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PETITIONER: COMMISSIONER OF INCOME TAX, NAGPUR

       Vs.

RESPONDENT: SUTLEJ COTTON MILLS SUPPLY AGENCY LTD.

DATE OF JUDGMENT25/07/1975

BENCH: MATHEW, KUTTYIL KURIEN BENCH: MATHEW, KUTTYIL KURIEN RAY, A.N. (CJ) KRISHNAIYER, V.R. FAZALALI, SYED MURTAZA

CITATION:  1975 AIR 2106            1976 SCR  (1) 120  1975 SCC  (2) 538

ACT:      Income-tax-Jurisdiction of  a High  Court in reference- Scope of-A single adventure-Tests for determining whether in the nature of business.

HEADNOTE:      The assessee  acquired shares in a newly floated sister concern and  later sold a part of its stock at a profit. The Income-tax officer  assessed the  profit to tax on the basis that i was profit accruing to the assessee from an adventure in the  nature of  business, and  the order was confirmed by the  Appellate   Assistant  Commissioner.   On  appeal   the Appellate Tribunal  held that  the transaction  was  in  the nature of  business adventure;  that  the  assessee  by  its Memorandum of  Association was  authorised to  buy and  sell shares. that there was a specific resolution to buy and sell shares. that the assessee included the profit on the sale of shares in  its profit and loss account without showing it in any reserve  account, that  the shares  were purchased  from borrowed funds  and not with ready cash. that the sales were not on  account of  any pressing necessity; that it kept the profit in  cash in  a bank  and that the assessee had in the past dealt with shares as a business transaction.      On reference,  the High  Court held  that there  was no provision in  the Memorandum of Association which authorised the carrying  on or  the business  of purchasing and selling shares; that  the inclusion  of the profit in the profit and loss account  was not  conclusive of the question whether it was capital  asset or  revenue receipt.  that the nature and character of  the money should be determined by its inherent character. that  there was  no evidence that the shares were purchased out of borrowed funds; that a solitary transaction could not  be taken  as conclusive of the fact that the sale of shares  was an  adventure in the nature of trade and that in any  case the  dominant  intention  of  the  assessee  in acquiring the  shares was  to boost  the shares  of a sister concern and when once that was achieved the assessee started selling the investments.      On appeal  to  this  Court  it  was  contended  by  the respondent that the profit can be taxed only if the dominant

