesaqat Hat ate ay Hath at aA gr daw afl sarar atx wes ara FAAT HAT AT AIT RT Tagg BT Hae HB TaTAT wasn F fer awMeqae Tel AAT AT HHAT| Tad ae afufratfea fHar tH ea THX FH Feqagi<al aredtan aaraaie Tel AAT TT THAT ATT star aATATT HT fear 3. fralfeat + araa< ofan & aren % faeg ages ayaa (adie) Fana atla BZA BY1 Ata tera Us Hfaaca fafats ¥ Fav F fasza ® aayHagar aged (attr) Fag ealare fear fe ga Bat wT 31 ard, 1959aT 8.06 aayaia Mat BT ate seated ata afafea seafya wa ar atzBq ST IT aa Hatt Hr ME Target sal gar aatfH wa saa ae HE Far ag at att ag fe staat afaard & ea ofefeafa at aacia Sat ag fasag fratadH aad ats fe gt Hat wt fawa-aeqagr< areafa agt at) saa ag afte-ary at aqatar fe arnt afgardt a ag ghenta aoa ana aadl at fHafe & tat un a aT are faafaa aafrat at geaiafed Vt as I aa: ga Tea& aren fase efeaat wat arcarta, sag ae ghentr aqarar fe aadwet A satis Mae aega: 2.50 wae of Bar at ees ats ay Y ale gal azquaam sy, sea at afasta ages fe var faatfedd grat ofeafaa ataaata F ate aagafa she Ht att ag aaa feat fe sa ag arare aval qatarmar ot fate agers tat staat arma oftafaa at Te ahSad agafecatora acarat fe ifs faatfedt are sa me. ga aad HF 25,000 War wa agaag sah H VTA FT At Gaal ade area tery Us Ffaaca fafets F frqayal asta BtaT gafae ga aifa at fafrara-atfa stat arat atfay a fePITA BTA| Het TH Hag Het Us Fadl fafats HF awl F fas qe saareal aft ar eae at, adh aged F ga amare F ofa free Hwagc, fratATT ATKT afsara + ga aft Hl aaa we fear at, ag sfeertor aqararfe ot TTT H area fae wea at aaa gfeager era fafrara-aaqaia aeqifaa faat at aaa @, aa: sat aria aol erft at aw fe Hears aft aT UsETalfa| saat ea aeag & ofa at fade fear fe ga aod sala dew sea Usagar fafats % Hat cere TATA arHe Ff veafaa ad feu aw st| sa gfefeqfaat & arate TX Tas alft Bl AAT KT fear || It is necessary to set out a few facts for the appreciation of the controversy in this appeal. In its agreement for the Assessment Year 1959-60 the respondent-assessee claimed deductions inter alia in re-spect of the loss of the sale of certain shares of Bharat Starch & Chemicals Ltd. and Greaves Cotton & Co. Ltd. for the relevant previ-ous year. The respondent-assessee had sold in the relevant previous year 2500 shares of Bharat Starch & Chemicals Ltd. to Mis K.C. - 1 Thapar & Sons Ltd., a company belonging to the same group. These shares were purchased on 22nd February, 1958 and were sold on 31st March, 1959. The loss claimed was of Rs.26,465. The Income-tax Officer concerned disallowed this case on the ground that the sale price was shown at Rs.2.50 per share whereas the market quotation on 31st March, 1959 was Rs.8.06 per share. The Income-tax Officer also relied upon the circumstances that the shares had been sold to a com-"'). pany which was an allied concern of the assessee, that is, belonging to the Thapar group. The Income-tax Officer took the view that the sale had been affected only to enable the assessee to claim the loss and \ could not be allowed as genuine. The respondent-assessee had arso sold 3000 shares of Greaves Cotton & Co. Ltd. on 4th February, 1959 to M/s K.C. Thapar & Sons Ltd., and claimed a loss of Rs.47,878.55p 1 [on ][this transaction. ][The ][Income-tax Officer held that these shares had ]...... also been sold to a compauy belonging to the Thapar group and under the control of that gr!