ORDER
M.V.R. Prasad, Accountant Member
1. These two applications were heard together and are disposed of by this common order.
2. By these applications, the assessee submits that there are certain mistakes apparent from the record in the captioned order of the Tribunal dated 23-10-1997 and so requests that the order should either by suitably amended or recalled for a fresh hearing. For understanding the contentions made out, it is necessary to set out the relevant facts of, the case, which are as under :-
3. The applicant is a lady born in 1971 to the Kasliwals, who own the S. Kumar group of companies. On 15-2-1988, she was engaged to Shri Kumarmangalam Birla, son of the late Shri Aditya Birla, who was a leading industrialist of the country. The marriage was celebrated on 17-5-1989.
4. After her engagement, the applicant purchased 2,50,000 shares of Indo-Gulf Fertilisers & Chemicals Corporation Limited (hereinafter referred to as ‘IGFCCL’). These shares were purchased during the period 27-10-1988 to 28-11-1988 for a consideration, inclusive of share transfer fees, of Rs. 31,60,000. The average purchase price works out to about Rs. 12.76 per share. The applicant did not maintain any books of account. She, however, had certain bank accounts and a current account in the family concern of M/s. S. Kumars Research Services. Subsequently, she purchased another lot of 7,00,000 shares of IGFCCL through two brokers, i.e., M/s. Jhawar & Co., Calcutta, and M/s. S. S. Dalmia, Calcutta, between the period 22-6-1990 and 29-6-1990 at an aggregate cost of Rs. 1,32,08,500, at average cost ranging between Rs. 18 and Rs. 19.10 per share. So, by 30th June 1990, her holdings of IGFCCL shares were of the order of 9,50,000 (2,50,000 + 7,00,000). Apart from the shares of IGFCCL, she also held certain other shares valued in her wealth-tax returns as on 31-3-1991 at Rs. 12,39,396 and these shares were acquired before her engagement. Her claim that the shares of the value of Rs. 12,39,396 were held as investments and not as stock in trade was accepted in her wealth-tax assessments upto assessment year 1990-91. She sold the initial lot of 2150,000 shares of IGFCCL on 11-9-1990 for an aggregate consideration of Rs. 1,05,25,000 and these shares were sold at an average rate of about Rs. 42.25 per share. The sale proceeds of these 2,50,000 shares were received on 11-10-1990, and so in the assessment for the assessment year 1991-92, the question came up for consideration whether the profit derived by the assessee on the sale of the said 2,50,000 shares of IGFCCL was actually profit assesses able to capital gains tax or a trading profit. The Assessing Officer accepted the claim of the assessee that 2,50,000 shares were held by the assessee as investment and so the profit derived from the sale of these shares of Rs. 29.30 lakhs after claiming the deduction under section 48(2) of the Income-tax Act of Rs. 44,05,000 was assessable under the head “Capital gains”. The assessee sold the second lot of 7,00,000 shares also in the year of account relevant for the assessment year 1992-93 and again claimed that the profit derived on the sale of these 7,00,000 shares is assessable to tax under the head ‘Capital gains’. She disclosed capital gains of Rs. 1,02,90,870 for the assessment year 1992-93 as per the following computation :-
Gross sale proceeds Rs. 3,97,46,775 Less : Dividend @ Re. 1 per share in respect of 6,77,600 shares Rs. 6,77,600 --------------- Hence sale proceeds Rs. 3,90,69,175 Less : Cost of acquisition of Shares : (Cost price of share Rs. 1,32,08,500 Share transfer fees Rs. 1,17,000 Bank charges Rs. 1,500) Rs. 1,33,27,000 ---------------- Gross long-term capital gains Rs. 2,57,42,175 Less : Deduction u/s 48(2) Rs. 1,54,51,305 Net long-term capital gains Rs. 1,02,90,870 ----------------
The Assessing Officer, however, took the view that the surplus on the sale of 7,00,000 shares is of the nature of trading profit and is assessable under the head “Business” and accordingly rejected the claim that the surplus is of the nature of capital gains. He observed that the assessee carried on an adventure in the nature of trade in respect of the acquisition of the sale of these 7,00,000 shares, and for this proposition he relied on the decision of the Hon’ble Allahabad High Court in the case of CIT v. Sugar Dealers [1975] 100 ITR 424 wherein it was held that profit from even a solitary transaction can sometimes be held to be a revenue income if the transaction can be said to be an adventure, in the nature of trade. He observed that at one point of time, the assessee was having about 9,50,000 shares of IGFCCL and also that no ordinary person can think of purchasing such huge quantity of shares of this company and that too only with borrowed funds. The assessee failed before the CIT(Appeals) also and the reasons given by the CIT(Appeals) are mentioned in the captioned order of the Tribunal for the assessment year 1992-93 at pages 8 and 9.
