Kotval, C.J.
1. The following five question have been referred for our decision in this reference made by the Income-tax Appellate Tribunal. Bombay Bench 'A' under section 66(1) of the Income-tax Act,
'1. Whether, on the facts and in the circumstances of the case, the assessee-company is entitled to claim exemption under section 25(3) of the Act
2. Whether, on the facts and in the circumstance of the case, the loss suffered on the sale of property in Shanghi was allowable as a revenue deduction out of profits of the year
3. Whether, on the facts and in the circumstances of the case, the assessee-company is entitled to claim a sum of Rs. 3,70,943, the amount transferred to the superannuation fund, against income of the year
4. Whether, on the facts and in the circumstances of the case, assessee-company is entitled to claim a sum of Rs. 2,92,672, transferred after the liquidation of the company, as against the profits of the company
5. Whether, on the facts and in the circumstances of the case, the assessee-company is entitled to set off the loss of Rs. 3,28,825 suffered in 1948 as against profit of 1949-50 ?'
2. The question No. 1 is the question which covers the entire assessment of the assessee-company and if it is decided in favour of the assessee, then counsel urged that the other questions would be more or less academic. We shall state the particular facts relating to each question separately when we turn to consider those questions, but the general statement of facts will be sufficiently clear when we state the facts upon which question No. 1 falls to be determined.
3. For several years prior to the year 1920, a partnership firm was carrying on business in India in the name and style of E. D. Season & Co. This firm consisted of several members of the Season family and one Mr. Raymond. The firm was carrying on business throughout the world and particularly at Bombay, Calcutta, Karachi, Hongkong, Shanghai, London, Manchester, Basra and at places in the Persian Gulf. The business was that of bankers, commission agents, agents of joint stock companies and as dealers in shares in securities and foreign exchange.
4. In the year 1918 the firm was assessed to income-tax of Rs. 96,000. In that year it had an income from dividends of Rs. 2,12,708-15-0 and it had shown in its balance-sheet of that year (exhibit G-2) profits on shares and securities at Rs. 51,383-14-0 and a net profit of Rs. 30,88,320. These figures are to be found in the balance-sheet for the year ended 31st December, 1918 (exhibit G-2). In the accounting year 1919, the firm incurred losses and, therefore, did not pay any income-tax. However, its profit and loss account for that year discloses that it showed that it had earned income from dividends in India of Rs. 47,690 and income from dividends in England of Rs. 1,39,527-15-7. In that year its profit from the purchase and sale of shares and securities is shown at Rs. 1,33,961-6-8. It had, however, sustained a huge loss on the London Exchange and due to fall in the market value of London investments in that year there was a loss. It may be noted here that under the Act of 1918, there was no provision for the carrying forward of loss and, therefore, the loss which the firm sustained in the year 1919 was borne by the firm and no tax was levied on the firm.
5. On 4th December, 1920, E. D. Sassoon & Co. Ltd., the assessee-company was incorporated. One of its principal objects as indicated in its memorandum of association was to acquire and take over as a going concern the business carried on by the firm E. D. Sassoon & Co. It appears that after the incorporation of the assessee-company the assets were taken over in anticipation of formal documents being executed and it was only on 30th June, 1921, that the formal agreement (annexure 'A') came to be executed. Thus, the assessee-company took over the business of the firm E. D. Sassoon & Co. and continued to do that business until the assessee-company was taken into liquidation on 28th December, 1948, on which date the official liquidator took charge of the assessee-company.
6. There is another company which figures in these proceedings and that is the Bombay Trust Corporation Ltd. This company was incorporated on the 8th of September, 1920, that is to say, about four months prior to the incorporation of the assessee-company. This company also carried on business in Bombay, among other things, in shares, securities and foreign exchange. The financial position of this company can be seen from the following figures :
7. The relevance of mentioning these facts about the Bombay Trust Corporation Ltd. here lies in this that the Tribunal has found or has rather suggested in paragraph 7 of its order that after the firm E. D Sassoon & Co. transferred its business to the assessee, E. D. Sassoon & Co., the shares and securities were really handed over to the Bombay Trust Corporation Ltd.
8. Pursuant to its memorandum of association and the agreement dated 30th June, 1921, between the firm and the assessee-company, the assessee-company took over the business of the firm and purchased the shares and securities worth Rs. 1,93,79,521-3-1 at market value as on 31st December, 1920. In the year of account 1920, the income from dividends of the firm is shown at Rs. 2,17,126-3-11 and income from interest on securities at Rs. 4,73,322-12-10. The firm in this year showed that its shares and securities had depreciated in value and had claimed that the depreciation was Rs. 9,26,730-5-8, but, as against this result of business in India, there was a considerable profit in the business outside India to the extent of Rs. 57,68,763. This was the last year in which the firm did business, for we have said, the assets of the firm were taken over by the company in January, 1921.
9. The position as it appeared after the firm was taken over in the books of the assessee at the end of the account year 1921, was as follows :
In the profit and loss account, the assessee showed the income from dividends (Indian : free if income-tax) at Rs. 6,403 and the dividend (English : income-tax deducted) at Rs. 2,07,440-3-4 and showed two other figure of appreciation as follows : Rs.Shares & Securities 6,55,895-14-0London Investment 3,20,812-08-7--------------Total 9,76,708-06-7
10. Thus, the two amounts together make up a total of Rs. 9,76,708-6-7. One of the points that had been urged before us on behalf of the department had been that this figure shows that the assessee-company held its shares and securities merely as investments and was not doing business in shares and securities in the account year 1921. On behalf of the assessee it has been urged that these figures of appreciation are nothing more than the profit made by the company. The total net profit in India in this at as shown in the profit and loss account was Rs. 12,85,462-14-7.
11. In the statement of the case, the facts pertaining to all the subsequent years have been mentioned. Upon the submissions of counsel it seems to us unnecessary to go into the detailed particulars pertaining to these years, because it is not in dispute that the business of this company from the account year 1922 onwards was the same until it went into liquidation on the 28th December, 1948.
12. Since the assessee-company ceased to do business in the accounting year 1948, it claimed relief in respect of the income, profits and gains which it had earned in that year under section 25(3) on the ground that its business was charged to income-tax under the Indian Income-tax Act, 1918, and had been discontinued. This claim of the assessee has been concurrently negatived by the tax authorities as well as the Tribunal. The Income-tax Officer in considering the claim held that the assessee's treatment of their profit or loss in dealing in shares have not been uniform and that it was only from 1938 onwards that they have been treated as regular dealer in shares and securities and, as their accounts indicate, only a portion of the shares and securities represent their stock-in-trade, the rest being treated as investments. The Income-tax Officer also emphasised that in the year 1921 the assessee has shown Rs. 9,76,708 as appreciation in the value of shares and securities but that amount was not offered for tax. On the other hand, in spite of the then examiner of accounts having pointed out that that amount was liable to be taxed in the hands of assessee, it was not so taxed because of 'the assessee's contention that it was an investor'. He held that on the basis of that finding 'the business of dealing in shares and securities of this company had not in the aggregate been charged with tax once in respect of every year's income and twice in respect of one year's income' which according to him was the principal condition to the grant of relief under section 25(3). The Income-tax Officer also held that the main activities of the company in the year of its discontinuance were managing agencies of various mills, financing, commission agency, import and export, selling agency, dealing in shares and securities and dealing in exchange and he compared them with the previous activities of the company and came to the conclusion that the assessee had been stopping one business and starting another at different times and the various business which the assessee carried on would not be considered as one business. He held that the only common business between in year 1921 and the year 1948 was the business of managing agency.
13. When the matter was taken in appeal, the Appellate Assistant Commissioner held that the dividends from shares received by the assessee should by considered as income under section 10, that is to say, business income, and he also held that the record showed that the firm was doing 'the shares dealing business during the account year ending December 31, 1920'. He further held that the firm was treated as a dealer in shares, and that if it could be established that tax was charged on the business in share-dealing under the Act of 1918, the assessee was clearly entitled to the benefit under section 25(3). He, however, came to the conclusion :
'In the present case, however, all evidence furnished clearly shows that the business discontinued during the year under appeal was not charged to tax under the Act of 1918. From the facts on record and those made available to me by the appellate, it is clear that tax was not charged under the Act 1918 on the income from share dealing either for the account years 1918, 1919 and 1920 or for the account year 1921. When his basic requirement for exemption under section 25(3) has not been established, the question of granting any relief under section 25(3) does not arise.'
14. A second appeal was preferred to the Tribunal and the Tribunal, after examining the material on record, gave findings which are summarized in paragraph 14 of the statement of the case as follows :
'(i) For the assessment year 1918, E. D. Sassoon & Co., a firm was assessed to tax under the Act of 1918;
(ii) For the year 1919, as there was hung loss no tax was charged;
(iii) In 1919, however, the said firm had included in the profit and loss account, profit and loss on securities and shares;
(iv) For the year 1920 there was hung profit and the shares and securities were transferred to the assessee-company of the then market value of the shares and securities;
(v) Over Rs. 9,00,000, of losses were claimed by the said firm as a result of revaluation and allowed by the income-tax authorities in the assessment of the said firm for the year 1920;
(vi) The said firm was benign held by the department to be a declare in shares and securities and the profit was brought to tax.
(vii) The applicant-company neither intended originally to do the business, nor took over the business of dealing in securities from the old firm.'
