The Oriental Investment Co., Ltd vs The Commissioner Of Income-Tax, Bombay

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 153 of 1954

Decision Date: 22 May 1957

Coram: J.L. Kapur, Natwarlal H. Bhagwati, S.K. Das

The case was titled Oriental Investment Co., Ltd versus the Commissioner of Income‑Tax, Bombay and was decided on 22 May 1957 by the Supreme Court of India. The judgment was authored by Justice J.L. Kapur, who sat on the bench together with Justices Natwarlal H. Bhagwati and S.K. Das. The petitioner in the appeal was the Oriental Investment Co., Ltd and the respondent was the Commissioner of Income‑Tax, Bombay. The decision was recorded on 22/05/1957 and the bench composition was reiterated as Justice J.L. Kapur, Justice Natwarlal H. Bhagwati and Justice S.K. Das. The case is reported in the 1957 volume of the All India Reports at page 852 and also in the 1958 Supreme Court Reports at page 49. The matter concerned the provisions of the Income‑Tax Act relating to references to the High Court, specifically questions of law arising from the classification of an investment company as either a dealer or an investor, a classification described as a mixed question of law and fact, with the legal effect of the facts found constituting a question of law.

The headnote of the judgment explained that the appellant company had been incorporated as an investment company, and its memorandum of association expressly permitted it, among other things, to deal in investments and properties. For the assessment year under consideration, the appellant asserted that it should be treated as an investor rather than as a dealer, contending that it did not engage in any business of buying or selling shares, securities or other properties. The Income‑Tax Appellate Tribunal, however, held that the company’s memorandum of association together with the company’s own long‑standing assertions required it to be treated as a dealer in investments and properties, and therefore the income derived from the sale of shares and properties ought to be taxed as business profits. The appellant’s applications for a reference to the High Court were rejected on the ground that the Tribunal’s order raised no question of law. The Supreme Court held that determining whether the appellant’s activities 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—by which the appellant could be classified as a dealer or an investor—is a question of law. Consequently, the Court set aside the order of the High Court and remitted the matter to that Court, directing it to require the Tribunal to state a case. The Court also referred to earlier authorities, including the decision in Meenakshi Mills, Madurai v. Commissioner of Income Tax, Madras (1956) SCR 691, and a 1944 tax reporter citation. The judgment proceeded under the civil appellate jurisdiction as Civil Appeal No. 153 of 1954, arising by special leave from the Bombay High Court judgment dated 15 January 1952 in Income‑Tax Application No. 54 of 1951. Counsel for the appellant included R.J. Kolah, J.B. Dadachanji, S.N. Andley and Rameshwar Nath, while counsel for the respondent comprised C.K. Daphtary, the Solicitor‑General of India, G.N. Joshi and R.H. Dhebar. The Court noted that the factual background of the appeal involved the petitioner company’s incorporation on 29 July 1924 as an investment company, the objects of which were set out in the memorandum of association.

The objects of the petitioner company were set out in clause III of its memorandum of association and were further detailed in sub‑clauses 1, 2, 15 and 16 of that clause. The assessment years that the Court was asked to consider comprised the fiscal periods from 1943‑44 through 1948‑49, with the sole exception of the year 1947‑48. In the petition filed before the High Court of Bombay, the company described how it managed its assets during the relevant period. It stated that between 1 July 1925 and 30 June 1928 the company purchased shares worth Rs 1,86,47,789, the majority of which consisted of holdings in the Sassoon Group of Mills. In the financial year ended 30 June 1929 the company promoted two enterprises, namely Loyal Mills Ltd. and Hamilton Studios Ltd., and acquired all of their shares for a total consideration of Rs 10 ½ lakhs. The following year, 1930, the company purchased additional shares valued at Rs 1,33,930. No further purchases were made during the nine‑year interval from 1 July 1930 to 30 July 1939, except for a few shares of Loyal Mills Ltd. that were transferred to the company from retiring staff of E. D. Sassoon & Co. Ltd.