>llp. The Income-tax Officer took the view that the motive for selling the aforesaid shares and some other shares was to make losses and set them off against the profits and these. transac-tions could not be considered to be in the normal course of business. He held that this type of transaction could not be regarded as genuine and disallowed the claim. The assessee preferred an appeal to the Appellate Assistant Commissioner against the order of the Income-tax Officer. In respect of the ·sale of the shares of Bharat Starch & Chemicals Ltd. the Appel-late Assistant Commissioner accepted .that the market quotation of these shares at Rs.8.06 on 31st March, 1959, was a nominal quotation SUPREME COURT REPORTS 4. faatfedt & at afar Fadia at1 afsnco & ce aoa ar aacafeat fe qaax aut F faatftdt a aad F fas oe at aaa fear at vaPTRATT-AT AAT TAT aT ale gas ae ata sar fH fratfedt at qaaz auf Faad ar eatardy rat wat att afc A Ste A ae aa aaa fear fie zaafefeafaat & fratfedt at gana ga ad Hat ar aateret a area ar aeare val ari afaacr a ag at aha feat fe afaereat ag gata aa aretarg ata afaa adh at we fe sa tae ar aga ak ma sararer arfinfsaasaad & fart feet ara sais & fac at azar ae fe fase arearxayaaan & aa ferme &) afar at ag afafratica feat fe ata ae ae feWaT HTT Hl Ale Sat H faganredts Haat st Fa ae g, ag afaa weafaa fararaa aat ert fe aeragre faear Yat HIATT H TATATHT aA FRaat fae wo & ar arfsaac sfana % fou feu ae 81 dag faunita ofafafya afsacor at ag aatar ar fa faatfedt + aa tat at aga gaa-oa Ff fafraraewe Ff afaa feat arafsaen a ae aha feat fe za ofefeafa & arasaawr & ag faony aél fae fe wat fafrara arta $ wr A area & a feBAIT TH FH VT F, He Fa aaa F afancy F era qT Aygt Us aza osrzaz fafads care arate otaaa (Aifta) sawaT A ea qrraa & fafrvar ar a (1970) 1 TH0 fo Fo 489=[1971] 82 ATo eto AIT 899 aaa frat frat ag afafratfea feat vat ar fe ag ofefeafa fe fratfeat 2ard tar afgat aar aga gaa-ca F afaca tat a fafrata gad & wa Fafaa fear 2, caata ag soaina Bea are favarae ofefeafe aval 8 Pe Gazfafrara we at gsiina we art gargs afen ag cH dat gana ofefeafe &fre ot afrazor ag froxy faara® & fac aaa F anata fe vat dadsfargo arf gatas at |set ag aa cara waa ag @ fe ge fafasadug staat datfa aaft ag ofa, frat fratfedt & gaa ca agar Far afeayHaat afaa feu aes, gatagf al Mt ag ga sea FH aaarem F fafaearaaara vat & fe eat wat fafa & wr Ft afta Far onrqreeerms F wT FRafar Sa ATA A Se qTATAg are aTATaT Tar sfeenin ae at fH arty qataratta at aati oat ar faa aa a afia ay at adt oats & are fear aaati afar a} yma sat amet g sae ga ar fase He acoax aafiz 3%wat frat war g frat ae aha fae, eraife feet vt oar< & fava eqa ad, fe fae reat aeragre at cafe FF1 afsawT A ag et ada Peoot fs ga ofefeafa a fe aeraare vet aafaal & dia, fat atex TT FTfrdan-fea at, ate sat ao at aafeat & dad at aaa feu av a, cqgagqa fang ar anda set star fe aeragrt areata ea 4 eqafeaa feo aemaf gaa aay seat Bl THAT ar ale arday & date Ha sl arazzwar alaadt at | watt & saa alat arel & aada Fafa a ag aha far fH aefaa Hwa are até ara adh 2 fe ga dad F wa at dag safaal ® faaan 2at adarc ari afar a caofefeaft ar vaca fear fe fewer art ex.ara cafrt aut oz fay me a aa: feat gifs feart ar ag set eh adh 8qq fronat & ararc at afew a ag afafaatfea fear fe ara erg deafrnca fafacs Tar wey Blea Us aoa fafats H maw F famq H Gay Bge atfaat arcane atfral & wa FH agaa Pau ory Haye 5. afaarm % ga fafreag & faeg marae aged a afew & argaqafaae Teas F Aaa F faa up ser fadfar wwe ge area ofafratfratfeag ag afaqa aa seat at seat fagfana at sea Ha carqiay A ea arare ® agate Te Fate & Hr faa feat fadfaa fe safety wz |at fafaraa faqaa: vt aeat & geatea ox otarfea & at