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intention of  the assessee  was to  carry on an adventure in the nature of business and not otherwise.      Allowing the appeal, ^      HELD: The Tribunal found, after taking into account all the relevant  circumstances, that  the dominant intention of the assessee  was to make profit by resale of the shares and not to make an investment. [134F]      (1) (a)  The finding  that loss  or profit is a trading loss or  profit is  primarily a  finding of  fact though  in reaching that  finding the Tribunal has to apply the correct test laid  down by law. When the Tribunal has considered the evidence on record and applied the correct test, there is no scope for any interference with the finding of the Tribunal. [134G]      C.I.T. v.  Ashoka Marketing  Co. [1972]  83 I.T.R. 439, referred to.      (b) The whole conclusion of the High Court was based on an unwarranted assumption of facts. The danger of falling to recognise that  the jurisdiction  of the High Court in these matters is  only advisory  and that conclusions of facts are conclusions on  which the  High Court  is  to  exercise  the advisory jurisdiction is illustrated by this case At no time had the  assessee a case that the shares were Purchased with a view to help a sister concern. Nowhere in the statement of the case  or the supplementary statement of case prepared by the Tribunal and filed in the High Court was there a finding on the question. [134E; D] 127      (2) The  tests for  the purpose of ascertaining whether profits made  upon a  sale of an article are taxable profits are:      (i) if a transaction is in the assessee’s ordinary line of business it is in the nature of trade. [131B-C]      (ii) it  is not  necessary, to  constitute trade,  that there should  be a  series of transactions, both of purchase and sale.  A single transaction of purchase and sale outside the assessee’s  line of business may constitute an adventure in the nature of trade; [131C-D]      Venkataswami Naidu  & Co.  v. C.l.T.  [1959] 35  I.T.R. 594, followed.      I. R. v. Reinhold 34 T. C. 3891, 392 referred to.      (iii) where  the purchase  of any  article  or  of  any capital investment  is made  without the intention to resell at a  profit the  resale under  changed circumstances  would only be  a realisation  of capital  and would  not  stamp  a transaction with a business character. [131G]      C.I.T. v.  P. K. N. Co. Ltd. [1966] 60 I.T.R. 65 (S.C.) referred to.      (iv) a  transaction is not necessarily in the nature of trade because  the purchase  was made  with the intention of resale. [131H]      Jenkinson v.  Freeland 39  T.C. 636  (C.A.); Radha Debi Jalan v.  C.l.T. [1951] 20 l.T.R. 176; India Nut Co. Ltd. v. C.l.T. [1960]  39 I.T.R.  234.  Sooniram  Poddar  v.  C.l.T. [1939] I.T.R.  470, 478-9;  Ajax  Products  Ltd.  v.  C.l.T. I.T.R. 297,  310; Gustad India v. C.l.T. [1957] 31 I.T.R. 92 and Mrs.  Alexander v.  C.l.T. [1952]  22 I.T.R.  379.  402. referred to.      (v) a  capital investment  and resale do not lose their capital nature  merely because  the resale  was foreseen and contemplated  when   the  investment   was  made   and   the possibility  of  enhanced  value  motivated  the  investment [132B]      Leeming v.  Jones 15 T. C. 333; Saroj Kumar Mazumdar v.

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C.l.T. [19591  37 I.T.R..  242, 250-1; I. R. v. Fraser 24 T. C. 498, 502. Jankiram Bhadur Rant v. C.I.T. [1965] 57 I.T.R. 21, referred to.      (vi) the  accretion to  capital does  not become income merely because the original capital was invested in the hope and expectation that it would rise in value. [132D-E]      Leeming v. Jones 15 T.C. 333, referred to.      (vii) The  intention to  resell would,  in  conjunction with the  conduct of  the assessee  and other circumstances, point to the business character of the transaction. [132F-G]      In the  instant case,  the assessee had been dealing in shares. (i)  In an  earlier assessment year the assessee had shown in its profit and loss account and the balance sheet a loss in dealing of shares which showed that the assessee had been buying  and selling  shares even  though as an isolated adventure in the nature of business. The debit on account of devaluation of  shares shown  in the profit and loss account was  permissible  only  on  the  footing  that  the  shares, constituted the stock in-trade of the assessee, (ii) in view of the  resolution of  the assessee authorising the director to purchase  and sell shares the view of the High Court that the memorandum  of association did not authorise the company to acquire  and sell  shares had  no  relevance:  (iii)  the finding that  the shares  were purchased with borrowed funds on which  the assessee  was paying  interest was  a  finding supported by  evidence. The  Tribunal was correct in holding that the  assessee had not invested its funds with a view to earn dividend:  (iv) the Tribunal found that the shares were not sold  to liquidate  the debts  of the  assessee  as  the balance sheet  showed that the proceeds were kept as cash in bank. [133A-H] 128