15. It will be noticed from the findings Nos. 2, 3, 4, and 5 summarized above that the Tribunal did not accept the finding of the Appellate Assistant Commissioner that it was clear that the tax was not charged under the Act of 1918, on the income from the share dealing for the account here 1919 and 1920. The Tribunal upheld the order of the tax authority on the short ground that the business that the firm was doing and at any rate in the year in which the assess-company took over from the firm was not the same business that the firm was doing and at any rate in the year in which the assessee-company took over, it 'neither intended originally to do the business nor took over the business if dealing in securities from the old firm,' this finding the Tribunal elaborated in paragraphs 6 and 8 of its order as follows :
'6. The assessee-company was assessed to tax for the first time is respect of the profits of the account year 1921. Appreciation on shares and securities was taken for account purpose, but was not brought to assessment on the ground that it was capital accretion. The assessment record shows that before the Income-tax Officer the assessee stated that he was holding securities for the new company to whom they had to be transferred on instruction from the London Office. The transfer is said to have been made in a subsequent at the book values which had been brought up by about 9 (nine) lakhs of rupees in 1921. We are satisfied that the assessee-company did not treat these shares and securities as its stock-in-trade in 1921 as they did in the past in the hands of the firm.....
8. In the past, profit from this source was being brought to taxation in the hands of the firm on the basis of the market value. In the year 1921, in spite of the fact that the market value had considerably increased, the appreciation was not brought to assessment in the bands of the assessee-company. This appreciation was neither brought to assessment when the shares and securities were transferred to B. T. C. Ltd. in 1922. We do not accept the assessee's contention that the business of shares dealings which was previously carried on by the partnership was continued by the assessee-company. If the assessee-company started this business in any of the later years, it is a different matter altogether. In our opinion, the appellant-company neither intended originally to do the business, nor took over the business of dealing in securities from the old firm. For a short time, it held the securities on behalf of a sister concern. We think that the income-tax authorities were right in not allowing the assessee the benefit under section 25(3) of the Income-tax Act.'
16. The contention of Mr. Kolah on behalf of the assessee has been that these findings of the Tribunal are not only entirely unsupported by any evidence but are contrary to such material as there is on record. Mr. Joshi, on the other hand, attempted to show that the material justified these findings. Alternatively, he also raised another contention based upon the findings in paragraph of 6 which we have just reproduced. His contention is as follows. In the first year after the assessee-company took over the business from the firm E. D. Sassoon & Co. the figure of Rs. 9,76,708-6-7 was shown in the profit and loss account as appreciation on shares and securities. We have already indicated above that this figures consisted of two items shown in the annexure '1-6' the profit and loss account for the year 1921 of Rs. 6,55,895-1-4-0 on account of shares and securities (appreciation) and of Rs 3,20,812-8-7 on account of London investments (appreciation). Mr. Joshi has argued that this amount came under the scrutiny of the examiner of accounts who made the report to the Income-tax Officer in connection with the assessee's assessment for the year 1922-23. That report is exhibit B dated 12th October, 1922, In that report in regard to the amount of Rs. 9,76,708-6-7, the examiner of accounts reported to the Income-tax Officer that the company was a habitual dealer in shares and securities and in the preceding year, i.e. 1920, it had been allowed a sum of Rs. 9,26,730-5-3 (the figure is wrongly printed as Rs. 7,26,730-5-3) as a set off against the profit of 1920, on the loss of shares and securities. Therefore, the appreciation shown in the year 1921 of Rs. 9,76,708-6-7 ought to have been taxed. Nevertheless, it was not so taxed because, as Mr. Joshi says, of the representation made by the assessee before the Income-tax Officer and in this respect Mr. Joshi relied upon the note of the then Income-tax Officer (also part of annexure 'B') made on the 23rd December, 1922, as follows :
'Attended reassessment submitted... Billimoria. Shares and securities Rs. 6,55,895 and Rs. 3,20,812 book entry. Securities being valued at... and appreciation or depreciation brought into the accounts. These securities are being taken over by the new company B. T. C. Ltd., Bombay. Show this on instructions from their London House only, and these items may therefore be disregarded for income-tax purposes.'
17. He also referred in this respect to an affidavit made on behalf of the assessee by one Mr. Hillel on the 18th November, 1958, before the Income-tax Appellate Tribunal, Bombay, in which he says similar representations had been made. He also points to certain entries in the accounts. Because of these representations, Mr. Joshi has urged that the Income-tax Officer in the very first year after the assessee-company took over treated the appreciation on shares and securities as being an appreciation on capital account and therefore not a business profit. Since that conclusion was reached upon the representation of the assessee-company and the assessee-company was enable to gain an advantage to that extent in so far as that amount escaped taxation, the assessee cannot today turn round and say that that amount shares and securities, the same business which the firm was doing. The material relied upon is the same that the Tribunal based its findings on in paragraphs 6 and 8 which we have quoted above.
18. The material upon which these contentions fall to be determined is thus as follows :
'1. the articles of association dated 4th December, 1921, of the assessee-company.
2. the agreement entered into between the firm E. D. Seasoon& Co. and the assessee-company on 30th June, 1921;
3. the two statements in annexure 'B' referred to above;
4. the profit and loss account and the balance-sheet for the account year 1921 (annexure 'I-6').
5. the statement prepared by the assessee and filed before the Tribunal (exhibit B) showing the statement of purchases and sales of shares and securities in 1921, by the assessee-company;
6. another statement (annexure 'I-51') also filed before the Tribunal showing how the figure of appreciation of Rs. 9,76,708-6-7 was arrived at as on 31st December, 1921, and giving the figures of profit and loss for the subsequent years; and
7. the orders of the authorities in past years'.
19. It is not in dispute that the firm whose business was taken over by the assessee-company was, amount other things, carrying on business as bankers and as dealers in shares and securities and foreign exchange. When the assessee-company was incorporated, its primary purpose was to 'acquire and take over as a going concern the business now carried on... and all or any of the assets and liabilities of the proprietors of that business in connection therewith' as sub-clues (1) of clause III of the memorandum of association of the assessee will show. Another purpose stated is 'to enter into the agreement referred to in clause 4 of the company's articles of association and to carry the same into effect with or without modification.' Clause 4 of the company's articles of association says :
'Business
4. The company shall forthwith enter into the agreement mentioned in clause 3 of the memorandum of association with such modifications (if any) as the directors shall approve.'
20. Sub-clause (2) of clause III of the memorandum of association mentions as one of the object 'to carry on business as bankers... and to carry on any other business (except the issuing of policies of assurance on human life)'. In sub-clause (9) one of the object is mentioned as 'to acquire stock, bonds, obligation and securities issued or guaranteed by any company...' whether in India or elsewhere. Sub-clause (13) states the object to be to invest and deal with the moneys of the company not immediately required in such manner as may from time to time be determined. Pursuant to these object and these powers the company took over the business of the firm E. D. Sasson & Co. and on 30th June 1921, a formal agreement relating to that taking over was executed (annexure 'A'). In the agreement itself it is recited that the company has been formed with a view amongst other things to the acquisition of the said business of the vendors as a going concern and all or any of the assets and liabilities of the vendor in connection with the said business. In the operative part of the agreement, clause 1(a) refers to the goodwill of the business with all appurtenant rights being transferred and by sub-clause (c) are transferred 'investments of all kinds such as securities of the Government of India and the local Government and of public bodies, bonds debentures, shares in the capital of joint stock companies and standing in the name of the vendor's firm or the individual members thereof...' Clause 2 of the agreement provides for the valuation of the shares and securities on taking over and it is importance that the valuation is stated to be 'the market price of the several securities on the 31st day of December, 1920.' By clause 4 the purchase was to be completed on or before the 31st December, 1921, and by clause 5 the assessee-company is entitled to all the books of account of the firm and all vouchers, documents and papers in relation to the business.
21. These were documents disclosing the intention of the assessee in taking over the business of the firm E. D. Seasoon & Co. and they were documents which were entered into at time when no one had any idea of the questions that have now arisen in these proceedings. They clearly show that the entire business as it was being carried on by firm was to be bodily taken over by the assessee-company and the importance words are throughout emphasised both in the memorandum of association, the articles of association and the agreement that the business was to be taken over 'as a going concern'. It does not appear from the order of the Tribunal that the effect of these crucial documents was in any way considered when the Tribunal passed its order, nor is the effect of these documents referred to in the orders of the tax authorities. It is also, in our opinion, important that not only was the business as a going concern taken over, but also the good will of the firm E. D. Seasoon& Co.
22. Then we turn to the position as it appears upon the accounts and the other documents. It is not in dispute that in the account year 1920, the firm had shown 'depreciation' in shares and securities to the extent of Rs. 9,26,730. This amount is shown in the profit and loss account on the basis that it is a loss sustained on shares and securities. At the same time it had shown income from dividends of Rs. 2,17,126-3-11 and interest on securities of Rs. 4,73,322-12-10. In that year, there was a huge profit of over Rs. 57. lakhs because of the profits made in the business outside India. What is of importance to note is that even in that year the firm had itself shown the loss which it had sustained in India in its business of buying and selling shares and securities as a 'depreciation'. The amount is shown in the profit and loss account of the firm for the account year ending 31st December, 1920, and which has been taken into account in arriving at the figure of net profit. The business of the firm was taken over in January, 1921, and it is not surprising, therefore, to find the company following the same mode of account. In the profit and loss account for the year 1921, they have shown two figures the total sum of which is Rs. 9,76,706 as appreciation of shares and securities and appreciation of London investments. This figure is the figure, which we have said, was specially noticed by the examiner of accounts in his report dated 12th October, 1922, and by the Income-tax Officer when he passed his report dated 22nd December, 1922 we will come to that order a little later and to the alleged representations on the basis of which it is said that the order was passed. But what has to be noticed is that the same mode of mentioning the profit or the loss is followed by the company as was followed by the firm, by mentioning it as appreciation or depreciation. In any case, the figures of appreciation and depreciation have gone into the profit and loss account and have been taken into account in arriving at the total figure of the net profit.