In the year ended 30 June 1940 a reconstruction scheme of Appollo Mills Ltd. was carried out; under that scheme the debentures held by the petitioner in Appollo Mills Ltd. were redeemed and the proceeds were reinvested in a fresh issue of shares issued by Appollo Mills Ltd. During the year ended 30 June 1941 the company made purchases amounting to Rs 2,794, of which Rs 2,000 represented shares of Loyal Mills Ltd. obtained from retiring staff. In the year ended 30 June 1943 the petitioner acquired, from David Mills Co. Ltd., shares in The Associated Building Co. valued at Rs 56,700. After that acquisition the company made no further purchases until the year ended 30 June 1946, when it bought shares worth Rs 34,954. The petition further set out the sales made by the company, as recorded in paragraph 3(b). It noted that, apart from a modest sale in the year ended 30 June 1929 amounting to Rs 1,29,333, there were no appreciable sales of shares between 29 July 1924 and 30 June 1942. The 1929 sale comprised shares of Loyal Mills Ltd. valued at Rs 45,000, which were sold to staff members, and sterling‑investment shares valued at Rs 83,833 that were transferred to the company’s creditors as part‑payment of a loan taken in the year ended 30 June 1931. Additionally, shares worth Rs 7,48,356 were handed over to creditors in full settlement of a loan extended to the company. From the year ended 30 June 1943, E. D. Sassoon & Co. Ltd. began relinquishing the managing agencies of its various mills, and the shares held by the petitioner in the Sassoon Group of Mills were subsequently transferred to the purchasers of those mill agencies.

In the course of the proceedings, it was recorded that a group of mills had been transferred to the purchasers of the respective mill agencies, a fact that illustrated the history of how shares had been acquired, disposed of and the manner in which the various transactions had been entered into. The record further showed that before the year 1940 the assessee company had annually asserted that it should be treated as a dealer in investments and properties. That claim had been consistently rejected, and up to the assessment year 1939‑40 the company had consequently been assessed on the basis that it was an investor. However, for the assessment year 1940‑41 and the two subsequent years, namely 1941‑42 and 1942‑43, the Revenue Department accepted the company’s pleading and treated it as a dealer in shares, securities and immovable properties, and the assessments for those years were made accordingly. The company prepared its return for each of those years, including the assessment year 1943‑44, on the premise that it was a dealer. After filing the return for the year 1943‑44, the company withdrew that return and, on 7 March 1944, lodged a revised return in which it contended that it was not a dealer but only an investor. Together with the revised return, the company submitted a letter dated 6 March 1944 stating, in part, that the original return filed with the company’s letter of 25 May 1943 had been prepared in conformity with the ruling of the Income‑tax Officer in the 1940‑41 assessment that the company was to be assessed as a dealer in investments. The letter further explained that since that return had been filed, the Central Board of Revenue had decided that the company was an investment‑holding company and that, consequently, an amended return under Section 22(1) of the Indian Income‑tax Act was being filed for the assessment of 1943‑44, because the company could not maintain one status for Excess Profits Tax and another for Income‑tax. The company also pleaded that it had never carried on any business of buying or selling shares, securities or properties and therefore, in view of the order of the Central Board of Revenue made under section 26(1) of the Excess Profits Tax Act, it should be assessed for income‑tax purposes as an investor and not as a dealer. The Income‑tax Officer rejected this plea, holding that the investments constituted the stock‑in‑trade of the business that the company had carried on during the previous year. The company appealed this decision to the Appellate Assistant Commissioner, whose order dismissed the appeal and upheld the officer’s view. The company then appealed to the Income‑tax Appellate Tribunal in Bombay, raising the same contentions, but the Tribunal also repelled them. The Tribunal observed that the company had consistently maintained in prior years that it was a dealer in investments and properties, and therefore it was difficult to understand why the company now sought to alter that position and desired the Income‑tax Officer to treat it as if it were not dealing in shares, securities and immovable properties.

The Tribunal observed that the company was not mistaken when it described itself as a dealer in investments during the earlier years because it consistently incurred losses at that time. It further noted that the present argument was advanced only after the company began to generate substantial profits. The Tribunal stated that, based on the company’s memorandum of association and the continual assertions it had made in the past, the assessee was indisputably a “dealer in investments and properties.” Consequently, the income derived from the sale of such investments and properties had correctly been characterized by the Income‑tax Officer as business profits subject to tax under the ordinary provisions of the Income‑tax Act. The Tribunal identified two principal reasons for deciding against the assessee. First, the assessee had shifted its claim between being a dealer and an investor depending on whether it incurred losses or earned profits. Second, because the objects specified in the memorandum of association and the company’s earlier self‑identification as a dealer were clear, the tribunal concluded that the assessee could not now be regarded as an investor. In its view, the consistent pattern of dealing in investments and the unabated claim of dealer status left no room for the company to be treated as a mere investor for tax purposes.

