The surplus received by a shareholder from the liquidator on liquidation of a company is a capital receipt and not a revenue receipt, and therefore not assessable to tax.

( 1 ) IN this reference under Section 66 (2) of the Indian Income-tax Act, 1922, we are concerned with the following questions of law ;" (i) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in investigating the nature of the shares held by the assessee in Chrestian Mica Co. Ltd. , when both the assessee and the income-tax authorities had treated them as the stock-in-trade of the assessee as a dealer in shares for every assessment year since 1949-50 and proceeded on the same basis for the instant assessment year? (ii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the shares held by the assessee in Chrestian Mica Co. Ltd. were not its stock-in-trade for dealing in shares? (iii) If the answer to question No. (ii) be in the negative, then, whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the sum of rupees thirty-two lakhs, twenty-five thousand and five hundred and fifty was not assessable in the hands of the assessee?"

( 2 ) THE assessee is a firm. The assessment year is 1956-57. The previous year ended on December 31, 1955. The assessment was made on a total income of Rs. 36,41,554 including a sum of Rs. 32,25,550 representing the surplus which the firm had received during the relevant previous year from the liquidator of Messrs. Chrestian Mica Company Ltd. , which went into liquidation in 1955.

( 3 ) THE said assessment was confirmed on appeal by the Appellate Assistant Commissioner, but the second appeal was allowed by the Tribunal and the assessment order was set aside.

( 4 ) IT is unnecessary for us, as rightly said by Mr. Pal, the learned counsel for the revenue, to deal with the facts in detail, for question No. (ii) can be answered on the facts and circumstances as hereinafter stated and we need not answer question No. (i) in view of our answer to question No. (ii ).

( 5 ) THE assessee is a regular dealer in shares. In 1945, the assessee purchased all equity shares of Chrestian Mica Co. Ltd. , which was then a public limited company. The assessee took over the management of the said company after acquiring those shares. In 1947, the said company was converted into a private limited company. In 1948, the value of these shares depreciated and the assessee claimed Rs. 20,88,735 as trading loss in the assessment year 1949-50 on the ground that these shares were the stock-in-trade of the assessee. The said claim was allowed by the Tribunal on appeal. All successive assessments were made according to the value of these shares as claimed by the assessee, namely, that they were the stock-in-trade of the assessee.

( 6 ) IN the assessment year under reference, the learned counsel for the assessee not only conceded but also admitted before the Tribunal that these shares were the stock-in-trade of the assessee. Accordingly, it has been held by the learned Judicial Member that these shares are the stock-in-trade of the assessee, but it has been held by the learned Accountant Member that they are not the stock-in-trade of the assessee.

( 7 ) ON a reference, under Section 5a (7) of the Indian Income-tax Act, 1922, the learned President of the Tribunal after recording that the learned counsel for the assessee has expressly admitted before him that these shares continued to be the stock-in-trade of the assessee in the assessment year has upheld the aforesaid finding of the learned Accountant Member.

( 8 ) IT has been contended by Mr. Roy, the learned counsel for the assessee, that the Tribunal was not bound by the above concession and admission, for it was made erroneously by the counsel. He has also submitted that it is the duty of the Tribunal to ascertain the assessee's intention at the time of purchase of these shares inasmuch as such intention can alone determine the question of assessability of those sums in the hands of the assessee and, therefore, no error has been co