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 1877 of 1970.      From the  judgment and  order dated  the 10th  January, 1968 of  the Madhya  Pradesh High Court at Jabalpur in Misc. Civil Case No. 221 of 1962.      V. S.  Desai, B.  B. Ahuja  and S.  P. Nayar,  for  the appellant.      M. C.  Chagla, B.  Sen, A.  K. Chitale,  A.  K.  Verma, Ravinder Narain  J.  B.  Dadachanji  and  O.C.  Mathur,  for respondent.      The Judgment of the Court was delivered by      MATHEW, J.-This  is an  appeal from the judgment of the High Court  of Madhya  Pradesh in  a reference  made at  the instance of  the assessee  M/s. Sutlej  Cotton Mills  Supply Agency Ltd.  (hereinafter referred  to as the ’assessee’) by the Income  Tax Appellate  Tribunal (hereinafter referred to as the  ’Tribunal’) under  s. 66(1) of the Indian Income Tax Act. The question referred was:      Whether the  inference of  the Tribunal that the profit of Rs.  2,13,150/- arising  from the sale of 1,58,200 shares of the  Gwalior Rayon Silk Manufacturing (Weaving) Co. Ltd., is assessable as business profit is correct ?".      When the  reference came up for hearing before the High Court, the  High Court  found that although the Tribunal was of the  view that the question referred was a mixed question of law  and fact,  it had  not  stated  all  the  facts  and circumstances on  which it  based its  conclusion  that  the profit of  Rs. 2,13,150/-  was a  business profit and so the Court called for a supplementary statement of the case and a

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supplementary statement  of the  case was  submitted to  the Court by the Tribunal.      The material facts in the statement of the case were as follows. The  assessee is a public limited company and it is controlled by  the Birlas.  the assessee applied for certain shares of  the Gwalior  Rayon Silk  Manufacturing  (Weaving) Company Limited  (hereinafter  referred  to  as  the  "Rayon Company"), also  a company  controlled by  the Birlas.  This company was  floated on  25-8-1947 with a paid up capital of Rs. 5  lakhs made  up of  50,000 ordinary shares of Rs. 10/- each. in  the year  ending  31-12-1951,  the  Rayon  Company issued certain  new  shares  for  paid  up  capital  of  Rs. 1,17,25,000/- made up as follows:                                                          Rs. 7,60,000  Ordinary shares of Rs. 10/- each         76,00,000           fully paid up. 1 50,000  Ordinary shares of Rs.10/. each           3,75,000           with paid up at Rs. 2/8/- each. 1,50,000  6% preference shares of Rs. 100/-        37,50,000           each paid up at Rs 25/- each           (redeemable at par at the company’s           option after specified date by giving           one Year’s notice). 129      The assessee  which was interested in the Rayon Company and which  had  already  purchased  1,000  ordinary  shares, subscribed for 3,49,000 shares of the new issue and paid Rs. 8,72,500/  as   application  money  on  the  25th  and  21th February, 1951, and paid Rs. 26,17,500/- as final call money on  10-8-1951.   These  purchases   were  authorized   by  a resolution of the assessee dated 7-2-1951. The assessee sold a part of its stock viz., 1,58,200 shares at a profit of Rs. 2,13,150/-.      For the assessment year 1956-57 (accounting year ending on 31-3-1956),  the Income  Tax Officer sought to assess the amount on  the basis  that it  was profit  accruing  to  the assessee from  an adventure L in the nature of business. The assessee contended that the amount re presented capital gain as the  shares were  purchased by way of investment and that the same  cannot be taxed as revenue receipt. The Income Tax Officer rejected  the  contention.  the  assessee  filed  in appeal  before  the  Appellate  Assistant  Commissioner.  He confirmed the  order. The  assessee then  went up  in appeal before the Appellate Tribunal.      The Tribunal  came to the conclusion, after considering all the  circumstances, that  the  transaction  was  in  the nature of a business ad venture and that profits were liable to be  taxed. The reasons which induced the Tribunal to come to this  conclusion were:  The assessee  was  authorised  by clauses 12,  13, 28  and 29 of paragraph 3 of its Memorandum of Association  to buy  and sell shares; there were specific resolutions of  the Company  authorising a  director of  the assessee to purchase and sell these shares; the assessee had included the profit of Rs. 2,13,150/- in the profit and loss account  without   taking  it  to  any  reserve  account  or specifically  set  it  apart  for  any  other  purpose;  the assessee had  purchased the  shares from  borrowed funds and not with money readily available to it; the assessee did not make the  sales on account of any pressing necessity to meet existing liabilities  but had  in fact  kept a  part of  the sale-proceeds as  liquid cash  in the United Commercial Bank Ltd.; the  assessee had.  in the  past, dealt  in shares  as business transaction and had claimed for the assessment year 1951-52 Rs.  1.29,214/- as loss on account of its dealing in shares of  M/s. Titagarh  Paper Mills  Ltd.; it also claimed

