JUDGMENT [ENTITY], J.
1. Calcutta Discount Co. Pvt. Ltd., the assessee, was incorporated on November 26, 1917. At its incorporation, all the shares of the assessee were held by Sir [ENTITY], who died on July 3, 1928, and after his death the shares of the assessee came to be held by a trust estate. At the material time, the assessee had invested largely in Indian shares and had made loans and advances to a number of limited companies consisting of, and under the control of, the Yule group of companies.
2. The administration of the estate of Sir [ENTITY] was completed by 1934 and in a letter dated January 19, 1934, from Yule Catto & Co. Ltd. to M/s. Andrew Yule & Co. Ltd., it was recorded that the assessee should carry on business as an investment company.
3. In 1934, the successors of Sir [ENTITY] floated another company by the name "Meryl Investment Co. Ltd.", a sterling company to which all the shares of the asseseee, which were being held by the trust estate were transferred. Meryl Investment Co. Ltd. was wound up in 1940 and another company known as "Meryl Co. Ltd." was incorporated. The new company took over all the shares of the assessee which became a 100% subsidiary of Meryl Co. Ltd.
4. In 1946, the assessee floated a company of the name "Clive Row Investment Holding Co. Ltd". Shares held by the assessee in the Yule group of companies were transferred by the assessee to the new company and, in consideration, the entire fully paid-up share capital of the new company was transferred to the assessee.
5. The assessee continued to hold the shares of Clive Row Investment Holding Co. Ltd. till 1954 when the said Clive Row Investment Holding Co. Ltd. became a public limited company and its shares were listed in the stock exchange.
6. In the assessment years 1956-57, 1957-58 and 1958-59, the respective accounting years ending on the 31st March of the calendar years 1956, 1957 and 1958, the assessee sold the shares of Clive Row Investment Holding Co. Ltd. The said sales resulted in profit.
7. In the said three assessment years, the assessee was assessed to income-tax. In its return of income the assessee contended that the profit arising out of sale of the shares held by the assessee in Clive Row Investment Holding Co. Ltd. was capital in nature, having arisen out of disposal of investments and was not taxable as revenue receipt. The contentions of the assessee were rejected by the Income-tax Officer who held, by following an earlier order of the Appellate Tribunal in the case of the same assessee for the assessment years 1945-46 and 1946-47, that profits arising on the sale of shares of Clive Row Investment Holding Co. Ltd. were assessable to tax as a revenue receipt.
8. Being aggrieved by the order of the Income-tax Officer, the assessee preferred appeals to the Appellate Assistant Commissioner. In the meantime, the decision of the Tribunal for the assessment years 1945-46 and 1946-47 in the case of the assessee had come up in a reference before this court and it was held by this court that the shares sold by the assessee in those years having been held for a period of ten years and sold thereafter as they had become hazardous securities, the profit arising from such sale could not be taxed as a revenue receipt. The Appellate Assistant Commissioner remanded the matter to the Income-tax Officer for ascertainment of further facts relating to the acquisition of the shares by the assessee during the years from 1946 to 1957 and sale or transfer of shares or securities during the said period. On the report of the Income-tax Officer, the Appellate Assistant Commissioner, taking into consideration the facts and circumstances relating to the incorporation of Clive Row Investment Holding Co. Ltd., the conversion of the latter company into a public limited company, the quotation of the shares of the latter company in the stock exchange and the sale of the said shares by the assessee, held that the said shares having been sold at a time when it would be profitable to do so, the profits arising were revenue in nature.
9. Being aggrieved, the assessee came up in a further appeal before the Tribunal. The Tribunal noted that the sale of the shares by the assessee in the past assessment years from 1946-47 up to 1950-51 had been held to be change of investment and not sale of shares by way of trading transaction and the profits arising from such sales had always been held to be capital and not revenue.
