SARDAR INDRA SINGH AND SONS LTD. versus COMMISSIONER OF INCOME-TAX, WEST BENGAL.

Citation: [1954] 1 S.C.R. 167 · Decided: 23-09-1953 · Supreme Court of India · Bench: M. PATANJALI SASTRI
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Judgment (excerpt)

• 
s.c.:R. 
SUPREME COURT REPORTS 
167 
In the view we have expressed above, it is unneces-
sary to deal with the alternative contention based on 
section 8(1) of the Act. 
We allow the appeals, set aside the answer made by the 
High Court to question No. 1 and answer it as follows: 
In view of the finding of fact that the old joint family 
business in Banaras brocade was wound up and was 
no longer carried on by the joint family as such during 
the relevant chargeable accounting periods, the same 
business could not legally be treated as having con-
tinued unbroken in respect of such periods for the 
purpose of section 10-A of the Excess Profits Tax Act 
read with sections 4 and 5 of the same Act. The 
judgment of the High Court will stand in other res-
pects. The appellants will have their costs of the 
appeals. Advocates' fee one set. 
Appeals atlowed. 
Agent for the appellants: Naunit Lal. 
Agent for the respondent: G. H. Rajadhyaksha. 
SARDAR INDRA SINGH AND SONS LTD. 
v. 
COMMISSIONER OF INCOME-TAX, 
WEST BENGAL. 
[PATANJALI SASTRI C.J., S. R. DAs, VrvrAN Bos:m, 
GHULAM HASAN and BHAGWATI JJ.] 
Incomdax Act (XI of 1922), s. IO-Income-Sale of shares 
and sec1irities-Company carrying on business as financiers and 
promoters of cornpanies-1 ncorne frorn sale of securities-Whether 
assessable-Tests. 
· 
The question whether surplus arising from the sale of shares 
and securities is assessable as profits or gains or is only an appre-
ciation 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 assssses's business that it could be 
fairly said that the surplus is the profits and gains of the business . 
1953 
Soh"1n Pathak 
and Sons 
v. 
Commissioner of 
Income-tax, 
U.P. 
Patanjali 
Sastri G. J. 
19$8 
Sep. 23. 
168 
SUPREME COURT REPORTS 
[1954] 
1953 
It is not necessary that the surplus should have resulted from 
such a course of dealing in securities as by itself would amount 
Sardar Indra 
to the carrying on of a business of buying and selling securities. 
Singh and Sona It would be enough if such sales were effected in the usual course 
Ltd. 
of carrying on the business, or, in other words1 if the realisation 
v. 
of securities is a normal step in carrying on the assesseejs 
Commissioner of business:. 
· 
Income-tax, 
, 
C 
. 
k L l 
I 
. 
West Bengal. 
P1li1~Jab a-operative Ban 
tc. v. ncome-tax Ooniniissioner, 
Lahore (67 I.A. 464) followed. 
Where one of the objects of a cotnpany 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 realis-
ing 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 
profi~s made by the co1npany by sale of 
shares and securities were assessable to income-tax. 
CIVIL 
APPELLATE 
JURISDICTION : Civil Appeal 
No. 40 of 1952. 
Appeal from the Judgment and Order dated the 
the 15th May, 1950, of the High Court of Judicature at 
Calcutta (Harries C. J. and Sinha J.) in its Special 
Jurisdiction (Income-tax) in Income-tax Reference 
No. 7 of 1949. 
N. 0. Chatterjee (R. P. Khosla, with him) for the 
appellant. 
C. K. Daphtary, Solicitor-General for India ( G. N. 
Joshi, with him) for the Commissioner of Income-tax. 
1953. September 23. 
The Judgment of the Court 
was delivered by 
PATANJALI SASTRI C.J.-This is an appeal from a 
judgment of the High Court of Judicature at Calcutta 
answering a question referred to it by the Income-tax 
Appellate Tribunal under section 66 of the Indian 
Income-tax Act, 1922. 
The appellant is .a private limited company incor-
porated in the year 1935 under the Indian Companies 
.. 
• 
• 
S.C.R. 
SUPREME COURT REPORTS 
i69 
Act with the following objects, among others, set out 
1963 
in the memorandum of association : 
sardar Indra 
To carry on and undertake any business, transaction, Singh and Sons 
operation or work commonly carried on or undertaken 
Ltd. 
by bankers, capitalists, promoters, financiers, conces-
.v .. 
. 
. 
h t 
. • 
Commissioner of 
s10na1res, contractors, mere an s, managers, managmg 
.J 
t 
ncome- ax:, 
agents, secretaries and treasurers. 
west Bengal. 
To purchase or othe
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