23. In an explanatory chart which was filed before the Tribunal there have been shown, apart from the figures of shares purchased and sold, considerable bonds, debentures and other securities of large amounts taken over or purchased by the assessee-company in the first year of its existence after taking over and, whatever may be said as to the shares, it is clear that at last so far as the securities are concerned, the same business which the firm was carrying on was carried on by the assessee-company. For example, in that year the company purchased in the open market Rs. 1,10,24,750 worth of 6% bonds 1926, and held it throughout the year for it is shown as the closing stock as on 31st December 1921. The same is the case with the purchase of 6% bonds of 1931, of the amount of Rs. 42,64,000. At least upon these figures it is clear beyond doubt that the company continued to do the same business which the firm was doing, namely, of purchasing and selling securities.
24. As regards the shares, the figures mentioned in column 1 of the statement (Exhibits) are the figures of the shares taken over from the firm. To those figures were added the number of shares purchased in the market the value of which is shown in column 2. Some of these shares were sold in the account year 1921, to the B. T. C. Ltd. The other were sold in the market and the balance is shown as the closing stock. It does appear, however, as was urged by Mr. Joshi, that most of the shares were in the year 1922 transferred to one of the two accounts. They were either sold to the B. T. C, Ltd. in the year 1922, or were transferred to what has been called 'the qualification share account'. Mr. Joshi has, however, urged that even if this statement is taken into account, the purchases of shares were not with a view to doing business but were merely purchased for transference to the B. T. C. Ltd. or because one or more of the directors of the company wanted to acquire qualification to be a director in some other company. We will presently come to consider separately the question of the transactions with the B. T. C. Ltd. but so far as some of these shares have been transferred to the qualification share account (annexure 'I-14') we do not think that the mere fact that these shares are kept apart in order to sustain the qualifications difficulties of one or more of its directors, it must necessarily follow that the company did not hold it as its stock-in-trade and held it only on capital account. In fact, the appreciation or depreciation on these shares has itself been shown by the company as a profit or loss in each year and if the appreciation is shown as a profit it is clear from the accounts that the shares were not treated as being held on capital account.
25. Turning to that part of the shares which were transferred to the Bombay Trust Corporation Ltd. not only does the statement, exhibit B, show that the entire transfer to the Bombay Trust Corporation Ltd. of the shares took place in the year of account 1922, but the figures relating to the Bombay Trust Corporation Ltd. as given in the statement of the case itself, show that that part of the shares transferred by the assessee-company went to contribute to the sudden rise in their stock-in-trade in the account year 1922. At the end of 1921, the BOMBAY Trust Corporation held shares of the value of Rs. 4,31,32,212, but at the end of December, 1922, the amount had risen to Rs. 10,42,78,511. The accounts also show that all the transfers were in the year 1922. The Bombay Trust Corporation Ltd. also was a company no doubt commenced about four months before the incorporation of the assessee-company, but with the object of dealing in shares, securities and foreign exchange, But beyond these circumstances, there is nothing to indicate that there was any other connection between the assessee-company and the Bombay Trust Corporation Ltd. nor is there anything to show that the assesses-company had purchased the shares from the firm with a view to transfer them to the Bombay Trust Corporation Ltd.
26. The Tribunal in paragraph 7 of its order has not indicated how the sale of the shares and securities to the Bombay Trust Corporation Ltd. in 1922, shows that the assessee had a pre-existing intention to do so when it took over the business of the firm E. D. Seasoon& Co. nor has the Tribunal said that the transfer of the shares and securities to the Bombay Trust Corporation Ltd. in 1922, supported the conclusion that in the first year of assessment the assessee did not hold the shares and securities as its stock-in-trade, thought that seems to be the suggestion. We are unable to see how the subsequent transfer of the shares and securities to the Bombay Trust Corporation Ltd. in 1922, can have anything to do with the intention of the assessee-company when they took over the business of the firm E. D. Seasoon& Co. in January 1921.
27. The question of the transfer of the shares and securities to the Bombay Trust Corporation Ltd. being put out of consideration, it is clear upon the other circumstances that the assessee-company continued to do the business and the same business that the firm did, even after the taking over in December 1920/January, 1921. The whole trading of the assessee-company after its formation shows that it was doing business in shares and securities Its issued and subscribed capital as shown in the balance-sheet for the year ending 31st December, 1921, was Rs. 1 core but in the same balance-sheet its book debts are shown at Rs. 12,66,29-049-4-11, that is to say, several times its authorised capital. In 1921 itself it made large profits on shares and securities in the market. This is clear from the statment, exhibit B. The total purchases in the market of shares and securities exceeded Rs. 4 cores and more than half of it was of shares. Even its activities on the London Stock Exchange show that its sales exceeded the stock which it held at the commencement of the year 1921. Its stock taken over from the firm was of Rs. 34,72,140-13-9 whereas the sales to H. T. C. Ltd. (Hongkong Trust Corporation) alone in 1921, were of the order of Rs. 40,40,272 and add. This is clear from the Tubular, statement, exhibit I-51 and exhibit B. In the assessment of the year 1921, the authorities treated the assessee as a dealer in shares. This is clear from the note of the examiner of accounts(annexure 'B'). Wherein the company is described as 'a habitual dealer in shares as securities'. The Income-tax Officer had not said anything to the contrary in his notes but he held that the profit was on capital account. But even the tax authorities did not treat the assessee as doing anything except business in shares and securities.
28. Mr. Kolah further referred to a finding of the Appellate Assistant Commissioner given, not in connection with the point which we are discussing but in the connection with another item of loss on property in Shanghai sold by the assessee-company in the year of account, where the Appellate Assistant Commissioner has observed :
'Even since its incorporation on December 4, 1920, as a private limited company and till it went into liquidation on December 29, 1948, the assessee's business activities consisted of.... (v) Dealing in shares and securities.'
29. No doubt these remark of the Appellate Assistant Commissioner is fatal to the contention which the department has advanced, but it must be said for the Appellate Assistant Commissioner that is remark was not made by him while disusing the question whether the business in the hands of the assessee continued after it took over the business from the firm, but in connection with an isolated item connected with a loss arising out of property sold. It was a causal observation. It only shown that the Income-tax Officer cannot be too careful in making statements of this kind.
30. Both in the year 1920 and 1921, the assessee-company was taxed on the profits of shares and securities as will appear from the assessment order for the assessment years 1921-22 and 1922-23, dated 10th January, 1923. The provisional assessment was confirmed and the final tax for 1921-22, levied was Rs. 1,733-13-0. Similarly the tax due for 1922-23, was shown for the same amount at Rs. 1,733-13-0. The tax for the two years thus amounted to Rs. 3,467-10-0 and the company on its part debited the amount in its profit and loss account for the year ending 31st December, 1922, (annexure 'I-15') to 'super-tax account'. All these facts and circumstances, in our opinion, show beyond any doubt that the company was trading in shares and securities in the year 1921, immediately after it took were from the firm E. D. Sassoon & Co. In fact the company was incorporated with that object and that object was its principal object as will appear from the memorandum of association and the articles of association. It took over large quantities of shares and securities from the firm and was earning in the first year of its existence large dividends from those shares and securities and we have shown also a small profit. It may be that the profit was not as large as it was in the subsequent year or when the firm was resign in the last year of its existence, that is to say, in 1920, but the fact of transfer has itself something to do with the difference in the figure of profit or the fact of dealing in the vast quantity of shares and securities was not easily effective. In any case, the circumstance, which we have set forth above, are, in our opinion, clinching and can point to no other conclusion but that the trading or business in shares and securities continued as before. It was one and the same business before and after the take-over.
31. As to how the holding of shares and securities by a person who is carrying on a business has to be dealt with, was indicated in a Division Bench decision of this court in Commissioner of Income-tax v. Ahmuty & Co. Ltd. It was here held that an income can only be property included under the head 'Other source' covered by section 12 of the Indian Income-tax Act if it cannot be legitimately included in any of the preceding heads indicated in section 6. In that case the assessee was a company dealing in shares which constituted its stock-in-trade and in the years 1950-51 and 1951-52, it had suffered losses which had been allowed to be carried forward. After setting off the loss against the dividend income, there had remained a balance of the dividend income, but the tax authorities did not allow the company to set of the loss brought forward from the year 1950-51, against the dividend income on the ground that it was not profit from the same business. It was held that the dividend income is respect of the shares held by the assessee as stock-in-trade was income from business chargeable under section 10 and that the income-tax authorities could not compile the assessee to show that income as under section 12. This distinction between holding of shares as mere investment and holding them as the stock-in-trade of business was further adverted to by the Supreme Court in their decision in Bengal and Assam Investors Ltd. v. Commissioner of Income-tax. Of course, that case it was held upon the facts and circumstance there appearing that the shares were held by that company only as investment. But so far as the facts are concerned, that case is wholly distinguishable. The Supreme Court, however, accepted the principle in this case of Ahmuty & Co.
32. The exemption granted by section 25(3) is in the following words :
'Where any business, profession or vocation on which tax was at any time charged inter the provisions of the Indian Income-tax Act, 1918 (VII of 1918), is discontinued, then, unless there has been a succession by virtue of which the provisions of sub-section (4) have been rendered applicable no tax shall be payable in respect of the income, profits and gains of the period between the end of the previous year and the date of such discontinuance, and the assessee may further claim that the income, profits and gains of the previous year shall be deemed to have been the income, profits and gains of the period....'