10. The Tribunal held that, on the facts before it, the assessee could not be held to be a dealer in the said shares, inasmuch as there was no need for the assessee to form a subsidiary and then have the shares of the subsidiary transferred to it. If the assessee wanted to trade in the shares held by it, the assessee could have done so without setting up a subsidiary. The Tribunal also held that the conversion of the subsidiary into a public limited company could not be held to be a transaction in the nature of trade and when the subsidiary company, viz., Clive Row Investment Holding Co. Ltd., became a public limited company, its shares were listed in the stock exchange in the usual course.
11. The Tribunal noted that after holding the shares of the subsidiary for nearly ten years, the assessee sold the same in the three assessment years. The Tribunal came to the conclusion that the transactions in the shares could not be described as trade or an adventure in the nature of trade. The Tribunal found that the transactions were had only with the object of rearrangement of the shareholding of the assessee. The surplus arising from the sale of the shares was held by the Tribunal to have arisen on capital account. It was contended by the Revenue before the Tribunal that the transactions had been repeated in three successive assessment years. The Tribunal held that the transactions were of such magnitude that it would have been difficult for the assessee to find purchasers at one time and, therefore, the transactions were spread out. The mere spreading out of the transactions did not convert the transactions into trading -transactions.
12. On an application by the Revenue under [SECTION] of the [ACT], the following question has been referred to this court by the Tribunal as a question of law arising out of its order for the opinion of this court:
" Whether, on the facts and in the circumstances of the case, the surplus realised on the sale of shares in Clive Row Investment Holding Co. Ltd. in the relevant previous years for 1956-57, 1957-58 and 1958-59 was on revenue or capital account ? "
13. At the hearing before us, learned advocate for the Revenue reiterated the contentions of the Revenue raised in the proceedings below. In particular, it was emphasised that the assessee had been indulging in transaction of shares in every year on and from the assessment year 1946-47. It was submitted that the very fact that the transactions in shares were a regular event would go to show that the transactions were of a trading character as the same were being indulged in by way of a regular activity.
14. It was further submitted that the question whether any particular transaction in shares would be a trading activity or merely a change of investment would be a mixed question of law and fact and in the instant case the Tribunal had erred in drawing the conclusion that the sales did not partake of the character of trading transactions even if the facts found by the Tribunal were admitted to be correct.
15. Learned advocate for the assessee contended, on the other hand, that it has been established in the case of the assessee in more than one assessment year that the assessee had been carrying on business as an investment company and not as a dealer in shares. Learned advocate submitted that the transactions in shares made by the assessee in each year had to be considered separately and on their respective merits taking into account all background facts and circumstances in order to find out whether the transactions were by way of trade dealing in shares or not. It was submitted that the facts found by the Tribunal have not been challenged and they have become final. On the said facts, the Tribunal had drawn a conclusion and it could not be said that the conclusion drawn by the Tribunal on the facts found was perverse or contained such fundamental error which would merit interference by this court. The law on the question is well-settled. In support of the respective contentions of the parties, several decisions were cited at the Bar, which are considered hereinafter :
(a) [PRECEDENT] .
This decision was cited for the observations of the Supreme Court that in reaching the conclusion that the transaction is an adventure in the nature of trade, the Tribunal had to find primary evidentiary facts and then apply the legal principles involved in the expression "adventure in the nature of trade" used by [SECTION], [SECTION]. It was patent that the clause "in the nature of trade" postulated the existence of certain elements in the adventure which in law would invest it with the character of a trade or business, and that would make the question and its decision one of mixed law and fact.
(b) [PRECEDENT] . This decision was in the case of the same assessee. The assessment years involved were 1942-43, 1943-44 and 1944-45. The Supreme Court observed that the question whether sales of certain shares were by way of changing the investments or by way of trading in shares had to be decided on a consideration of different circumstances, including the frequency of the sales, the nature of the shares sold, the price received as compared with the cost price and several other relevant factors.