The company subsequently filed an application under section 66(1) of the Indian Income‑tax Act, requesting that the Appellate Tribunal refer two specific questions to the High Court for opinion. The first question sought to determine whether, based on the facts and circumstances of the case, the assessee could rightfully be characterized as a dealer in investments and properties. The second question asked whether the profits and losses arising from the sale of shares, securities and immoveable properties by the assessee should be taxed as business profits. The Tribunal rejected this prayer, holding that no question of law arose from its own order, and therefore it could not refer the matter to the High Court. In its reasoning, the Tribunal explained that its decision was not based solely on the memorandum of association granting the company power to deal in investments and properties, but on the finding that the company had continuously dealt in such investments and had always asserted that it was a dealer. The Tribunal’s statement on this point was broader than what it had expressed in its earlier appellate order. Following this rejection, the company made another application under section 66(2) of the Act, seeking that the Tribunal state the case and refer it to the High Court; this application was also dismissed. The company thereafter obtained special leave to appeal to this Court. Counsel for the company argued that genuine questions of law did arise from the Tribunal’s order because the Tribunal had ignored documentary evidence, relied on irrelevant matters, failed to consider crucial facts, and had incorrectly assumed that the petitioner was a dealer from the outset, contrary to the documents produced. Section 66(1) of the Income‑tax Act, hereinafter referred to as the Act, provides that any assessee may require the Appellate Tribunal to refer any question of law arising from its appellate order to the High Court.

The Court explained that when a question of law arises from an appellate order, the Appellate Tribunal is statutorily required to prepare a statement of the case and forward that legal question to the High Court. However, this duty could be exercised only if a genuine question of law was identified in the Tribunal’s order. If the Tribunal declined to prepare the statement on the ground that no legal question existed, the assessee retained the right to approach the High Court and ask it to compel the Tribunal to draft a case and refer it. In every instance, the decisive factor was whether a question of law could be discerned from the order in question.

The Court noted that distinguishing between a question of law and a question of fact is often difficult and that the precise demarcation has generated numerous judicial decisions. To illustrate the principle, the Court cited the decision in Stanley v. Gramophone and Typewriter, Limited(1), where the Master of the Rolls observed that a court may not overturn a Commissioner’s finding of fact unless there is no evidential basis for that finding. Conversely, when Commissioners set out the evidence before them and then concluded that certain legal results follow, the court is permitted to examine whether the evidence justifies the Commissioners’ conclusions. Hamilton J., in The American Thread Co. v. Joyce(2), interpreted this observation to mean that by presenting the material underlying their findings, the Commissioners invited judicial review of whether a reasonable inference could be drawn from that material. The House of Lords, on appeal, reaffirmed that courts have no jurisdiction to disturb factual conclusions except to assess whether the factual findings were supported by evidence and whether proper legal principles were applied. Lord Clerk, in Californian Copper Syndicate v. Harris(3), formulated a test to determine the nature of a gain, asking whether the gain represented merely an enhancement of value upon realizing a security or whether it constituted a gain derived from a business operation carried out for profit‑making. In that case, the memorandum of association and the company’s actual conduct indicated a highly speculative business, and the Court considered the pattern of share dealings as further evidence of such a profit‑making scheme.

In this case the Court observed that the conversion of investment into account was not a mere incidental activity but formed an essential part of the company's operations, and that speculation was expressly included among the means by which the company pursued its business. Accordingly, the Court concluded that the company was indeed carrying on a business. The Court then referred to the authority of the Lord President in the Scottish case of Cayzer, Irvine & Co., Ltd. v. Commissioners of Inland Revenue, where the grounds for judicial interference with the Commissioner’s findings were set out. The Lord President had stated that the Court possessed jurisdiction to consider the legal question of whether the majority of the Commissioners were justified, on the basis of the evidence, in reaching the conclusions they had reached. He further noted that, at the very least, this Court could review a factual finding in a Stated Case on the ground that no evidence existed to support it.

Next, the Court cited Lord Parker’s observation in Farmer v. Trustees of the Late William Cotton. Lord Parker had remarked on the difficulty of separating questions of fact from questions of law and had observed that when all material facts were fully established and the only remaining issue was whether those facts brought the case within the proper construction of a statutory provision, the remaining question was purely one of law. However, the Court pointed out that this statement had been substantially qualified in Inland Revenue Commissioners v. Lysaght, where it was held that if the issue before the Court could be described as a “question of degree,” the conclusion necessarily involved a question of fact.