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Rs. 6,30,000/-  as loss  on account  of devaluation  of  the shares of M/s. Pilani Investment Corporation though that was not allowed; there had recently grown a business practice of investing large sums of money in shares in new ventures with an  eye   on  their   appreciation  for  obtaining  by  sale substantial pro fits in future.      The High Court, in its judgment, said that there was no provision in clauses 10, 12, 13, 28 and 29 of paragraph 3 of Memorandum of  Association of  the assessee which authorised the carrying  on of  the business  of purchasing and selling shares, although  some of  these clauses  did authorise  the assessee  to  acquire  and  sell  shares  in  other  similar companies.  that   the  inclusion   of  the  profit  of  Rs. 2,13,150/- in  the profit and loss account without taking it into any  reserve specifically  was not  conclusive  of  the question whether  it  was  a  capital  asset  or  a  revenue receipt; that  the true  nature and  character of the moneys received was to be determined not by the manner in which the assessee treated it but by its inherent character, and, that it was wholly immaterial 130 as to  how the  assessee treated the amount in question; and that there   was  no evidence that the shares were purchased out of borrowed funds as the assessee had a fixed deposit of Rs. 31,75,000/-  in the  United Commercial  Bank Ltd.  and a deposit of  Rs. 8,76,008-2-0  in the  current account of the Bank. The High Court was of the view that the finding of the Tribunal that  the sale  of shares  in 1955  was made not on account  of   any  pressing   necessity  to   meet  existing liabilities  was   based  on  materials  placed  before  the Tribunal. The Court, however, said: "It may be that, at that time, the  liabilities of  the assessee company existed, but it is  quite another  matter to  say that  it was obliged to sell the  shares in  order to  meet those  liabilities." The High Court  was also  of the view that the conclusion of the Tribunal that  the assessee  had claimed  Rs. 1,29,214/-  as loss on  account of dealing in shares of M/s. Titagarh Paper Mills Ltd.  for the  assessment year  1951-52 and  that  the claim was allowed by the Income Tax officer must be accepted as correct,  but said  that this solitary transaction cannot be taken  as conclusive  of the fact that the sale of shares in question  here was  an adventure  in the nature of trade. The main  reason which  impelled the High Court to hold that the transaction  was not an adventure in the nature of trade was that the dominant intention of the assessee in acquiring the shares  was to boost the shares of a sister concern viz, the Rayon Company, and thus render it assistance for setting it up as a going concern and when that was accomplished, the assessee started  selling the  investment which  had in  the mean time enhanced in value.      The question  which the Tribunal had to consider in the appeal and  which was referred to the High Court was a mixed question of  law and  fact, namely.  whether the profit from sale of  the shares  in question  was a revenue or a capital receipt.  The  distinction  between  capital  accretion  and income has  been explained  by Rowlatt,  J. in Thew v. South West Africa Cc. Ltd.(1). The learned judge said that for the purpose of  ascertaining whether profits made upon a sale of an article are taxable profits. the question to be asked is: "Is the  article acquired  for the purpose of trade ?. If it is, the  profit arising  from its  sale must be brought into revenue account and that the profit is chargeable as capital gains if  the sale  is of  a capital  asset, and as business profit if  the sale  is in  the course  of business  or  the transaction constitutes an adventure in the nature of trade.