33. In order, therefore, to be entitled to the exemption under sub-section (3), four requirements have to be fulfilled : (1) that there should be a business carried on which tax was charged under the provisions of the Indian Income-tax Act, 1918; (2) that that business should be discontinued in the year of account under the Act of 1922. Undoubtedly this suggests that is must be same business; (3) the condition that the business should have been charged to tax under the Act of 1918, is not limited to any particular year, but so long as it has at any time been charged, that is to say, so long as it has borne the incidence of taxation under the Act of 1918, the condition would be fulfilled; and (4) the case must not fall under sub-section (4) of section 25, that is to say, that it must not be a case of succession. Now, as to what is implied by the first condition, namely, by the use of the word 'business', was indicated in a recent decision of the Supreme Court in Commissioner of Income-tax v. Chugandas and Co., and the Supreme Court there held that the word 'business' in section 25(3) does not refer to that head of charge which is referred to in section 6(iv) read with section 10 but that it implied 'business' in a very general sense and included within it all the heads of charge mentioned in section 6. The Supreme Court first of all pointed out (see page 20) :
'Under the Act, income-tax is a single tax on the aggregate of income received from diverse heads mentioned in section 6 : section 6 is not a charging section, and income computed under each distinct head is not separately chargeable to tax. But income which is chargeable under a specific head cannot be brought to tax under another has either in lieu of or in addition to that head.'
and at page 22, they held :
'When, therefore, section 25(3) exacts that tax was charged at any time on any business, it is intended that the tax was at any time charged on the owner of any business. If that condition be fulfilled in respect of the income of the business under the Act of 1918, the owner or his successor-in-interest quo the business, will be entitled to get the benefit of the exemption under it if the business us discontinued. The section in terms refers to tax charged on any business, i.e., tax charged on any person in respect of income earned by carrying on business. Undoubtedly, it is not all income earned by a person who conducted any business, which is exempt under sub-section (3) of section 25 : non-business income will certainly not qualify for the privilege. But there is no reason to restrict the condition of the applicability of the exemption only to income on which the tax was payable under the head 'profits and gains of business, profession or vocation'. The legislature has made no such express reservation meaning.'
34. A further contention was raised before the Supreme Court in Chuganda's cases on the basis of section 26(2) which imposed liability upon a successor to a business to pay tax on behalf of his predecessor. The Supreme Court held that this provision did not affect the operation of section 25(3), as interpreted by them.
35. The reason for the exemption granted by section 25(3) was explained by the Supreme Court in a recent decision in O. RM. M. SP. SV. Firm v. Commissioner of Income-tax. Under the Income-tax Act of 1918, the mode of assessment was for the assessment to take place in each year of account. There used to be first of all a provisional assessment and after the scrutiny by the department and acceptance of the returns of after settling the items a final assessment used to be made, but under the Act of 1922, the notion of the previous year to the assessment year was introduced and, while the accounting year is always the previous year to the assessment year, the assessment year is the seceding year in which the income profits or gains are brought to tax. The result was that when the Act of 1922 was passed, the income of the last year before the Act came into force came to be taxed twice, once under the old Act for the year in which it was earned and again in the assessment year 1921-22, under the new Act as income of the 'previous year'. Since it was thus taxed twice over in the first year of business under the Act of 1922, exemption was granted in respect of income when the business was discontinued under the Act of 1922. The Supreme Court explained this position at page 407 :
'Section 25(3), however, applies even if the person assessed under the 1918 Act was different from the person who claims relief under that section provided the former was the predecessor-in-interest of such person in relation to the business. The reason for enacting section 25(3) was that under the 1918 Act, income-tax was levied by virtue of section 14(2) of the 1918 Act, on the income of the year of assessment. Tax was, therefore, levied in the financial year 1921-22 on the income of that year. By the 1922 Act, the basis of taxation was altered and by section 3 of that Act, charge for tax was imposed upon the income of the previous year. When the 1922 Act was brought into force on April 1, 1922, two assessments in respect of the same income for the year 1921-22 had to be made. The income for 1921-22 was accordingly charged to tax twice; it was charged under the 1918 Act and it was also charged to tax under section 3 of the 1922 Act read with the appropriate Finance Act, resulting in double taxation in respect of the income for that year. But with a view to make the number of assessments equal to the number of years during which the business was carried on, the legislature enacted the exemption prescribed by section 25(3).'
36. Arising out of this explanation as to the reasoning why exemption or is provided under section 25(3), is the other contention urged on behalf of the department that this assessee had in the first year of its assessment after it took over the business of shares and securities but that the amount of Rs. 9,76,708-6-7 shown as appreciation of shares and securities and on London Investments in its profit and loss account for the year 1921, was really the capital gain and not liable to tax as a business profit. It was held by the department that since this claim of the assessee was held correct in the year 1921, the income of the assessee was first of all not subject to double taxation in the assessment year 1922-23 for the account year ending 1921. Therefore the very basis of the exemption under section 25(3) was taken away. If the basis were as explained by the Supreme Court that the amount in the first year of its business should be liable to double taxation, then it was urged on behalf of the department that the income of the assessee in the first year of its existence had not been subjected to double taxation and therefore when it discontinued its business the assessee was not entitled to claim exemption under section 25(3). The other contention also advanced in this connection was that the representation which the assessee made to the tax authorities at that time resulted in a definite benefit to the assessee and therefore the assessee could not now turn round and say that the amount of Rs. 9,76,708-6-7 was really a business profit. The assessee in other words must be held bound by its representation whereby it had gained an advantage for itself.
37. The basis of this argument is to be found in annexure 'B' which contains copies of the notes of the examiner of accounts and of the Income-tax Officer dated 12th October, 1952. So far as the examiner of account concerned, there does not appear to have been any representation made so far as annexure 'B' was concerned. The report shows that he examined the accounts of the company for the year 1921, and then it goes on to state that certain deductions were claimed from the profits, one of them being 'appreciation of shares and securities... Rs 9,76,708-6-7'. This figure as we have shown is a composite figure made up of the two figures shown in the profit and loss account for the year 1921, namely :
Rs.'Shares & securities (appreciation) 6,55,895-14-0London Investments (appreciation) 3,20,812- 8-7'
38. Now, the examiner of accounts inter alia observed as regards this item that 'the company is a habitual dealer in shares and securities and it was allowed Rs. 9,26,730-5-3 as a set-off against the profit of 1920, the loss on shares and securities (depreciation). Hence the appreciation of Rs. 9,76,708-6-7 will have to be taxed this year'. Thus so far as the examiner of accounts was concerned he left the department in no doubt that he regarded the income from shares and securities as a business income and taxable. When the matter came before the Income-tax Officer, he has made a note which is not very clear but which reads as follows.
'Shares and securities Rs. 6,55,895 and Rs. 3,20,812..... book entry. Securities being valued at... and appreciation or depreciation brought into the accounts. These securities are being taken over by the new company B. T. C. Ltd. Bombay. Show this on instructions from their London House only and these items may therefore be disregarded for income-tax purposes.'
39. It was urged on behalf of the department that the passage which we have quoted above was the representation made by the assessee because it is preceded by the words 'attended reassessment submitted... Billimoria'. These words do not simply that any particular statement or representation was made before the Income-tax Officer but the subsequent passage which we have quoted shows that it was the Income-tax Officer but the statement or representation was made before the Income-tax Officer who was deciding was stated on behalf of the assessee-company. Even assuming that that amounts to a representation, all that has been stated is 'these securities are being taken over by the new company B. T. C. Ltd. Bombay'. As we have shown, in the next year a large part of the shares and securities were undoubtedly transferred to the B. L. C. Ltd. but the representation is only as regards securities and not as regards shares. We cannot, however, find that the representation has affected the decision of the Income-tax Officer.
40. Quite apart from this, it is now settled by a decision of the Supreme Court in Commissioner of Income-tax v. MR. P Firm, Muar that the doctrine of 'approbate and reprobate', which is a species of estoppel, only applies to the conduct of parties and cannot bring to tax an income which cannot otherwise be taxed under the law. At page 74 the Supreme Court observed :
'The contention is that the assessees having opted to accept the scheme, derived benefit there under, and agreed to have their discharged debts excluded from the assets side in the balance-sheet subject to the condition that subsequent recoveries by them would be taxable income, they are now precluded, on the principle of 'approbate and reprobate'. from pleading that the income they derived subsequently by realization of the revived debts is not taxable income. The doctrine of 'approbate and reprobate' is only a species of estoppel; it applies only to the conduct of parties. As in the case of estoppel, it cannot operate against the provisions of a statute. If a particular income is not taxable under the Income-tax Act, it cannot be taxed on the basis of estoppel or any other equitable doctrine. Equity is out of place in tax law; a particular income is either exigible to tax under the taxing statute or it is not. If it is not, the Income-tax Officer has no power to imposed tax on the said income.'
41. In the present case the sole question is whether the income of the business which the assessee is now carrying on had borne tax under the Act of 1918, and whether the business in respect of which the exemption has been claimed is the same business which had borne tax under the Act of 1918. We do not think that any representation was made to the tax authorities at that time which affected the questions which arise for determination under section 25(3) to-day.