The Court then turned to the case of Commissioners of Inland Revenue v. The Korean Syndicate, Ltd. In that case a syndicate had been registered with the purpose of acquiring and working concessions, turning them to account, and investing or dealing with monies that were not immediately required. The syndicate had obtained part of a concession right in Korea and, under an arrangement described as a “lease,” had assigned that lease to a development company in consideration for payments termed “royalties,” which were in reality percentages of the profits earned by the assignee company. Certain monies received from the sale of shares that the syndicate had obtained in exchange for shares originally acquired in a mining company were deposited in a bank. During the relevant period the company’s activities were limited to receiving bank interest and royalties and distributing those amounts among its shareholders as dividends. The question for determination was whether the syndicate was carrying on a business and therefore liable to the excess profits duty. From the facts the Court concluded that the syndicate was indeed carrying on a business.

Lord Atkinson, sitting as a judge, remarked at page 204 of the report that the mere fact of incorporation did not automatically imply that a company was carrying on a business. He noted that the memorandum of incorporation showed only that the company was formed for a particular purpose, but when the surrounding circumstances and the facts of the case were taken into account, it was concluded that the company was carrying on a business.

The Court affirmed that the syndicate was indeed carrying on a business. It then referred to the decision in Great Western Railway Company v. Bater, where the issue for determination was whether a clerk occupied a public office that fell within Schedule E. The Court noted that the decision in that case held that findings of pure fact made by the Commissioners should not be disturbed unless it appeared that no evidence existed before them on which a reasonable person could base the conclusion reached. Lord Atkinson was quoted as saying: “What I have many times in this House protested against is the attempt to secure for a finding on a mixed question of law and fact the unassailability (1) (1921) 12 T.C. 181. (2) (1922) 8 T.C. 231, 244, which belongs only to a finding on questions of pure fact. This is sought to be effected by styling the finding on a mixed question of law and fact a finding of fact.” The Court further observed that, according to the dictum of Lord Wrenbury, the question before the Court was whether, based on the facts found and stated by the Commissioners, the clerk held the office within the meaning of the Act, a question described as one of law.

Subsequently, the Court examined the principles laid down in Lysaght v. The Commissioners of Inland Revenue, where the issue was whether the assessee was a resident and ordinarily resident in the United Kingdom for the year of assessment. Lord Buckmaster’s observation was reproduced: “The distinction between questions of fact and questions of law is difficult… It is, of course, true that if the circumstances found by the Commissioners in the Special Case are incapable of constituting residence their conclusion cannot be protected by saying that it is a conclusion of fact since there are no materials upon which that conclusion could depend. But if the incidents relating to visits in this country are of such nature that they might constitute residence, and their prolonged or repeated repetition would certainly produce that result, then the matter must be a matter of degree; and the determination of whether or not the degree extends so far as to make a man resident or ordinarily resident here is for the Commissioners and it is not for the Courts to say whether they would have reached the same conclusion.” The Court then turned to Jones v. Leeming, a case in which the respondent, together with three others, obtained an option to purchase a rubber estate in the Malay Peninsula, sold that estate and another at a profit, and was found by the Commissioners to have acquired the property solely for resale at a profit with no intention of holding it. The Court noted that the transaction was held not to be a trade or a source of income but rather an accretion to capital, and therefore not taxable under Case VI of Schedule D, citing (1) (1928) 13 T.C. 511, 533, 534 and (2) [1930] A.C. 415. Finally, the Court referred to the test articulated in Cameron v. Prendergast, which was the subject of the next discussion.