aed F are azaitz ae fa a sea, fraat ataa argaa fate azatat aed 2, fates fava tegaa aat FT aaareFH fare eatavaa at fadfna Heaay1 afara ca fafaraa % fase arrat aged & seq eqrataa H aaa far fe agafar stagfata ef ag gaa seatat at earaa & agate & faufadfad St1 Gea AAT: A eae aetfta FAUT are sat aaa aT |Tfeaat feat| sega atte Sea earaTaa H yaa fafrear % faes st wes| 6. fat ana ag ale SA ane GAAS Foe ge west aa gay geaam rotate argad & Fagg widdaaft wader a ag fades Pear fe gad 9g sitet faa-fafa haa a ovat Fada Fax 4 F fay at F—| 1. Far aaa Fazal aleofefeafaal F ataie ge as Fal GTana @ feafsacn } oa ag afyfratier wet ay, fr MTta eeTT USSfaaca fafats atc det ater us aodt fafate F ae F aq alefrag Bada X faatfedd era fee ae deqagrt areaa A arfysadaqagiet %, aE area ar ate saa dar afufrate aud aaa aaATaaa atta: aaa ardl ar rade adt far at ate ae fie aa tarfasay aaa agieagad at aqfaa adt at ?| and there was no transaction in these shares at that rate because there }--was no buyer at that price and that the Income-tax Officer was wrong in relying upon this circumstance to come to the conclusion that the transaction of sale of these shares was not genuine. He also took the view that the Income-tax Officer was in error when he took the view because thes.e shares had changed hands between companies control---¥' led by the same group that fact vitiated the sale. He, however, took the view that the disallowance was correct as the shares were, in fact, purchased at Rs.2.50 per share and sold at the same rate, that is, he i disagreed with the average cost worked out by the assessee and pointed out that the basis on which such average cost was worked out had not been shown to him. He further took the view that the 25 ,000 shares of this company sold by the assessee constituted a large block and was connected with the acquiring of control over the Bharat Starch . .\' ·& Chemicals Limited and hence the loss should be regarded as an investment loss and not a business loss. As far as the loss on the sale of shares of Greaves Cotton & Co. Ltd. was concerned, after referring to the ground on which the Income-tax Officer had disallowed this loss the Appellate Commissioner took the view that the holding of these shares could be reasonably attributed to the investment portfolio and hence, the said loss was a capital loss and not a business loss or a .1.~ revenue loss. He further referred to the fact that the shares of this company, namely, Greaves Cotton & Co. Ltd. were not quoted in the stock exchange market. On the basis of these circumstances he dis-allowed the loss. al to the Thribunaf.l. ThedTbri- l : The adssessee hwefnt inhfurthehr appeal to the Thribunaf.l. ThedTbri- l : b una 1re 11e upon t e act t at mt e ear 11er years, t e pro its ma e y .......F the assessee on the sale of shares had been treated as business income and this would show that the assessee in the earlier years had been regarded as a dealer in shares. The Tribunal rightly observed that under these circumstances, there was no reason why the assessee should not be treated as a dealer in shares in the relevant previous year either. The Tribunal also pointed out that nothing was shown on the G record which would suggest that the acquisition and purchase of these shares was for anything other than normal commercial purposes or that the sales were not made in the ordinary course of business. The Tribunal held that the mere fact that the shares have been sold to a company belonging to the same group and under the same control H would not be conclusive to. show that tl\e transactions were bogus or 2. 