42. On behalf of the department, a reference was made to a decision of this court in Commissioner of Income-tax v. Army and Navy Stores Ltd. In that case, under section 10 of the Indian Finance Act, 1942, an option was given to an assessee to make a deposit of one-fifth of the amount of the excess profits tax and, if he did so, he became entitled to be refunded one-tenth of the excess profits tax or one half of the said deposit whichever was less. There was a proviso to this section which exempted the assessee from making the deposit in respect of any profits which were liable to assessment to excess profits tax under the law in force in the United Kingdom and the assessee had availed of that proviso and had got the advantage of not making a deposit, because a part of its assessment was liable to assessment in the United Kingdom. Later on, the voluntary deposit was made obligatory by an Ordinance in 1943. Under sub-section (11) of section 11 of the Finance Act of 1945, it was provided that any item of excess profits tax which was refundable must be deemed to be income of the previous year which constituted or included the chargeable accounting period in respect of which the sum was repayable, but in regard to this provision also there was a proviso that any sum repaid in respect of any profits which were assessable to excess profits tax in the United Kingdom shall be taxed as income of the previous year during which any repayments were made. The assessee in that case received a refund for the chargeable accounting periods which ended on 31st of August, 1941, 1942, 1943 and 1944 and on the 31st of March, 1946, and at that stage contended that it had in fact no profits assessable in the United Kingdom and that therefore the provisos to section 10(1) and section 11(11) would not apply. What was argued in that case was a point of construction of the proviso to section 10(1) and not a question such as has been raised in the present case as to any estoppel on a question of fact. The Supreme Court held in that case that the proviso to section 10(1) and section 11(11) cannot be so construed that an assessee who got the benefit of refund of excess profits tax without incurring the obligation of making the deposit should also have the benefit of having the refund distributed in the relevant accounting years and not having to pay the tax on the whole of that amount in the previous year to the year in which the refund was made. We do not think, therefore, that the principle of the decision in the Army and Navy Stores case can apply in the present case.
43. Another point which has been urged on behalf of the department, has been that the amount of Rs. 9,76,708-6-7 not having been brought to tax twice, the assessee would not be entitled to exemption under section 25(3). Upon the view that we have taken that question cannot arise in the present case, for the words of section 25(3) are, 'where any business, profession or vocation on which tax was at any time charged under the provisions of the Indian Income-tax Act, 1918, is discontinued'. It is not the payment of the tax on any particular amount, but whether the business as a whole has paid any tax on any particular amount, but whether the business as a whole has paid any tax that matters and in the present case the business had paid tax in 1920 and 1921. The item of Rs. 9,76,708-6-7 was taken into account though it was held that it was not chargeable as a business income.
44. Moreover the words of the section are 'at any time charged under the provisions of the Indian Income-tax Act, 1918' and as we have pointed out in the decision to which we have already referred - Chugandas's case, exemption from liability to pay tax in respect of the income, profits and gains under section 25(3) may be claimed by an assessee if the business is one in respect of which tax was charged at any time under the Indian Income-tax Act, 1918, and the business is discounted. Section 25(3) applies even if the 'person' assessed under the Income-tax Act, 1918, was different from the 'person' who claims relief under that section provided the former was the predecessor-in-interest of such 'person' quo the business.
45. For these reasons, we do not think that the view taken by the Tribunal and the tax authorities upon this question was the correct view. The finding of the Tribunal that in the first year after it took over the firm, the assessee-company had not the intention to carry on the business in shares and securities is not only not supported by the evidence on record but is flatly contrary to all the evidence on record. We have already dealt with the finding of the Tribunal or its suggestion made in paragraph 7 of its order that the assessee acquired the shares and securities from the firm of E. D. Sassoon & Co. only in order to hand it over to another company, B. T. C. Ltd. This finding is again unsupported by any evidence and is virtually based on a mere conjecture. Accordingly, we must hold on question No. 1, contrary to the findings of the Tribunal, that the assessee-company was entitled to claim the exemption under section 25(3) of the Act. The question No. 1 must be answered in the affirmative.
46. Then we turn to the other questions invoked in this reference each represented by a separate question framed. The question No. 2 is as follows.
'Whether, on the facts and in the circumstances of the case, the loss suffered on the sale of property in Shanghai was allowable as a revenue deduction out of profits of the year ?'
47. This question as also the questions Nos. 3, 4, and 5 are really concerned with individual items claimed as deductions against the profits of the year of account. Since we have held upon the first question that the assessee would be entitled to exemption under section 25(3), in regard to the whole of its income, these questions really do not arise for determination, but since each one of these questions has been framed and the matter may not rest with this court, it seems to us that it would not be proper to deal with the reference partially in the present circumstances. We would, therefore, indicate our answers upon these question also, especially since counsel for both the parties have fully argued them. The facts pertaining to the second question are as follows.
48. The assessee claims Rs. 1 crore as the loss suffered on account of the sale of its immovable properties in Shanghai, China. The assessee-company which was doing business in India from 1921 onwards, it appears, reduced its business in India considerably after the year 1942. The Tribunal has suggested that it was on account of the political conditions prevailing in this country and because the assessee seems to have become suspicious about the future of the country, but that suggestion was vehemently criticised by Mr. Kolah on behalf of the assessee as a mere conjecture. We agree that there is nothing to support such a suggestion. The fact, however, remains that the business of the assessee was considerably reduced from 1942 onwards and soon after a large sum was invested in China. The property, in regard to which it is said the loss was incurred, was purchased in December 1947 - the land for Rs. 1,39,10,432 and the buildings standing thereon for Rs. 12,79,000. Very soon thereafter, an imminent change was about to take place in the Government of China and, according to the assessee, the property had to be hurriedly sold and its investments liquidated. As a result of this sale or enforced sale of its immovable property, the assessee-company sustained a loss of Rs. 1,85,03,239(?). The assessee claimed this as a business loss but the department as well as the Tribunal have throughout held that the loss can by no stretch of imagination be styled as a loss in business but is a loss on capital account. The finding of the Tribunal was given as follows.
'In Hongknog the Chinese appeared in 1947 and the assessee thought of quitting that place. The assessee, therefore, liquidated all its investments. We think that the purchase and sale in China of the immovable properties cannot by any stretch of imagination be styled as a business venture. The assessee went to China with a view to earn better income from the investment made in property. The loss suffered by the assessee is loss of capital and it was caused primarily on account of the change in the political conditions in that country.'
49. Now, no doubt, some of the grounds which the Tribunal has given are, as Mr. Kolah put it, pure speculation. But it seems to us that the finding in substance was correctly given. Quite apart from the circumstances referred to by the Tribunal, the fact remains that the business of the assessee, as its memorandum and articles of association show, was that of carrying on managing agency of various mills, financing, commission agency, dealing in shares and securities and dealings on the stock-exchange, Even having regard to the fact that the business was a very large business and spread over the world, we cannot conceive of an amount of over Rs. 1,52,00,000 being invested in immovable property for the purpose of business. In the past, the assessee never carried on any business in immovable property or any dealing in relation to immovable properties in a big city like Shanghai, it could only be for the purposes of having an office and accommodation for its business and not with a view to make any income from profits out of the purchase or sale of the land and buildings. There is no proof that the company ever dealt in the buying and selling of immovable properties or in promoting housing schemes as was suggested by Mr. Kolah. No doubt, the amount invested was a large amount but it is possible that purchase of property like this in a busy and important city like Shanghai would be very costly. The largeness of the amount would not necessarily indicate that the property was purchased with a view to doing business.
50. If a large amount like this was to be invested in business, the assessee-company would undoubtedly have ample material to show that a new business was started. At least, there would be a resolution of the board of directors sanctioning the commencement of such a business, but there is no proof whatever that this amount was invested in this property for the purpose of starting a business. Mr. Kolah referred to the findings of the Income-tax Officer in the assessment order for a prior assessment year, namely, 1948-49 (annexure 'I-53') wherein the Income-tax Officer has remarked that 'the opening of Hongknog branch and the transfer of nearly 2 cores of rupees funds to China in this year was clearly with a view to settle in China after pulling out of India for the purposes of opening new lines of investment'. He suggested that the expression 'new lines of investments' indicate that the Officer held that a new business was started. We do not think that we can give that construction to the finding of the Income-tax Officer in that case. The purchase of the property in Shanghai was clearly held to be a capital investment. In the assessment order with which we are concerned also, the Income-tax Officer accepted the reasoning and held that it was an 'investment in property' and income therefrom was assessable under section 9.
51. A passage from the judgment of the Supreme Court in G. Venkataswami Naidu & Co v. Commissioner of Income-tax was relied on in this connection. The Supreme Court was considering whether it is possible to evolve any formula which can be applied in determining the character of isolated transactions which come before the courts in tax proceedings and in that connection it observed at page 609 :
'Generally speaking it would not be difficult to decide whether a given transaction is an adventure in the nature of trade or not. It is the cases on the border line that cause difficulty. If a person invests money in land intending to hold it, enjoys its income for some time, and then sells it at a profit, it would be clear case of capital accretion and not profit derived from an adventure in the nature of trade. Case of realisation of investments consisting of purchase and resale, though profitable, are clearly outside the domain of adventures in the nature of trade. In deciding the character of such transactions, several factors are treated as relevant (1) Was the purchaser a trader and were the purchase of the commodity and its resale allied to his usual trade or business or incidental to it Affirmative answers to these questions may furnish relevant data for determining the character of the transaction. (2) What is the nature of the commodity purchased and resold and in what quantity was it purchased and resold If the commodity purchased is generally the subject-matter of trade and if it is purchased in very large quantities, it would tend to eliminate the possibility of investment for personal use, possession or enjoyment. (3) Did the purchaser by any act subsequent to the purchase improve the quality of the commodity purchased and thereby make it more readily resoluble (4) What where the incidents associated with the purchase and resale (5) Where they similar to the operations usually associated with trade or business (6) Are the transactions of purchase and sale repeated (7) In regard to the purchase of the commodity and its subsequent possession by the purchaser, does the element of pride of possession come into the picture ... These and other considerations are set out and discussed in judicial decisions which deal with the character of transactions alleged to be in the nature of trade. In considering these decisions it would be necessary to remember that they do not purport to lay down any general or universal test.' (The passage does not bear the numbering which we have given above which is ours. It is merely given for the sake of convenience.)
