Judgment

SHAH, J.: The appellant is a public limited company incorporated in 1948 under the Indian Companies Act, 1913. At the commencement of the year of account 1952-53, the company held Government securities of the value of Rs, 1,93,30,958 and shares of public limited companies of the value of Rs. 64,54,529. During the course of the year the company sold Government securities valued at Rs.92,50,000 and realized a sum of Rs. 79,78,055.50. The company also purchased Government securities of the Value of Rupees 1,00,00,000 and out of those sold securities of the value of Rs, 69,00,000 earning a profit of Rs. 21,024.

2. In proceedings for assessment of income-tax for the assessment year 1953-54, the company claimed allowance for the loss suffered in the sale of the securities. The claim was disallowed by the Income-tax Officer. He held that "it was no part of the business of the company to deal in securities , that the transactions in securities did "not appear to be a normal business venture of the company , and that the memorandum and articles of association of the company prohibited transactions of sale of securities and on that account the loss was of a casual nature. The Appellate Assistant Commissioner agreed with the Income-tax Officer on the following grounds:-

"(i) Since its inception in 1948 in the course of seven years, sales of securities have been effected only in the accounting year 1952-53;

(ii) In other years there have been redemption of securities but no sale which shows that the appellant was an investor and not a dealer in securities.

(iii) In the balance sheets the securities are shown as "investments , They are not valued at market value although the market value was less.

(iv) there is no frequency of transactions nor can it be said that there was a scheme of profit-making.

3. The Income-tax Appellate Tribunal held that the securities were not held as stock-in-trade of the company s business, and dismissed the appeal filed by the company. At the instance of the company, the following question was referred by the Tribunal to the High Court of Madhya Pradesh:

"Whether on the facts and in the circumstances proved in the case, the inference that the securities in question were held by the assessee as an investment and not as a stock-in-trade and that the loss incurred thereon was a capital loss, is, in law, justified?

The High Court recorded their answer in the affirmative.

4. The Tribunal held that the loss suffered by the sale of securities was of a capital nature. That finding is not one of fact. This Court has held in Commr. of Income-tax, Delhi and Rajasthan v. National Finance Ltd., (1962) 44 ITR 788

"....whether a particular loss is a trading loss or a loss on the capital side, depends on the facts of each case. The question, however, is not one of pure fact but a mixed question of fact and law; and the decided cases indicate how the matter is to be viewed in the contest of the facts. The problem must be approached in such cases in the light of the intention of the assessee, having regard to the legal requirements which are associated with the concept of trade or business.

As, observed in paragraph 2 of the statement of case submitted by the Tribunal, the company was incorporated with the objects, amongst others, "to invest, and deal with the moneys of the company, and in particular to subscribe for or otherwise to acquire and to hold and deal with the perpetual or redeemable debentures or debenture-stock or obligation or the shares, fully or partly paid, or stock of the company in India or elsewhere . The transactions in securities were within the competence of the company. In computing the taxable income of the company in assessment years 1952-53, 1954-55 and 1955-56, the Income-tax Officer held that the shares and securities were the stock-in-trade of the company, and the loss suffered in transactions relating thereto was a permissible allowance. It is true that an order made in assessing the income