Summary
The question whether surplus arising from the sale of shares and securities is assessable as profits or gains or is only an appreciation of capital arising from a change of investment depends on whether the sales which produced the surplus were so connected with the carrying on of the assessee's business that it could be fairly said that the surplus is the profits and gains of the business.
168 It is not necessary that the surplus should have resulted from such a course of dealing in securities as by itself would amount to the carrying on of a business of buying and selling securities. It would be enough if such sales were effected in the usual course of carrying on the business, or, in other words, if the realisation of securities is a normal stop in carrying on the assessee's business.Punjab Co-operative Bank Ltd. v. Income-tax Commissioner, Lahore (67 I.A. 464) followed.Where one of the objects of a company was to carry on the business of financiers and to purchase, acquire, and sell stock, shares, business concerns and other undertakings and the company held a large number of shares in other companies and was realising its holdings and acquiring new shares, and it was engaged in financing and promoting the business of other companies: Held, that the sale of investments and the making of fresh investments was directly connected with the carrying on of the company's business and profits made by the company by sale of shares and securities were assessable to income-tax.See the full content of this document
Extract
Sardar Indra Singh And Sons Ltd. VS. Commissioner Of Income-tax,west Bengal.
PETITIONER: SARDAR INDRA SINGH AND SONS LTD.Vs.RESPONDENT: COMMISSIONER OF INCOME-TAX,WEST BENGAL.DATE OF JUDGMENT: 23/09/1953BENCH: SASTRI, M. PATANJALI (CJ)BENCH: SASTRI, M. PATANJALI (CJ)DAS, SUDHI RANJANBOSE, VIVIANHASAN, GHULAMBHAGWATI, NATWARLAL H.CITATION: 1953 AIR 453 1954 SCR 167CITATOR INFO : E&D 1959 SC 92...
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