Viscount Maugham stated that any inference drawn by the Commissioners from facts that have been recorded is a matter of law and therefore may be challenged on appeal; the same principle applies to the interpretation of documents, and when the Commissioners set out evidence, the court is free to depart from their conclusion. In the case of Bomford v. Osborne, the farm in question operated as a single mixed enterprise, and the issue for determination was whether the tax assessment could be divided so that one portion was treated as a farm and the other as a nursery. Viscount Simon articulated the test, observing that although Commissioners often prove or admit a series of facts and may deduce further conclusions that are purely factual, the legal question is whether the proven facts provide sufficient evidence to support the Commissioners’ conclusions. The court also held that this type of issue constitutes a mixed question of law and fact. Du Parcq J., referring to J. H. Bean v. Doncaster Amalgamated Collieries Ltd., set out the test for deciding whether a question is one of fact or of law, explaining that if the Commissioners, having ascertained the relevant facts and posed the correct question to themselves, fail to reach the proper answer, they have erred in law. He added that when an inference drawn from facts does not logically follow, there is no evidential support for it, and reaching a conclusion without such support amounts to a legal error. (1) [1940] 2 All E.R. 35, 40. (3) [1944] 2 All E.R. 279, 284. (2) [1941] 2 All E.R. 426, 430. In Edward v. Bairstow, the respondent entered into a joint venture to acquire a spinning plant with the intention of quickly reselling it for profit. The General Commissioners concluded that the venture was not of the nature of trade, but the court held that the established facts inevitably led to the conclusion that the transaction was indeed a venture of the nature of trade, rendering the Commissioners’ contrary inference erroneous. Lord Simonds observed that characterising a transaction as an adventure in the nature of trade involves identifying its distinguishing characteristics, a task that is a question of law, not fact. Lord Radcliffe further emphasized that it is a legal question to determine the meaning of the Income Tax Act expressions “trade, manufacture, adventure or concern in the nature of trade” and what constitutes “profits or gains” arising from such activities, noting that the statute imposes a charge of tax and that its interpretation rests with the courts.

The Court observed that the provision imposed a tax and that it was the role of the judiciary to interpret its meaning, taking into account the context in which the provision appeared and the principles that courts apply to the concept of income. The Court then set out the test at page 57, stating that when a matter comes before a court, the court must examine the determination with reference to its knowledge of the relevant law. If the material before the court contains, on its face, a point of law that is wrong and that influences the determination, the decision is plainly erroneous in law. However, even when no such obvious legal mistake is present, the court may still find that the facts as established are such that no reasonable judge, correctly instructed on the applicable law, could have reached the conclusion that is being appealed. The Court cited the dicta of Warrington L.J. in Cooper v. Stubbs (2), which held that court intervention is appropriate only when the decision‑makers have reached a conclusion without any evidence that should support it, that is, when the evidence would not allow a reasonable person to arrive at that conclusion, or when they have erred in law. The Court also referred to observations of Atkin L.J., which were endorsed by Lord Radcliffe at pages 56 and 57. A review of those authorities showed that, although early English cases gave a broad definition of what constitutes a question of law, the House of Lords eventually held that a “matter of degree” is a question of fact. Moreover, it was decided that a finding by the Commissioners that rests on a misapprehension of law or on a lack of evidential support is a question of law. The Privy Council, in Commissioner of Income‑tax v. Laxminarain Badridas (1), stated that no question of law was involved and that a pure factual question cannot be transformed into a legal question by asking whether the officer reached a correct legal conclusion on that fact. Bose J. in Seth Suwallah Chhogalal v. Commissioner of Income‑tax (2) articulated the test that a fact remains a fact regardless of the evidence establishing it, and that a legal question arises only when it is alleged that there is no material on which a conclusion can be based or that the material is insufficient. The Court explained that “sufficiency of evidence” means whether the tax authority regarded the existence of a fact as so probable that a prudent person, under the circumstances, ought to act on the assumption that it exists. Finally, the Court noted that the issue in Dhirajlal Girdharilal v. Commissioner of Income‑tax, Bombay (3) was whether a Hindu undivided family was carrying on a business in shares, citing the authorities [1937] 5 I.T.R. I70, 179; [1954] 26 I.T.R. 736; and [1949] 17 I.T.R. 269, 277.

