SUPREME COURT OF INDIA
Commissioner of Income-tax
versus
H. Holck Larsen
R.S. PATHAK, SABYASACHI MUKHARJI, JJ.
CIVIL APPEAL NOS. 1954-55 (NT) OF 1974 WITH SPECIAL LEAVE PETITION (CIVIL) NOS. 8292-8293 OF 1979
MAY 8, 1986
Judgment
Mukharji, J.— These appeals by certificate arise from the judgment and decision of the Bombay High Court, dated 10-8-1971 in IT Reference No. 124 of 1963.
2. The question involved in these appeals is familiar in direct tax laws. The points in controversy are short. But the adjudication is pending for long.
3. The assessment years involved are 1957-58 and 1958-59. The High Court disposed of these references on 10-8-1971 and in 1986, i.e., nearly after 28 years of the years of assessment, we are posed with the question whether in respect of certain transactions in those years the assessee was a dealer or an investor and consequentially whether the income arising from the sale of shares by the assessee is to be taxed on revenue account or capital account.
4. The question that the High Court had to answer was as follows:
“Whether, on the facts and in the circumstances of the case, the assessee was a dealer in shares in the accounting periods relevant to the assessment years 1959-60 and 1960-61?”
5. The said question was referred by the Tribunal to the High Court at the instance of the assessee.
6. The assessee, H. Holck Larsen, was a partner in the firm of Larsen & Toubro (hereinafter referred to as the ‘said company’) up to 1946. On 7-2-1946/8-2-1946, that partnership was converted into a private limited company of the same name. In consideration of his interest in the firm, the assessee was allotted shares of the company. Against payment of cash, the assessee got 1,875 equity shares and against his interest in the partnership firm, he got 53,486 equity shares. During the next few accounting years up to the financial year 1953-54, the assessee acquired 2,994 shares of the said company and sold 1,550 shares. According to the statement of the case, the purchases and sales of shares of the said company were few and far between up to the financial year 1953-54, but these became larger in number and at close intervals in the next few succeeding years. The chart would indicate the position in this respect.