997 Ho (1) ot afaaa sara ete faa, aa ATA FH aeal aleafefiafaat & ararc qe afancn ar ag fasad, fe fraifedt as aravera Us thane fafress 2500 tad ate dem area Ceara fafats% 3000 Had F wa ate faa ah daa.a a degagre feu a a varae F ater F wT FT egy HVAT.aaaA A fHu.a, Fat aer 1ataifea val at aeaar aeqet aafeaqad at ahaa at ? 7. sa 994 at fafasaa ear & fry, fe aa afeaen ay sagad stat oTsaratay H aggre H fae frafas we arian a, sara aearfaa fagia g fraeq TET SAT alaT2| erat aaaa, fagre ate agar gaa srafear sa Tzgaat fafazs! # ca caraTaaa ag afafeatfesPrat Paar ars faferee gift, sarafen atta 2 at ositae aif, Geren 8 oem Faure oer 3 1 Tet afirree a ag froRyfrarat 2 fe fratfedt + aot are afta fat % fase F ot ait garg at agsaat earatfes arf at ate faa sr ag ceaaa adl é fe afeaur F aayfafreaa at agaa Hf Pret aara aret oe fears fear & aaat ag Pet gaaraaaa It feat HCA F HAHA al s aal eararag sree seaatg fee ay HY HEwaren saat Fl ag ataGearfra sf fe afew aeg Hr cat amy arar afaafania & 1a wea, fe aar are. faferserarft earatiea ais S args aif atx agfe zat lg tft areafaa & ar faeat, Gea wre US ea g faa AaaaeqtaT qeataa Heh fear qa gar Fl et weal SY area afr FTfaseg fanty ¢ say al geaeta fear ar aamat wa afar a feet aanarr ot faare Pear et ar ag fret aera aaa Te fray HVA H TAHA VTat atafaaem ara frarer war front ga ataafaa & fe TT ar afHamat YX VaR avare Te ars Tt gheaara safes sar faswe aal fray avargr dat fe afanwn a fratar ei aaa eT aag wt geaita gfe ara aggat ama & fac fe aot afeaey a aga facta F aet aval at afacare azfeatat afanentFy afare & she ata are feet arasfas ava qe caraaét feat%, afaren & fafayaa atareatqaaa aaa ag at adr1 (1972) 83 ATEo ate wIRe 438,:| drat ¢ 1 afe araraa afenco & facia ar fore wa R goa Hwy ot ae frondfrataat ¢ fe afeacr a frend frat amaadt gine arate fearFrat g att feat aaa arrit oe faare ad} fear 2 at afaaco } fafreaaHaq an eect él fear arasar wa ae fe afrncr are fra TTfasag aafaa a att aa featat ay carr cae gu sega area HF ey ca frogqt aga & fe afar a afeara a seta AA ata va algae ofefeafaat aeta Hear & fred frate & vfafafaat rer afer & aner fafese Peat qaraT| aferecatet feet araat ox faare sat fear & faraat aaa ae sar oTaa fa ag sue fronaf at agua % fag adnate1 aaa A ag faare Heaama fe aa ata terse Us afraca fafats ate deg area Us aoa fafuteRare frathedl FT carats cere FH STH ar gst Heed F atfta Hew Y, eaaa at eart feat 2 fe feats 3 faatfedt at cee ad aT satetay AAT ATaar fs ft waatar A aha feat g fag ga ofefeafa at oa fafasaa at aftea wana al ara aT THAT “fraaT aA eer a fade wx ah Fag Heat vydaa ad § fe afsaco a fafaeaa aafaa1 oft wader A gat ener aq-gam ag Her g fe afanen at Hel AT ease wT a ae Haq ae feat 8 fH waaafefeafaat at vagal ot aaa afeacy zt garg aE ofefeafaat & ead gaaaz faare frat g, aa: aTaat afew at sfasfra Peat sat atferi ganzfaare & aa ceil F Hrs are el 21 ae aa 21 fe afaaco a eq we Te—opfiea val fear fas sat va sate we ofefeafaat & aadt sara az faar< fegy& fag gas farde afraw % facta aT alae BT A gaa HA gz Az eqeeat orat¢ fa afar a aega: agt ana afaca ox faaara ofefeafaay &|@aat sata ox faare fear &1 fancy at aaa facta & fafafeszaar a7 eqsmealHae HAT Hear Arazay al & fe Gan ofefeafaal F Maat outa gr qeayal aera at frart fear g,-atay fH Car Hear Tle TEE Tear gt; afe afyaey% fara & ag ata atar gfe sed sega: Var feat g at tar are grey at zfe sae fafaraa A geaeta fear aegard aa