Investment shares vs stock-in-trade: adverse inference from bookkeeping and conduct was not legally sustainable.

Whether shares were investment assets or stock-in-trade depended on a mixed question of law and fact. The Tribunal relied on book-keeping practice and family conduct to treat the shares in set No. 2 as investment shares, but the record also showed active trading through other books, use of the shares in the share business, and an earlier finding that the same shares formed part of stock-in-trade. The court held that the adverse inference rested on conjecture, surmise and suspicion, and was not legally sustainable. The referred question was answered in the negative.

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Issues: Whether the shares in set No. 2 were investment shares and not stock-in-trade up to 21 February 1940.

Analysis: The question whether shares are held as stock-in-trade or as investment is a mixed question of law and fact. The Tribunal's inference that the shares in set No. 2 were investment shares rested on the manner of book-keeping and the past conduct of the family, but those materials did not conclusively show an intention to treat the shares as capital assets. The record showed active trading in the shares through other sets of books, use of the shares in the course of the share business, and an earlier Tribunal finding that the same shares formed part of the stock-in-trade of the family's share business. The adverse inference drawn by the Tribunal was held to be based on conjectures, surmises and suspicion and could not stand.

Conclusion: The inference that the shares in set No. 2 were investment shares and not stock-in-trade up to 21 February 1940 was not justified in law, and the answer to the referred question was in the negative.

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