52. If we were to consider the present transition in the light of these tests. We would find that none of these tests would apply to the transaction in question except perhaps that it was a transaction of a large value (the reason No. 3). We have shown that it was not the business of the assessee to deal in immovable properties. The nature of the property purchased cannot be connected with the business of the assessee except that is was required for its offices and accommodation. The period within which it was sold also was very short and can indicate nothing nor was any significant alteration of the property proved suggesting that it was intended for resale as a business. There are no other similar transactions of purchase and sale. All the circumstances, therefore, are against, it being held that the property was purchased with a view to deal in that property as a business. We agree with the findings of the Tribunal and the tax department that the loss sustained on the sale of the property in Shanghai was not allowable as a revenue deduction out of the profits of that year, but was a loss on capital account. The answer to the question No. 2 must, therefore, be in the negative.
53. The third question covers the item which the company paid as contribution to its superannuation fund. The amount involved is Rs. 3,70,943 and the question relating thereto posed for our decision is :
'Whether, on the facts and in the circumstances of the case, the assessee-company is entitled to deduct Rs. 3,70,943, the amount transferred to the superannuation fund, against income of the year ?'
54. Now, the facts upon which this question arises are as follows : The assessee-company went into liquidation on the 28th December, 1948, during the account year (January 1, 1948 to December 28, 1948). The company had during the years in which it was doing business started a fund called the E. D. Sassoon Co. Ltd. superannuation fund, which had come into force from the 30the November, 1944. By the rules framed by the company, the fund was vested in trustee who were to be appointed by the board of the company from time to time. The scheme envisaged that in respect of every eligible worker a policy of insurance was to be taken out with the Prudential Assurance Co. Ltd. or other insurance company as the board may decide. The company was to pay prima on the policy amount equivalent to one month's salary of each employee 'current at the date of retirement for ever one year of his total uninterrupted service with company if such employee retired from service at the maturity of the policy or policies'. The idea was that, on retirement, the employee was to get the benefit of that policy amount for his subsistence after retirement. The policies were, therefore, endowment policies payable at the age of 55 or at the expiration of ten years whichever was later. Now, it is clear that the amount of these policies would not, in given cases, give to the workers the same benefit which it was the intention of the Scheme to give, because a worker may for other reasons not be able to work before the normal time for retirement and also before the normal time for receipt of the benefit under the insurance policies, Therefore, the company undertook to make good these additional amounts so as to ensured to the worker the total sum equivalent to one month's salary of such employee for every one year of his total uninterrupted service with the company. The undertaking of the company is contained in rule 30 which was as follows :
'30. The company undertake to make good to the trustee all additional amounts which the trustee may become liable to provide or may provide in carrying out their liabilities hereunder and for which they may not have been sufficiently covered under the policies assigned to them and/or any contributions previously received from the company and from moneys to the credit of the lapse and forfeiture account, and undertake to indemnify and keep indemnified the trustee against any liability they may incur as trustees of his fund.'
55. Under this liability the assessee-company paid the said sum in dispute, Rs. 3,70,943, through its liquidator in the account year and it claimed the amount as a business expense. The tax authorities have disallowed this amount on the ground that, according to the explanation offered by the assessee's employees at the time of hearing, this amount was on account of short provision made this head in some of the earlier years and that the amount paid, therefore, related to earlier years and could not be allowed as a revenue deduction against the profits of the year of account. Secondly, the Tribunal held that : 'In any case the payment was made after the company stopped its business.'
56. So far the finding that the amount paid relates to earlier years and cannot be allowed as a revenue deduction against the profit of the year of account, it concerned, we are unable to see hoe it can be said that this liability of the company arose in the years prior to the accounting year 1948. The question of making contributions under rule 30 would, while the company was carrying on its business, arise in the case of each employee as and when he retired or his services were dispensed with or the other causes mentioned in rule 29 began to oprate. It was not a liability of the company which was continuing from day to day but only arose when the events contemplated in rule 29 transpired. In fact, the accounts of the company show that very small amounts were from time to time paid by the company in the case of particular workers. This large amount had to be paid in the year of account because of the extraordinary circumstance that the company went into liquidation in the account year, with the result that a large number of employees became suddenly affected by those circumstance which are contemplated in rules 29 and 30. On a plain reading of the rules, one thing is clear that the liability only arose in the year of account because the liquidation gave rise to a large number of claims of employees for the additional amounts guaranteed by the company under rule 30. A mere perusal of the rules, therefore, would show that the conclusion reached by the Tribunal was incorrect. The error is clearly one of law in so far as the rules have not been correctly read and applied. In fact, in the finding of the Tribunal there is no reference whatever to the rules. The further argument that the assessee keeps its accounts on a mercantile basis and, therefore, the liability must be deemed to have accrued in each year of account cannot be sustained because, unless the conditions contemplated by rules 29 and 30 arose, the liability could never accrue. The conditions contemplated by these rules arise only when certain events happen, such as, disablement or premature retirement of a worker. The mode of keeping accounts, therefore, cannot affect the accrual of this liability.
57. Mr. Joshi stressed the other part of the finding of the Tribunal, viz., that the payment was made after the company stopped business and in that respect he relied upon the decision in Commissioner of Income-tax v. Gemini Cashew Sales Corporation. Now, we have already said enough about the nature of the liability of the company in this case. The liability was a liability in connection with business but not a recurring liability. It was a liability which arose only upon certain events happening, such as the premature retirement of a worker or his premature disablement and other causes. Events like these give rise to liability to pay, but under rule 30 the company had undertake to make good additional amounts to the trustees as and when these events transpired. That general liability being there, the specific expense was incurred only upon the happening of the events contemplated by rule 29. If that be so, then we are unable to see how the stoppage of the business of the company in the year of account could affect the question of payment. No doubt the payment was made after the stoppage of the business, but it was made a pursuance of the liability of the company under rule 30 which was in operation during the time that it was carrying on business. Even assuming that the liability arose or accrued only on liquidation, as was argued, still the accrual of the liability and the liquidation were co-terminus in point of the time and therefore again it cannot be held that the liability was incurred or accrued after the cessation of business.
58. We do not think that in these circumstance the decision in Gemini Cashew Sales Corporation case can assist the department. That was a case of retrenchment compensation under section 25FF of the Industrial Disputes Act, In that the case the liability to pay retrenchment compensation arose consequent upon the business of a partnership firm being taken over and continued by the surviving partner on his own account. There was therefore a transfer of the business in that the case and in regard to such a case, specific provision is made in section 25FF that, '.... every workman who has been in continuous service for not less than one year in that undertaking immediately before such transfer shall be entitled to notice and compensation in accordance with the provisions of section 25F, as if the workman had been retrenched' This liability, therefore, under section 25FF was by a fiction of the law approximated with the liability to pay compensation only arises upon the severance of the relationship of master and servant, that is to say, that it arises after the business relationship between the employer and the employee cease. That is not the case here, for the liability is undertaken by rules 30 to make good the amount even during the period of the service of the employee. The Supreme Court itself made this clear at page 647 by observing :
'But until there is a transfer of the undertaking resulting in determination of employment, the workman do not become entitled to retrenchment compensation. So long as the ownership of the business continues with the employer, the right of the workman to claim compensation remains contingent. A workman mat, before the transfer of ownership of the business, himself terminate the employment : he may die or he may become Superannuated : in none of these case the owner of the business is under any obligation to pay retrenchment compensation to the workman. The obligation to pay compensation becomes definite only when there is retrenchment by the employer, or when the ownership or management of the undertaking is, except in the cases contemplated by the prove, transferred to a new employment, and not till then. The right therefore arises from determination of employment, or from transfer of the undertaking : it has no existence before these events take place.'
And at page 649 :
'As already observed, the liability to pay retrenchment compensation arose for the first time after the closure of the business, and not before. It arose, not in the carrying on of the business, but on account of the transfer of the business.'
59. In the present case the source of liability is in rule 30 which is as pre-existing; liability, existing prior to the date on which the company went into liquidation and not a liability as in the case of retrenchment compensation arising upon the termination of business or transfer of the undertaking For these reasons we are unable to accept any of the ground upon which the Tribunal disallowed this expenditure. We answer the question No. 3 in the affirmative.
Question No. 4 relates to Rs. 2,92,672, being the amount which the assessee-company was called upon to pay in 1950-51 to the employees. The question farmed is as follows :
'Whether, on the fact and in the circumstances of the case, the assessee-company is entitled to claim a sum of Rs. 2,92,672, transferred after the liquidation of the company as against the profits of the company ?'
60. The amount involved in this question was an amount standing to the credit of the 'lapse and forfeiture account' in the books of the company and how that amount accumulated is explained by the provisions of the Employees provident Fund Rules and particularly rule 17 (annexure 'F'). The rule provides :
All lapse and forfeitures occurring at any time shall be carried over by the company to a separate account called 'the lapse and forfeiture account' and shall be used and applied by the company in such manner and in such a way from time to time for the benefit of all any of the members of the fund, or for the benefit of the wife or widow or the children or any of them or relatives or dependents of the member whose interest lapses or is forfeited, or any of them as the company in their absolute desecration think fit and determine.'