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The line  between capital  sales and  sales producing income has been  drawn by  Lord Justice Clerk in Californian Copper Syndicate  v.  Harris(2)  in  a  passage  which  has  become classical:           "It is  quite a  well settled principle in dealing      with questions  of assessment  of income tax that where      the owner  of an Ordinary Investment chooses to realise      it,  and  obtains  a  greater  price  for  it  than  he      originally acquired  it at,  the enhanced  price is not      profit....assessable to  income tax.  but it is equally      well established  that enhanced  values  obtained  from      realisation or  conversion  of  securities  may  be  so      assessable  where   what  is   done  is  not  merely  a      realisation or change of investments but an act done in      what is  truly the carrying on, l I or carrying out, of      a business.... What is the line which 131      separates the  two classes of-cases may he difficult to      define, and  each case  must be considered according to      its facts.  the question  to be determined being-Is the      sum of  gain that  ha been  made a  mere enhancement of      value by  realising a  security or is it a gain made in      an operation  of business in carrying, out a scheme for      profit-making ?"      In the  absence of  any evidence of trading activity in cases of  purchase and  resale of  shares, it  has been held that profit  arising from  the resale is an accretion to the capital. If a transaction is in the assessee‘s ordinary line of business there can be no difficulty in holding that it is in the  nature of trade. But the difficulty arises where the transacting is  outside the  assessee’s the  of business and then, it  must depend  upon the  facts and  circumstances of each case  whether the  transaction is  in the  nature of  a trade.      It is  not necessary  to constitute  trade  that  there should be  a series  of transactions both of purchase and of sale. A  single transaction of purchase and sale outside the assessee’s line  of business  may constitute an adventure in the nature  of trade.  Neither repetition  nor continuity of similar  transactions   is   necessary   to   constitute   a transaction an adventure in the nature of trade. If there is repetition and continuity, the assessee would be carrying on a business  and the  question whether  the  activity  is  an adventure in  the  nature  of  trade  can  hardly  arise.  A transaction may  be regarded  as isolated although a similar transaction may  have taken  place a fairly long time before [see 1. R. v. Reinhold(1)].      The principles  underlying the  distinction  between  a capital sale  and an  adventure in  the nature of trade were examined by  this Court  In Venkataswami  Naidu &    Co.  v. C.l.T.(2), where  this Court  said that  the character  of a transaction cannot  be determined  solely in the application of any abstract rule, principle or test but must depend upon all the  facts and circumstances of the case. Ultimately, it is a  matter of  first impression    with  Court  whether  a particular transaction  is in  the nature of trade or not it has been said that a single plunge may be enough provided it is shown to the satisfaction of the Court that the plunge is made in  the waters  of the trade; but mere purchase/sale of shares-if that  is all  that is  involved in  the plunge-may fall short of anything in the nature of trade. Whether It is in  the  nature  f  trade  will  depend  on  the  facts  and circumstances.      Where the  purchase of  any article  or of  any capital investment,  for  instance,  shares.  is  made  without  the

