THE ORIENTAL INVESTMENT CO. LTD. versus THE COMMISSIONER OF INCOME-TAX, BOMBAY

Citation: [1958] 1 S.C.R. 49 · Decided: 22-05-1957 · Supreme Court of India · Bench: NATWARLAL HARILAL BHAGWATI · Disposal: Appeal(s) allowed

cites 1 · see the full citation network in Lexace

Judgment (excerpt)

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S.C.R. 
SUPREME COURT REPORTS 
49 
These observations do not help the respondent in any 
1957 
way; nor do they lay down any rule contrary to the Raghllha-;Mandal 
rules laid down in Seth Gurmukh Singh's case(1). 
Horihor Mtmdal 
For these reasons we hold.that the High Court was TlitSta~·o/Bihar 
in error in answering the question referred to it. The 
appeal is accordingly allowed and the judgment and 
s. K. Das J. 
order of the High Court are set aside. The answer to 
the question referred to the High Ceurt is in the 
negative. The appellant will be entitled to its costs 
both in this Court and in the High Court. 
Appeal allowed . 
THE ORIENTAL INVESTMENT CO., LTD. 
v. 
THE COMMISSIONER OF INCOME-TAX, 
BOMBAY. 
(BHAGWATI, s. K. DAS, and J. L. KAPUR JJ.) 
Income-tax-Reference 
to High Court-Questions of law-
Investment companv-Dealer or lm·estor-Mi'xed question of law 
and fact-Legal effect of facts found, a question of law. 
The appellant company 
was incorporated as an investment 
company which by its memorandum of association enabled it, 
inter alia, to deal in investments and properties. For the purposes 
of assessment to income-tax the appellant claimed, for the assess-
ment year in question, to be treated as an investor and not as a 
dealer on the ground that it did not carry on any business in the 
purchase or sale of shares, securities or -properties. The Income-
tax Appellate Tribunal held that according to. the company's 
memorandum of association and its own assertions made all along 
in the past, it should be. treated as a dealer in investments and 
properties and that its income arising from the sales of shares 
and properties should be taxed as business profits. The appellant's 
applications for a reference to the High Courts were rejected on 
the ground that no question of law arose out of the order of the 
Tribunal. 
Held, that the question whether the appellant's business 
amounted to dealing in shares and properties or to investment, is 
a mixed question of law and fact and that the legal effect of the 
facts found by the Tribunal as a result of which the appellant 
could be treated as a dealer or an investor, is a que~tion of law. 
Accordingly, the order of the High Court was set aside and 
· the case remitted to the High Court for directing the Tribunal to 
state a case. 
(1)(1944) 12 I.T.R. 393. 
1957 
May22 
50 
SUPREME COURT REPORTS 
[1958J 
1957 
Meenakshi Mills, Madurai v. Con11nissioner of lnco1ne Tax,. 
The Oriental 
Madras, (1956) S.C.R. 691, applied. 
Investment Co., Ltd 
Case law reviewed. 
Th 
Cv. 
1s. 
C1v1L APPELLATE JURISDICTION : Civil Appeal No. 
e 
omm 'Sioner 
· 
of lnoo--tax, 153 of 1954. 
Bombay 
Appeal by special leave from the judgment and 
KapurJ. 
order dated January 15, 1952, of the Bombay High 
Court in Income-tax Application No. 54 of 1951. 
R. J. Ko/ah, J. B. Dadachanji, S. N. Andley and 
Rameshwar Nath, for the appellant. 
C. K. Daphtary, Solicitor-General of India, G. N. Joshi 
and R. H. Dhebar, for the respondent. 
1957. May 22. The Judgment of the Court was 
delivered by 
KAPUR J.-This is an appeal by the assessee by 
special leave and the question for decision is whether 
questions of law, if any, arise out of the order of the 
Appellate Tribunal. 
The facts giving rise to the appeal are that the 
petitioner company was incorporated on July 29, 1924, 
as an investment company, the objects of which. are 
set out in cl. III of the memorandum of association 
and more particularly in sub-els. I, 2, 15 and 16 of 
that clause. The assessment years under review are 
1943-44 to 1948-49, 
excepting the year 1947-48. 
According to its petition made in the High Court of 
Bombay, the petitioner company dealt with its assets 
as follows: 
"The Petitioner Company purchased during the 
period !st July 1925 to 30th June 1928 shares of the 
value of Rs. 1,86,47,789/- major portion of which was 
comprised of shares in the Sassoon Group of Mills. 
During the year ended 30th June 1929 the Petitioner 
Company promoted two companies known as Loyal 
Mills Ltd. and Hamilton Studios Ltd. and took over 
all their shares of the value of Rs. lOt lacs. In the 
year 1930, the Petitioner Company purchased shares of 
Rs. 1,33,930. During the period of 9 years from 1st 
July 1930 to 30th July 1939 no purchases were made 
with the exception of a few shares of Loyal Mills Ltd., 
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51 
taken over from the staff of E. D. Sassoon & Co. Ltd., 
1957 
who retired f

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