61. At the end of the account year 1947, the amounts standing to the credit of the provident fund lapse and fracture account is shown in the balance-sheet of the company as on 31st December, 1947, at Rs. 2,87,524-3-6. In the next year the amount was as mentioned in the reference. On 5th August, 1948, the attorneys on behalf of the employees of the company served a notice upon the company reminding them of the provisions of the Provident Fund Rules and pointing out that under rule 17, the amount standing to the credit of the lapse and fracture account 'shall be used and applied by the company of all or any of the members of the fund....' It was pursuant to this demand on behalf of the employees of the company that the amount was paid by the company on the 20th January, 1950, for distribution amongst the employees. No doubt, under rule 17 the amount standing to the credit of the lapse and fracture account was to be utilized for the benefit of the employees or their widows and children and here the amount was simply ordered to be distributed.
62. But the amount was paid in pursuance of an order of this court passed on the 20th January, 1950. This court passed an order by which the official trustee of Bombay was appointed a trustee of the securities and money standing to the credit of the lapse and forfeiture account go the assessee-company and authorised him to collect the amount from the liquidator of the company. The order in terms refers to rule 17 of the company's provident fund rules and it was in pursuance of that liability of the company that the amount was ordered to be paid to the official trustee.
63. Now this amount had throughout borne tax because the provident fund of this company was an unregistered fund and it was only when the amounts used to be paid even during the existence of the company, that is to say, before its liquidation, that the amounts actually paid used to be shown in the account and only used to be allowed by the department. For instance, for the prior year ending 31st December, 1947, the order of assessment (annexure 'I-53') itself shows that an amount of Rs. 540, which was paid from the provident fund lapse and forfeiture account was allowed by the authorities though the interest credited to the lapse and forfeiture account of Rs. 6,409 was not allowed. A similar entry is to be found in the assessment order of this company for the year 1934-35 where an amount of Rs. 4,041 was allowed on payment by the company. In the year of account, the assessment year 1949-50, also the Income-tax Officer allowed the payment from the lapse and forfeiture fund of a sum of Rs. 4,620. But the payment of Rs. 2,92,672, was disallowed as an expenditure by the authorities throughout. The Appellate Assistant Commissioner in his appellate order dated 15th September, 1958, has himself found as follows :
'As no separate trust had been created and as the contributions remained in possession of the assessee, the annual contributions were not allowed as a deduction for income-tax purposes but only actual payments made to employees in any year and debited to this provident fund account were so allowed for relevant assessment years. As and when the company did not pay any portion of its contributions to its employees who might have left service, such portion was transferred from the unrecognised provident fund account to the credit of 'provident fund lapse and forfeiture account.' Any actual payments subsequently made to employees from this account were also allowed as deduction against profits of the years in which the payments were actually made. From records I find that the unrecognised provident fund account had ceased to exist since a number of years. The Income-tax Officer found that this amount was paid by the company to the official trustee in the year 1951 by a court order passed in the year 1952, that is, the fund was handed over to the official trustee immediately a suit was failed by the employees who were members of the provident funds, though the court order was passed subsequently in the year 1952. The Income-tax Officer, therefore, rightly came to the conclusion that neither did the liability to pay tax arise in the year under appeal nor was the payment made in the year appeal.'
64. Now it is not exactly correct to say that the liability to pay tax did not arise in the year under appeal, for the liability arose under rule 17 and the other rules governing the provident fund. That liability was always there upon the company and when payment was made it was only in discharge of that liability which was always there. Where an undertaking of this kind is given - and the undertaking in the present case was unconditional - the liability arises from day to day, though the expenditure arising out of that liability may be made at a later date. Where the assessee maintains his accounts on a mercantile system, the accrual of the liability would be in that year in which the liability arose and not when the payment was made.
65. An illustration of this principle is to be found in a decision of the Supreme Court in Calcutta Co. Ltd. v. Commissioner of Income-tax where the assessee had bought lands and sold plots for building purposes undertaking to build the drainage system, etc. When the plots were sold, the purchaser paid only a portion of the purchase price and undertook to pay the balance in installments. The assessee had, however, undertake to carry out the development within six months though the time was not the essence of the contract. In the relevant accounting year, the assessee had received only a sum of Rs. 29,392 towards the sale price of lands, but in accordance with the mercantile system of accounts which the assessee followed, the assessee had credited in its account a sum of Rs. 43,692, representing the full sale price of lands. At the same time it also debited an estimated sum of Rs. 24,809 as expenditure though it had not been actually received. The department disallowed this expenditure though it had not been actually received. The department disallowed this expenditure. The Supreme Court held that, the undertaking of the assessee to carry out the developments 'imported the liability on the assessee which accrued on dates of the deeds of the deeds of sale though that liability was to be discharged at a future date. It was thus an accrued liability and the estimated expenditure which would be incurred in discharging the same could be deducted from the profits and gains of the business, and the amount to be expended could be debited in accounts maintained in the mercantile system of accounting before it was actually disbursed. The difficulty in the estimation thereof did not convert the accrued liability into a conditional one,...' The Supreme Court also pointed out that the expression 'profits and gans' in section 10(1) of the Income-tax Act has to be understood in its commercial sense and there can be no computation of such profits and gains until the expenditure which is necessary for the purpose of earning the receipts is deducted therefrom - whether the expenditure is actually incurred or the liability in respect thereof has accrued, even though it may have to be discharged at some future date. That is precisely the case here. The accounts show the liability of the company for the entire amount of the lapse and forfeiture account of the provident fund and, as and when actual payments were made, the working out of that liability was shown in the accounts. The practice followed, therefore, also was such payments as expenditure and we can see no reason, therefore, why simply because in the year of account the expenditure was incurred under an order of the court and the expenditure was large, it should be treated on a different footing. This amount, in our opinion, ought to have been allowed as a legitimate item of expenditure. Accordingly we answer question No. 4 in the affirmative.
66. The fifth and last question relates to the claim of the assessee to set off an amount of Rs. 3,28,825 as the loss suffered in the year 1948 as against the profits of the year 1949-50. The question framed is :
'Whether, on the facts and in the circumstances of the case, the assessee-company is entitled to set off the loss of Rs. 3,28,825 suffered in 1948 as against profit of 1949-50 ?'
67. The facts upon which this question arises are as follows :
68. In the preceding year the total dividend income of the assessee-company was Rs. 98,000 and the loss in the share business amounted to Rs 57,322. The department held that the loss in the share business was not incurred in the same business against the profits of which the loss was claimed to be set off. They held that in the year of account there was no loss brought forward in the preceding year in respect of the share business. On behalf of the assessee it was urged that all these so called business which the assessee was carrying on formed part of one and the same business and reliance was placed on various circumstances to which we shall presently advert. The department and the Tribunal held (we quote the Tribunal) :
'It is possible for a business house to carry on various business and maintain only one set of books of account and have the same employees. The assessee has been carrying on a number of businesses. The loss brought forward from the preceding year can only be set off against profit of the business which showed losses in the year preceding. We think the claim of the assessee has been rightly rejected by the income-tax authorities.'
68. Now, where an assessee carries on several activities at the same time, what amounts to his business is the subject of numerous authorities, but the leading case upon the subject is one which the Income-tax Officer relied upon namely, Scales v. Gorge Thompson & Company Limited. In that case the assessee was a company incorporated to take over the business of Messrs. George Thompson & Co., shipwoners, ship and insurance brokers, underwriters and merchants. George Thompson & Co. was a partnership and, in respect of its underwriting business, an amount was deposited with Lloyds, but in the name of two its partners because Lloyds would not recognise a firm. This amount was transferred to the assessee-company though the deposit continued in the name of the partners who continued to act as nominees and agents of the assessee-company. One of the nominees died in 1919 and the other in 1920 whereupon the underwriting business of the assessee ceased. The company claimed that the underwriting business was a business separate from their other activities and that it should be regarded as a separate business in computing their liability. Mr. Justice Rowlatt decided the question upon a principle which he stated at page 89 and which we find quoted in most of the subsequent cases :
'That method of book-keeping does not seem to me to throw any light upon this matter at all. I think the real question is, was there any inter-connection, any interlacing, any interdependence, any unity at all embracing those two business; and I should have thought, if it was a question for me, that there was none.'
69. The Income-tax Officer relied upon the earlier passage in which the learned judge merely observed that the company can carry on two business, although it may, for the purpose of convenience, if the wishes, amalgamate the proceeds before paying the shareholders. Scales case was decided upon its own facts and so far as the facts are concerned can have no similarity with the present case. In that case, though for the purpose of their final accounting to the shareholders the company had shown the profits of the underwriting business together with the other business of the assessee-company, there was very little else to show that it was part and parcel of the same business and the learned judge also emphasised that, having regard to the nature of those two business, he could not conceive of two business that could be more easily separated than those two. But the superficial. It was this aspect of the matter which was stressed by the tax authorities and by the Tribunal in the present case. The circumstances here are quite different. The business was one. It was taken over as a single business from E. D. Seasoon & Co. and run as such. The memorandum and articles of association of the assessee-company prove it as also the other circumstances as well as their accounts.
