TaxTMI 
TaxTMI 
1992 (7) TMI 17
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....tes (1938) Ltd, in the normal course of business as dealer in shares and whether such finding is otherwise unreasonable and/or perverse ? (2) Whether, on the facts and in the circumstances of the case, the conclusion of the Tribunal that the assessee-company was acquiring and selling shares of the said Ochterlony Valley Estates (1938) Ltd. not with the intention of having a controlling interest in that the company but in the normal course of share dealing business is unreasonable or preserve? (3) Whether, on the facts and in the circumstances of the case, the Tribunal misdirected itself in law in holding that the assessee was entitled to deduction on account of loss sustained by it in respect of the shares of Ochterlony Valley Estates....
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....., with effect from April 1, 1966, which position he held till early 1969. If shares in a company were acquired with the object of acquiring the controlling interest over it, the obvious inference was that they were not acquired with the intention of dealing in them and the shares so acquired did not take the character of stock-in-trade. The deduction claimed by the assessee was, therefore, not admissible as a business loss. As regards the loss claimed for the assessment year: 1965-66, the additional reason given by the Income-tax Officer for disallowing the claim was that the loss in respect of which the deduction was claimed was fictitious inasmuch as the shares, 90,000 in number, were shown to have been sold to the share-broker, Messrs. ....
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....consistent with the inference that the shares were acquired by the group with a view to acquiring a controlling interest over Messrs. O. V. E. Ltd. The above finding of the Appellate Assistant Commissioner was challenged by the Department in these appeals filed before the Tribunal. The Tribunal disposed of all these appeals' by a consolidated order. It agreed with the contention of the learned Departmental Representative that the only relevant consideration was whether the assessee-company and other concerns of the same group purchased the shares of Messrs. O. V. E. Ltd. not in the normal course of business As share-dealers, but with the intention of merely acquiring a controlling interest in that company and that if it was found that th....
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....stment Ltd. another concern of the same group suffered loss in the sales of shares of Messrs. O. V. E. Ltd., in the previous years relevant to the assessment years 1963-64 and 1966-67. Those losses were allowed as business losses in the assessments for those assessment years. The total number of shares of Messrs. O. V. E. Ltd. was 9,72,900 as could be seen from the balance-sheet of that company as at December 31, 1962. But, all the concerns of Sri Balmukund Bajoria group together held only 3,88,907 shares of Messrs. O. V. E. Ltd. as on December 31, 1967, and December 31, 1968. It could not, therefore, be said that the group held majority of shares at the relevant time, in Messrs O. V. E. Ltd. On a consideration of all the aforementioned ....
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..... (d) The Tribunal failed to consider that the shares of O. V. E. Ltd. were sold by the assessee-company within the group. (e) The mere fact that, in the earlier years, profits and losses on the sale of shares in O. V. E. Ltd. were assessed under the head "Profits and gains of business or profession" were wholly irrelevant since the principles of res judicata are not applicable to income-tax proceedings. We do not find any substance in the submissions made on behalf of the Revenue. Both the Appellate Assistant Commissioner as well as the Tribunal have found that the shares of O. V. E. Ltd. were acquired by the assessee-company as well as other companies in the group of Sri Balmukund Bajoria during the year 1962. The Tribunal has co....