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intention to  resell at  a profit.  a   resale under changed circumstances would  only be  a realisation  of capital  and would not  stamp the  transaction with  a business character [see C.l.T. v. P.K.N. Co., Ltd.(3)].      Where a  purchase is made With the intention of resale, it  depends  upon  the  conduct  of  the  assessee  and  the circumstances of  the case whether the venture is on capital account or  in the  nature of  trade. A  transaction is  not necessarily in the nature of trade because the purchase 132 was made  with the  intention of  resale [see  Jenkinson  v. Freeland(1);   Radha Debi  Jalan v. C.l.T.(2); India Nut Co. Ltd. v.  C.l.T.(3); M/s.  Sooniram Poddar v. C.l.T.(4); Ajax Products Ltd.  v. C.l.T.(5);  Gustad Irani v. C.l.T.(5); and Mrs. Alexander v. C.l.T.(7);].      A capital  investment and  resale  do  not  lose  their capital nature  merely because  the resale  was foreseen and contemplated  when   the  investment   was  made   and   the possibility of enhanced values motivated the investment [see Leeming v.  Jones(8) and also the decisions of this Court in Saroj Kumar  Mazumdar v.  C.l.T.(9) and Janki Ram Bhadur Ram v. C.I.T.(10)].      In I. R. v. Fraser(11) Lord Norman said:           "The individual  who enters  into a purchase of an      article or  commodity may have in view the resale of it      at a  profit, and  yet it  may be  that this is not the      only purpose  for which he purchased the article or the      commodity nor  the only  purpose to which he might turn      it if  favourable opportunity  for sale does not occur.      An amateur  may purchase  a picture  with a view to its      resale at  a profit,  and yet  he may  recognise at the      time or  afterwards that  the possession of the picture      will give  him aesthetic  enjoyment  if  he  is  unable      ultimately, or  at his  chosen time, to realise it at a      profit .... "      An accretion  to capital  does not become income merely because the  original capital  was invested  in the hope and expectation that it would rise in value. if it does so rise, its realisation  does not  make it income. Lord Dunedin said in Leeming v. Jones(8) at p. 360:           "The fact  that a  man does  not mean  to hold  an      investment may  be an  item of evidence tending to show      whether he  is carrying  on a trade or a concern in the      nature of  trade in respect of his investments, but per      se it leads to no conclusion whatever." This  Court  laid  down  in  Venkataswami  Naidu  &  Co.  v. C.l.T.(12) that  the dominant  or  even  sole  intention  to resell is a relevant factor and raises a strong presumption, but by  itself is  not conclusive  proof, of an adventure in the nature of trade.      The intention  to resell would, in conjunction with the conduct of  the assessee  and other  circumstances, point to the business character of the transaction.      In the light of the principles above referred to, it is necessary to examine whether the Tribunal had approached the question from  the right  perspective, viz.,  whether on the basis of  its finding  on questions  of fact,  the inference that the transaction was an adventure in the nature of trade was justified. 133      The Tribunal  relied on the following circumstances for coming to  the conclusion.  The assessee has been dealing in shares from  1951 to  1953. For the assessment year 1951-52, the assessee claimed a sum of Rs. 1,29,214/- which was shown in the  profit and loss account and the balance sheet of the