70. This was also the point of view which prevailed with the Division Bench of this court in Manilal Dahyabhai v. Commissioner of Income-tax In that case the assessee had claimed that it was one and the same business though he was carrying on a business of speculation in gold, silver, cotton, shares and other commodities and simultaneously as a wholesale dealer in cloth. Six factors were stressed and they were (1) that only one set of accounts was maintained; (2) that both the businesses were carried on in the same premises; (3) that they were carried on in the same premises with the help of the same staff; (4) that the capital employed for both the business was the same; (5) that the receipts in respect of one of them were utilised for the purpose of the other indiscriminatly; and (6) that the terms of overhead and other expense were common. This court held nonetheless that the two business answer not the same. As regards the six factors pointed out above, they held that the six factors did not necessarily lead to the interference that the businesses must be regarded as one and the same for the purposes of section 24(2). The more important point laid down in that case was as regards the effect of Scale's case was whether the two businesses can be separated and one carried on even though the other was stopped. As to that test the Division Bench remarked that it was an important, though not a conclusive, test in determining the question whether one of the two businesses conducted by the assessee could be stopped without affecting the texture of framework of the other.
71. In a decision of the Supreme Court given last year in Commissioner of Income-tax v. Prithvi Insurance Co. Ltd. the question was whether the life insurance business and the general insurance business carried on by an assessee was one and the same business and referring to the important test laid down in Scales case the Supreme Court observed at page 637 :
'We are unable to agree with counsel for the Commissioner that the test, whether one of the businesses can be closed without affecting the conduct of the other business, is a decisive test in determining whether the two constitute the same business within the meaning of section 24 (2). If one business cannot conveniently be carried on after the closure of the other, there would be a strong indication that the two business constitute the same business, but no decisive inference may drawn from the fact that after the closure of one business another conveniently be carried on. .......We are unable to agree with the Tribunal, that, because in respect of the life insurance business and general insurance business there are special methods of computation of income for the purpose of levying income-tax, they are not the 'same business' within the meaning of section 24 (2). A fairly adequate test for determining whether the two constitute the same business is furnished by what Rowlatt J. said in Scales v. George Thompson & Co. Ltd.
'Was there any inter-connection, any inter-lacing, any inter-dependence, any unity at all embracing those two business ?'
That inter-connection, inter-lacing and inter-dependence and unity are furnished in this case by the existence of common management, common business organization, common administration, common fund and a common place of business.'
72. We may say that so far as the present case is concerned, each one of the items mentioned by the Supreme Court in the passage which we have quoted above are also present and in addition there is the crucial fact that the assessee-company was started with the sole object of taking over the entire business of the firm of E. D. Seasoon & Co. and the agreement entered into on the 30th June, 1921, also shown the same thing. Not only therefore was the declared intention of the assessee at that time, when this question could never have been thought of by the assessee, as also their accounts and their subsequent conduct of the business although several business activities were being carried on at same time.
73. The same view was taken by the Supreme Court in Setabganj Sugar Mills Ltd. v. Commissioner of Income-tax where similar principles were reaffirmed. This case, however, is of some importance upon the other question which has been argued on this point, namely, that the findings as to whether there was one business or two business was in essence a finding upon the evidence alone and therefore is a finding of fact and ought not to be interfere with in a reference of this kind. No doubt, in Scales's case Mr. Justice Rowlatt remarked with reference to that case that he did not think it was a question of law (see page 89), but that was because, in that case what was challenged was not the conclusion from the facts but the facts themselves. In Setabganj Sugar Mill's case, at page 274, the supreme Court, after referring to the principles laid down in the Scale's case, observed :
'These principle have to be applied to the facts, before a legal inference can be drawn that a particular business is composed of separate business, and is not the same one. No doubt, findings of fact are evolved, because a variety of matters bearing on the unity of the business have to be investigated, such as unity of control and management, conduct of the business through the same agency, the inter-relation of the businesses, the employment of same capital, the maintenance of common books of account, employment of same staff to run the business, the nature of the different transactions, the possibility of one being closed without affecting the texture of the other and so forth. When, however, the true facts have been determined, the ultimate conclusion is legal inference from proved facts, and it is one of mixed law and fact, on which depends the application of section 24(2) of the Act.'
74. This court in Manilal Dahyabhai's case had also observed with reference to the same point (see page 402).
'Normally where the assessee carries on two different lines of business, it is a question of fact whether they constitute two separate and distinct business or whether they are in truth branches or departments of one and the same business. It is true the conclusion of Tribunal, which is founded on no evidence or which is unreasonable or perverse, may not be regarded as binding even if it is apparently on a question of fact. Again, if the question is one of legal inference to be drawn from the facts proved, it may be regarded as a question of law'.
74. In discussing the first point in this reference, we have shown that the entire business of the assessee-company was one and the same business, that there was throughout a common business management and a common business organisation and a common administration. The funds for the business one place of business. More important than any one of these, however, is, in our opinion, the intention which was evinced on the date on which it took over the business of the firm E. D. Session & Co. At that time there was no question of showing whether it was one business or two businesses or more, but the articles of association unequivocally showed that the business concerns'. See article 4 of the articles of association read with clause III (1) of the memorandum of association. There is nothing brought out upon the facts which would show that this intention was at any time given up. On the other hand, all the facts and circumstances with which we have dealt unequivocally point to the fact that the assessee-company was carrying on the whole of its activity as one business.
75. On behalf of the department a point was made that the case would be governed by the provisions of the Act before its amendment by the amending Act of 1953 (1955 ?) The relevant portion of sub-section (2) of section 24 prior to amendment runs as follows :
'Where any assessee sustains a loss of profits or gains in any year, being a previous year not earlier than the previous year for the assessment for the year ending on the 31st day of March, 1940, in any business, profession or vocation and the loss cannot be wholly set off under sub-section (1), so much of the loss as is not so set off or the whole loss where the assessee had no other hand of income shall be carried forward to the following year and set off against the profits and gains, if any, of the assessee from the same business, profession or vocation for that year.....'
76. The emphasis of counsel for the department has been on the words 'same business'. The words were subsequently dropped at the time of the amendment. Counsel urged, therefore, that at the relevant time the criterion was that it must be 'the same business', and the decisions to which we have adverted would not be attracted. Now, undoubtedly, the words 'same business' did occur in sub-section (2) of section 24 for the relevant year with which we are concerned, but we do not think that because there was the word 'same' specifically used, the position in law would be at all deferent, for the question even after the amendment is still the same, whether the assessee is carrying on one and the same business or two or more business. The criteria, therefore, which the authorities have now laid down would be equally applicable under the unamended section. Indeed the decision in Commissioner of Income-tax v. Cocanada Radhaswami Bank Ltd. specifically dealt with the unamended section and at page 309 the Supreme Court held :
'The crucial words, therefore, are 'profits and gains of the assessee from the same business', i.e., the business in regard to which the sustained loss in the previous year. The question, therefore, is whether the securities formed part of the trading assets of the business and the income therefrom was income from the business. The answer to this question depends upon the scope of section 6 of the Act. Section 6 of the Act classified taxable income under the following several heads : (i) salaries; (ii) interest on securities; (iii) income from property; (iv) profits and gains of business, profession or vocation; (v) income from other sources; and (vi) capital gains. The scheme of the Act is that income-tax is one tax. Section 6 only classifies the taxable income under different heads for the purpose of computation of the net income of the assessee. Though, for the purpose of computation of the income, interest on securities is separately classified, income by way of interest from securities does not cease to be part of the income from business if the securities are part of the trading assets. Whether a particular income is part of the income from a business falls to be decided not on the basis of the provisions of section 6 but on commercial principles.'
77. As regards the provisions of sub-section (2) of section 24, the Supreme Court held at page 310 :
'A comparative study of sub-section (1) and (2) of section 24 yields the same result. While in sub-section (1) the expression 'head' is used, in sub-section (2) the said expression is conspicuously omitted. This designed distinction brings out the intention of the legislature. The Act provides for the setting off of loss against profits in four ways. To illustrate, take the head 'profits and gains of business, profession or vocation'. An assessee may have two business. In ascertaining the income in each of the two business, he is entitled to deduct the losses incurred in respect of each of the said business. So calculated, if he has loss in one business and profit in the other, both falling under the same head, he can set off the loss in one against the profit in the other in arriving at the income under that head. Even so, he may still sustain loss under the same head. He can then set off the loss under the head 'business' against profits under another head, say 'income from investment', even if investments are not part of the trading assets of the business. Notwithstanding this process, he may still incur loss in his business. Section 24(2) says that in that event he can carry forward the loss to the subsequent year or years and set off the said loss against the profit in the business. Be it noted that clause (2) of section 24, in contradistinction to clause (1) thereof, is concerned only with the business and not with its heads under section 6 of the Act. Section 24, therefore, is enacted to give further relief to an assessee carrying on a business and incurring loss in the business though the income therefrom fall under different heads under section 6 of the Act.'
78. The position, therefore, is clearly the same whether we consider the amended or the unamended section and the omission of the word 'same'. In the result we think that this amount of Rs. 3,28,825 ought to have been allowed to the assessee as a set off against the profits for the year 1949-50. We accordingly answer the question No. 5 in the affirmative.
79. To summarise, our answers to the questions referred are as follows :
Question No. 1 answered in the affirmative.
Question No. 2 answered in the negative.
Question No. 3 answered in the affirmative.
Question No. 4 answered in the affirmative.
Question No. 5 answered in the affirmative.
The assessee is entitled to his costs from the Commissioner.
80. Upon the view that we have taken, it seems to us that the questions which have been framed and which we have answered above sufficiently cover the entire controversy between the assessee and the department. We do not think therefore that the questions which the assessee has asked for in the notice of motion need be framed or answered. There shall be no order on the notice of motion.