(c) [PRECEDENT] . The assessee in this case acquired shares of a company in two lots in the year 1941. Some of the said shares were sold in 1950 and the balance in 1955 at a loss. The assessee claimed the loss as a trading loss. The Tribunal in an appeal found that the shares had been purchased in 1941; the said shares belonged to a company managed by the assessee; the said shares were shown in the account books of the assessee as investment shares and also shown in the balance-sheet as investment; the said shares were not sold when their price was high and the said shares were not sold for about 14 years. The Tribunal held on the basis of the above that the loss incurred by the assessee was a capital loss. On a reference, this court upheld the decision of the Tribunal. On further appeal, the Supreme Court held that on the facts as found by the Tribunal, the Tribunal was justified in drawing the inference that the loss was a capital loss. The Supreme Court held further that the question whether a particular loss is capital loss or a revenue loss is a mixed question of law and fact. The Supreme Court held further that the fact that the assessee had shown these shares as investment shares in its books as well as in its balance-sheet was by itself not conclusive but it was a relevant circumstance on which the Tribunal could have relied for drawing its inference.
(d) [PRECEDENT] . In this case, the assessed had sold a number of shares in four assessment years and was sought to be taxed by the Income-tax Officer on the surplus arising out of such sales. The Appellate Assistant Commissioner upheld the decision of the Income-tax Officer. The Tribunal in further appeal held that such surplus was not liable to be assessed as business profits. The Tribunal found that the assessee had initially obtained the shares in the course of investment and at no point of time the assessee had acted as a dealer in shares. Following the decision of the Supreme Court in [PRECEDENT], it was held by this court that on the specific finding of the Tribunal that the sale had not been effected in the course of the assessee's business, it could not be held that the conclusion of the Tribunal was not correct.
(e) [PRECEDENT] . In this case, the assessee, a sterling company, had a controlling interest in an Indian company. The Indian company with the permission of the authorities concerned made a rights issue of capital. The assessee, in order to maintain its controlling interest, had to subscribe to the rights issue and for that purpose obtained an overdraft from an Indian bank. For the purpose of liquidating the said overdraft, the assessee sold a part of the shares, which resulted in a surplus. The Income-tax Officer sought to tax the surplus as business income of the assessee. The Appellate Assistant Commissioner and the Tribunal held that the assessee was never a dealer in shares and the purpose of acquiring the shares was to retain control over the Indian company. On a reference, the conclusion of the Tribunal was upheld by this court which found that the transaction was not an adventure in the nature of trade. This court observed that in determining whether a transaction was an investment or an adventure in the nature of trade, no universal rule or truth could be applied. Each case had to be judged on its own merits and the court had come to a conclusion taking into account the totality of the facts and circumstances.
16. On a consideration of the entire facts and circumstances and the decisions cited before us, it appears that the Tribunal, in coming to the conclusion that the sale of the shares of Clive Row Investment Holding Co. Ltd. by the assessee in the said three assessment years did not contain any element of an adventure in the nature of trade, had taken into account the fact that the assessee is basically an investment company and not a dealer in shares. The shares involved in the instant case belonged to a wholly owned subsidiary of the assessee, which the assessee itself had set up. After having held the shares for about ten years and when the subsidiary became a public limited company, the assessee disposed of the shares over the three years as it was not possible for the assessee to dispose of the entire shareholding at a time.
17. Keeping in view the above, we are unable to hold that the Tribunal committed any error which calls for interference from this court. It cannot be said that the Tribunal has failed to consider any relevant fact or has taken into account any irrelevant or extraneous fact which has vitiated its conclusion or that there is any fundamental error which appears in the face of the order of the Tribunal, The law is well-settled that every case has to be decided on its own merits and the facts which are relevant to the question have been noted and laid down in the decisions considered earlier. The Tribunal has applied the law as laid down on the facts of the case. Even if another view could possibly be taken on the same facts, that would be no ground for us to interfere with the view taken by the Tribunal.
18. For the above reasons, we answer the question referred by stating that the surplus realised on the sale of shares in Clive Row Investment Holding Co. Ltd. in the relevant assessment years was on capital account. The answer is in favour of the assessee.
19. In the facts and circumstances of the case, there will be no order as to costs.
[ENTITY], J.
20. I agree.