TaxTMI 
TaxTMI 
1975 (12) TMI 35
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....rves and accumulated profits of the assessee totalled Rs. 7,02,679-13-3. The cost of the fixed and other assets of the company were found to aggregate to Rs. 8,12,492-1-8 and the same consisted of, (a) land and buildings, (b) furniture and fittings, (c) typewriters and duplicators, and (d) motor cars and cycles. The assessee in the year concerned was the managing agent of another company named The India Steamship Co. Ltd. and the assessee held 94,000 ordinary shares of Rs. 10 each in the said India Steamship Co. Ltd. Actual cost of the said shares came to Rs. 6,91,373-15-0 in the balance-sheet of the assessee as on the 31st December, 1954. In the assessment year in question the assessee had declared a dividend of Rs. 2,75,000. I....
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....ent in the shares could not be given the status of fixed assets like land and buildings, furniture and fittings. He also found that the investment in the said shares could not be for retaining controlling interest of the managed company by the assessee inasmuch as the said investment fluctuated during the course of years. The appeal of the assessee was rejected and the decision of the Income-tax Officer was confirmed. In further appeal before the Appellate Tribunal the same contentions were reiterated by the assessee. It was not in dispute before the Tribunal that if the said shares of the steamship company were held to be fixed assets and were included in computing the fixed assets of the assessee, then the accumulated profits along wit....
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....s difficult to determine, but, generally speaking, investments in affiliated companies are classified as fixed assets. The short-term investments, however, may be regarded as current assets as they are merely a substitute for cash." The Tribunal found that the shares held by the assessee in the steamship company should be deemed to be fixed capital in the hands of the assessee as it satisfied the tests laid down both by Halsbury and Pickles. The Tribunal found that, the expressions " fixed capital " and " fixed assets " were inter-changeable terms, as fixed capital was employed in fixed assets. The Tribunal rejected the contentions of the revenue that these shares should not be regarded as fixed assets as they have increased and/or de....
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.... asset which is not ' fixed ' is ' current ' and vice versa. An indication of the nature of ' fixed assets' may be gained from para. 5 and of ' current assets ' from para. 11(7). Semble, any asset, such as stock-in-trade, cash, expendable stores and book debts, liable to be realised, expended or turned over in the ordinary course of the company's business is a ' current asset ', whereas assets of a capital nature, such as the company's premises, plant, machinery, investments and goodwill are fixed assets." The court also considered the statutory form of the balance-sheet provided by the Companies Act, 1956, in Part I of Schedule VI thereto. In this form under the heading " Assets " a sub-heading " fixed assets " was provided. It is al....