F ge otter Fas qo ag& att 7a. TAHT sat aTfET | 8. afeoraa: aeatta sane edttatradq afer afta at ort —atther afer at ag| .aHo/zo|: not in the normal course of business or were for an extra commercial consideration. It was pointed out to the Tribunal by the Dep_artmental Representative concerned that these shares were shown by the asses-see as investments in the balance sheet. The Tribunal pointed out that this circumstance would not necessarily lead to a conclusion that the shares were held in the investment portfolio and not as stock-in-trade and in this connection, the Tribunal placed relianace on the decision of this Court in Karam Chand Thapar and Bros. P. Ltd. v. Commissioner of Income-tax (Central), Calcutta, [1971] 82 l.T.R. 899 wherein it was held that the circumstances that the assessee had shown certain shares as investment shares in its books of account as well as its balance sheet was by itself not a conclusive circumstance indicating that the shares were held on investment account or capital account but it was a rel-evant circumstance on which the Tribunal could rely for drawing an inference that the loss on the sale of the said shares was a capital loss. It may be n_oted that this decision shows that although the manner in which shares are shown in the balance sheet or books of account of the assessee is relevant, it is not a conclusive factor in determining whether the shares were held as a11 investment or as stock-in-t~ade. However, the view taken by this Court in that case was that the loss was a capital ~ los~ as the sale of the shares was made after a long period of over ten years. In the case before us, however, the shares have been sold within a much shorter period which .,would suggest,. although by no means conclusively, that the sales were in the nature of a business transac-tion. The Tribunal also pointed out that the circumstances that the transactions were between companies in which Thapar group had a , controlling interest and also in respect of shares of companies belong-~ ing to the same group by themselves would not support the conclusion , that the transactions were stage-managed, although it might arouse suspicion and call for a closer scrutiny. In respect of both the said lots of shares, the Tribun~l pointed out that there was nothing to show that the purchase of these shares had anything to do with the control of the companies concerned. The Tribunal relied upon the circumstances that the sales were at the market rates or going rates and hence, there was no question of making a bogus loss. On the basis of these con-clusions, the Tribunal held that the losses in respect of the sales of shares of Bharat Starch & Chemicals Ltd. as well as of Greaves Cotton & Co. Ltd. were liable to be allowed as business losses. 644 SUPREME COURT REPORTS [1989) 1 S.C.R. A tax applied to the Tribunal for referring certain questions for the de-termination of the High Court. The Tribunal passed an order referring one question to the Court for determination but declined to refer the other questions on the ground that the decision of the Tribunal was arrived at purely on the appreciation of the facts brought out in evidence and that these questions, in respect of which the Commis-B sioner wanted a reference, were not questions of law which deserved to be referred to the court for determination. From this decision of the Tribunal, the Commissioner applied to the High Court for directing the Tribunal to refer the sa