1978 (2) TMI 19

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....ibunal was correct in holding that the assessee was not a company whose business consisted wholly or mainly in the dealing in or holding of investments and on that basis holding that the order of the Appellate Assistant Commissioner vacating the levy of super-tax by the Income-tax Officer was proper? Admitted facts had it that for the assessment year 1961-62, the assessee-company was assessed to tax of Rs. 17,883 on a total income of Rs. 39,740. Out of the distributable surplus of Rs. 21,857 a sum of Rs. 8,000 only was paid by way of dividend. In the view taken by the ITO the assessee was held to be an investment company liable to further pay Rs. 6,928.50 on account of super-tax then in force. The levy of super-tax was vacated in appe....

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....law was involved as to the meaning to be ascribed to the word " investment ". In order to arrive at the answer it would be necessary at the outset to precisely find out the meaning of the word " investment ", which term had not been defined in the Act, though s. 23A thereof referred or related to companies whose business consisted wholly or mainly in the dealing in or holding of investments. In the view taken by the Supreme Court in Nawn Estates (P.) Ltd. v. CIT [1977] 106 ITR 45 (SC), such companies are not limited to companies whose principal business was the acquisition and holding of shares, debentures, stocks or other securities but covered companies whose primary or principal source of income was house property or capital gains as ....

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.... (Baroda) P. Ltd. [1972] 83 ITR 377. According to the Supreme Court, s. 23A applied only in cases when the primary activity of the company was in " the dealing in or holding of investments ". In order to bring a company within the mischief of s. 23A of the Act, it must be held that the company carried out real, substantial or systematic or organised course of activity of investment for a set purpose such as earning of profits. According to the assessee there was no iota of evidence to establish that the assessee had any business whatsoever in the dealing in or holding of investments. In the above premises relying on the decision in Charmugaria Trading Co. Ltd. v. CIT [1977] 110 ITR 715 (Cal) it was faintly suggested that the court might ....