In this case the Court explained that the matter before the Appellate Tribunal was essentially a question of fact. However, if the Tribunal reached its conclusion by relying on material that was irrelevant to the enquiry, or on material that was partly relevant and partly irrelevant, or if the Tribunal’s decision was based partly on conjecture, then a legal issue would arise. Such a legal issue would be subject to review by the court, and any finding of the Tribunal that was reached on those improper grounds would be invalidated. The authorities cited by the Court indicated that an inference drawn from facts is treated as a question of fact or as a question of law depending on whether the point to be determined is a pure fact or a mixed question involving both law and fact. Moreover, a finding of fact that is unsupported by evidence, or that is based on a mixture of relevant and irrelevant considerations, cannot be regarded as conclusive. The Court further referred to its earlier decision in Meenakshi Mills, Madurai v. Commissioner of Income‑tax, Madras, where the issue was whether profits shown in the name of certain intermediaries were actually earned by the assessee or by those intermediaries. After examining the course of the transactions, the extent of the dealings, the position of the intermediaries and all the evidence, the Tribunal concluded that the intermediaries were merely dummies created by the appellant to hide the true amount of profit, that the sales in their names were fictitious, and that the profits were in reality earned by the assessee. The test articulated by the Court can be found in several passages of that judgment. At page 701, Justice Venkatarama Ayyar observed that questions of fact are not open to judicial review unless they lack any evidential support or are perverse. At page 706, the Court noted that between the distinct domains of questions of fact and questions of law there exists a substantial overlap where both types of questions intermix, creating what may be described as enclaves within each other. The questions that arise in this overlapping area are identified as mixed questions of law and fact. Such questions first require the ascertainment of facts on the basis of the evidence presented, and then require a determination of the parties’ rights by applying the appropriate legal principles to those facts. The law was summarized at page 720 as follows: first, when the point for determination is a pure question of law, such as the construction of a statute or a document of title, the Tribunal’s decision may be referred to the court under section 66(1). Second, when the point for determination is a mixed question of law and fact, the Tribunal’s finding on the factual issue is final, but its decision on the legal effect of that finding is a question of law that can be reviewed by the court. Third, a finding on a question of fact is open to attack under section 66(1) as erroneous in law if it is unsupported by evidence or is perverse.

In the present case the Appellate Tribunal, in its appellate order, had enumerated the amounts of profit earned by the assessee company for the assessment years 1943‑44 through 1948‑49. The Tribunal also observed that the assessee had adopted inconsistent positions, initially representing itself as a dealer and later as an investor, and it attributed this shift to the fact that the company incurred losses in the earlier years and only began to make profits when it advanced the claim of being an investor. The Tribunal based its findings on two fundamental facts: first, the objects specified in the memorandum of association of the assessee company; and second, the earlier declaration by the assessee that it was a dealer in investments rather than merely an investor. The counsel for the assessee relied upon the decision in Kishan Prasad and Co., Ltd. v. Commissioner of Income‑tax, Punjab, where the Supreme Court held that the question of whether a transaction falls within the powers of a company does not affect the character of the transaction or the determination of whether the resulting profits constitute capital or revenue income. Accordingly, the counsel argued that the Tribunal had considered an irrelevant circumstance. Conversely, the counsel for the Revenue referred to the judgment in Lakshminarayan Ram Gopal v. Government of Hyderabad, which stated that the objects of an incorporated company are not conclusive but are relevant for ascertaining the nature and scope of its activities. The Revenue counsel emphasized that merely having the power to deal in share investments in the objects does not automatically render the company a dealer in shares; however, other proved circumstances may be relevant in determining the assessee’s activities. The Court noted that the relevance of such additional material would depend on the other evidence relied upon by the assessee to support its contention that it was only an investor and not a dealer. The Court further explained that identifying the characteristics of a business dealing in shares versus an investor constitutes a mixed question of fact and law. The legal effect of the Tribunal’s factual findings, and whether those findings term the assessee a dealer or an investor, represented a question of law. Consequently, the Court identified the questions of law emerging from the Tribunal’s order, beginning with whether the Tribunal’s factual findings could be attacked under section 66(1) as erroneous in law if unsupported by evidence or if they were perverse, and whether the inference drawn from basic facts altered the character of those findings.

In this appeal the Court focused on two specific matters. First, it asked whether any documentary material placed on record supported the finding of the Income‑Tax Officer that the assessee company had been a dealer in shares, securities and immovable property during the assessment year that was before the Tribunal. Second, it considered whether the profits and losses that resulted from the sale of those shares, securities and immovable properties could be assessed as business profits for the purpose of tax. After examining the submissions and the material before it, the Court decided to allow the appeal. It set aside the order that had been passed by the High Court and directed that the matter be remitted to the High Court. The High Court was instructed to require the Tribunal to state a case on the two questions identified above, so that the factual findings could be reconsidered in light of those legal issues. The Court further ordered that the appellant would be awarded costs incurred in this Court as well as costs already incurred in the High Court for the proceedings that had taken place up to that stage. Any further costs were left to the discretion of the High Court. Consequently, the appeal was allowed, the case was remitted, and the judgment referenced the authorities (1) [1955] I.S.C.R. 393 and [1954] 25 I.T.R. 449.