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company for  the year  ending 31-3-1951  as a  loss  in  the dealing of  shares of  M/s. Titagarh  Paper Mills  Ltd. This claim was  allowed by  the Income  Tax officer. According to the Tribunal,  this would  show that  the assessee  had been buying  and  selling  shares  even  though  as  an  isolated adventure in  the nature  of business The High Court has not upset this  finding, but  has only  said  that  this  is  an isolated transaction. That apart, in the same year, a sum of Rs. 6,30,000/- was debited to the profit and loss account on devaluation  of   the  shares   of  M/s.  Pilani  Investment Corporation. Such  a  debit  was  permissible  only  on  the footing that  the shares  constituted the  stock in Trade of the assessee.  It is  no doubt  true that the Department did not allow  this claim.  But that  was on  the basis that the claim that  the shares  leave fallen in value was not proved to the  satisfaction of  the Income  Tax officer, and not on the basis that the shares were not held as stock in trade as the High  Court wrongly  thought. The Tribunal also referred to the  resolutions- passed  by the assessee authorising one of its  directors to  purchase and  sell the  shares in  the Rayon Company The finding of the High Court that the clauses of the Memorandum o Association viz., clauses 10, 12, 13, 28 and 29  and not  authorize the  company to  acquire and sell shares as business has no relevance in view of the aforesaid resolution of  the assessee and of the fact that it had been dealing in  shares in a commercial spirit as is evident from its claim  for loss  in  dealings  in  the  shares  of  M/s. Titagarh Paper  Mills Ltd. and devaluation of shares of M/s. Pilani Investment  Corporation on  the basis  that they  had fallen in value.      Secondly, the  Tribunal said that from 1947 to 1956, no dividend had been declared by the Rayon Company and that the money which  went into  the purchase  of  these  shares  was borrowed by  the assessee.  In other  words, the view of the Tribunal was,  it was  with borrowed funds that the assessee purchased the  shares. It is no doubt true that there was no evidence to  show that  the money  was specifically borrowed for the  purpose of  buying shares.  But there  was evidence before the  Tribunal for its finding that the liabilities of the assessee  exceeded its  assets. The  finding, therefore, that the  shares were purchased with borrowed funds on which the assessee was paying interest, was a finding supported by evidence. The  reasoning of  the Tribunal  that it  is  most improbable that  the assessee  would be  investing  borrowed money on  which interest  would have  to be  paid in  shares which yielded  no dividend,  was correct. We cannot say that this was  not a  relevant circumstance  for the  Tribunal to take into  consideration for  coming to  the conclusion that the transaction  was an adventure in the nature of business. Looking into  all the  circumstances, the Tribunal negatived the case of the assessee that it had invested its funds with a view to earn dividend.      The case  of  the  assessee  throughout  was  that  the purchase of the shares was by way of investment and the sale was forced  by necessity because the creditors were pressing for repayment of the loan. The 134 Tribunal found  that the  shares were  not sold to liquidate the debts  of the  assessee as the balance sheet as on 21-3- 1956 showed  that the  proceeds were  kept is liquid cash in the United Commercial Bank Ltd.      As already  stated, the  main reason why the High Court came to  a different conclusion. is stated as follows in the judgment :           " ..  Undoubtedly, there  are some  elements which

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    are   contra-indicative of  investment  but  there  are      other considerations  which detract from their value as      elements indicating  an  adventure  in  the  nature  of      trade, the main being, that the assessee company, which      is controlled  by the Birlas, purchased the shares with      a view  to assisting a sister company controlled by the      same persons,  and not  to embark upon a venture in the      nature of trade."      At no time had the assessee a case that the shares were purchased with a view to help a sister company controlled by the Birlas.  No such  case was set up by the assessee either before the  Income Tax  officer or  the Appellate  Assistant Commissioner;  nor   was  it   urged  before  the  Appellate Tribunal.  Nowhere   in  the   statement  of   case  or  the supplementary statement of case prepared by the Tribunal and filed in  the High  Court  was  there  any  finding  on  the question. The whole conclusion of the High Court is based on unwarranted assumption  of facts  which must have been taken from the argument of the assessee before the High Court. The danger of  failing to recognize that the jurisdiction of the High Court  in these  matters  is  only  advisory  and  that conclusion of  facts are conclusions on which the High Court is to  exercise the  advisory jurisdiction is illustrated by this case.      Mr. Chagla  for the  respondent contended that the only question to be asked and answered is : What was the dominant intention of  the assessee when it purchased the shares ? If the dominant  intention was  to carry on an adventure in the nature of  business, the profit can be taxed. Otherwise not. In  other  words,  the  question  is  whether  the  assessee purchased the  shares in  a commercial spirit with a view to make profit  by trading  in them.  The Tribunal found, after taking in-  to account  all the  relevant circumstances that the dominant intention of the assessee was to make profit by resale of the shares and not to make an investment.      The finding  that loss  or profit  is a trading loss or profit is  primarily a  finding of  fact, though in reaching that finding the Tribunal has to apply the correct test laid down by law When we see that the Tribunal has considered the evidence on  record and applied the correct test there is no scope for interference with the finding of the Tribunal (see C. 1. T. v. Ashoka Marketing Co.(l).      We do  not think  that the  High  Court  was  right  in interfering with the judgment of the Tribunal. In the result we reverse  the judgment  of the  High Court  and allow  the appeal with costs. P.B.R.                                       Appeal allowed. 135