ORIENTAL INVESTMENT CO. (P) LTD. versus COMMISSIONER OF INCOME TAX, BOMBAY

Citation: [1969] 2 S.C.R. 46 · Decided: 10-09-1968 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Appeal(s) allowed

Judgment (excerpt)

ORIENTAL INVESTMENT CO. (P) LTD. 
v. 
COMMISSIONER OF INCOME TAX, BOMBAY 
September 10, 1968 
[J. C. SHAH, V. RAMASWAMI AND A. N. GROVER, JJ.] 
Indian Income Tax Act, 1922, s. 66(1)-Mixed questions of fact and 
law-What are-Jurisdiction of High Court in dialing with such ques-
dons is the same as in dealing with questions of law-Appropriate Jann 
for such questions. 
For the assessment years 1940-41 to 1943-44 the assessee comi>anY 
claimed to be an investor in shares and properties and not a dealer. The 
contention was rejected by the Income-tax Officer, the Appellate Assistant 
Commissioner and the Tribunal. 
The company then applied to the Tri-
bunal under s. 66(1) of the Income tax Act, 1922 for a reference of the 
following questions of law for the opinion of the High Court : (i) 
whether on the facts and in the circumstances of the case the assessee 
company can rightly be treated as a dealer in investments and properties ? 
(ii) w)lether the profits and losses arising from the sale of shares, secu-
rities and immovable properties of the assessee company can be taxed 
as business profits. 
The Tribunal refused to make the reference and the 
High Court dismissed the application under s. 66(2). On appeal by special 
leave this Court held that the question as to what were the characteris-
tics of the business of dealing in shares or tlrat of an investor was a 
mixed question of law and fact. It remanded the case to the High Court 
for directing the Tribunal to state a case under s. 66(2) on the follow-
ing questions : 
( i) whether there are any materials on the record to 
support the finding of the Income tax Officer that th,, assessee company 
was a dealer in shares, securities and immovable property during the 
assessment year in question (ii) whether the profits and los·ses arising 
from the sale of sharesi securities and immovable properties of the asses-
see company can be treated as business property ? On these questions 
being referred to the High Court by the Tribunal, the High Court decided 
them against the assessee company. The company again appealed to this 
Court. It was contended on behalf of the appellant that the questions 
as framed by this Court did not reflect the real controversy and therefore 
the questions as originally framed in the company's application under s. 
66(1) should be referred to the High Court in a fresh statement of 
case to be made by the Tribunal. 
HELD : ( i) The questions framed by this Court and the form in 
whic11 they were framed seemed to assume that the questions 
involved 
were qnestiOns of fact for it is only in regard to a question of fact that 
the question can properly be framed "as to whether there was material 
to support the said finding". 
This Court had itself held that the ques-
tions involved in the present case were mixed questions of law and fact. 
Therefore the questions framed by this Court were not appropriate and 
did not reflect the real controversy between the parties. 
It was 
there~ 
fore appropriate that the questions should be modified as suggested by 
the appellant in its petition under s. 66(1) to the High Court. [53 G-54 ll] 
(ii) The proper construction of statutory language is always a matter 
of law and therefore the claim of the assessee that the profits and losses 
arising from the sale of shares securities etc. cannot be treated as profit; 
• 
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A 
B 
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c 
D 
E 
F 
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G 
, 
H 
ORIENTAL co. v. C.I.T. (Ramaswami, !.) 
47 
of a business involves the application of law to the facts found in the 
setting of the particular case. 
In dealing with findings on such ques-
tions of law and,fact the High Court must no doubt accept the findings 
of the Tribunal on the primary questions of fact; but it is open to the 
High Court to examine whether the Tribunal had applied the 
relevant 
legal principles correctly or not in reaching its final conclusion; and in 
that sense, the scope of enquiry and the extent of the jurisdiction of 
the High Court in dealing with such points is the same as in dealing 
with pure questions of law. [53 B-D] 
G. Venkatas.vami Naidu & Co. v. C.l.T., 35 I.T.R. 594, relied on. 
CrvrL APPELLATE JURISDICTION: Civil Appeals Nos. 651 to 
655 of 1967. 
Appeals from the judgment and order dated March 2, 1966 
of the Bombay High Court in Income-tax Reference No. 73 of 
1962. 
S. T. Desai, D. Dwarkadas and S. S. Javali, for the appellant. 
C. K. Daphtary, Attorney-General, R. Gopalakrishnan, R. N. 
Sachthey and B. D. Sharma

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