5. After the order of the CIT (Appeals) for the assessment year 1992-93 became available, the CIT took action under section 263 in respect of the assessment year 1991-92 and held that the purchase and sale of the first lot of IGFCCL shares was also a plunge into the waters of trade and accordingly revised the assessment with certain directions. On appeal against the order of the CIT under section 263 by the applicant, the Tribunal cancelled the said order after considering the purchase and sale of 2,50,000 shares and also the acquisition of the second lot of 7,00,000 shares and held that the first lot of 2,50,000 shares was bought as investments and they were sold to hold the second lot of 7,00,000 shares. The observations of the Tribunal for the assessment year 1991-92 are reproduced in the captioned order of the Tribunal for the assessment year 1992-93 at pages 9 to 11. The captioned order of the Tribunal is in respect of the appeal filed by the assessee against the order of the CIT(Appeals) for the assessment year 1992-93. On behalf of the assessee, it was pleaded before the Tribunal that the issue whether the 7,00,000 shares in question were held as trading assets or as investments has already been decided by the Tribunal in its order for the assessment year 1991-92 when it considered the issue relating to the purchase and sale of the first lot of 2,50,000 shares. The Tribunal rejected this contention. It held that the issue before the Tribunal for the assessment year 1991-92 related to the nature of the holdings of 2,50,000 shares and the nature of the profit derived on the sale of those shares, and even though the fact that the 7,00,000 shares were also acquired before the sale of the first lot of 2,50,000 shares was before the Tribunal and duly mentioned in its order for the assessment year 1991-92, it cannot be held to have decided the issue regarding the nature of the holdings of the 7,00,000 shares or the nature of profit derived on the sale of the 7,00,000 shares. The Tribunal observed that to hold otherwise, i.e., to hold that the nature of these 7,00,000 shares and the profit derived on the sale of these shares has already been decided, and to hold that the 7,00,000 shares were acquired as investments and so the surplus of Rs. 2,57,42,175 derived on the sale of these 7,00,000 shares [before deduction under section 48(2)] was of the nature of capital gains, was, to beg the question, or in other words, to assume the very premise which has to be decided in the appeal. It also observed that in this view of the matter, certain decisions cited by the counsel for the assessee during the hearing to the effect that the Tribunal cannot come to a different finding from the one arrived at by the earlier Tribunal on the same facts are not applicable to the facts of the case and so did not require to be considered.
6. In the present application (M.A. No. 111/Mum/98), it is made out that the order of the Tribunal is based upon either erroneous facts or irrelevant facts. It is also made out that the Tribunal has come to a different conclusion from the one arrived at by the Tribunal for the assessment year 1991-92 in respect of the holdings by way of IGFCCL shares of the applicant and so if the Tribunal wanted to give a contrary finding on the same facts, it could have at least referred the matter to a larger Bench and should not, on its own, have given a finding contrary to that arrived at by the earlier Tribunal. It is pleaded that the Tribunal committed an error in holding that the earlier Tribunal did not consider the issue whether the second lot of 7,00,000 shares of IGFCCL was held as investments or as an asset. It is also pleaded that the Tribunal gave a wrong finding that the 7,00,000 shares in question were acquired out of borrowed funds and this wrong finding is the bedrock of the captioned order of the Tribunal. It is also mentioned that the Tribunal observed that the 7,00,000 shares were also sold and certain railway bonds were acquired out of the sale proceeds by the applicant and this fact of the sale of 7,00,000 shares and the acquisition of the bonds was not considered by the earlier Tribunal. It is also pleaded that these observations of the Tribunal have no relevance to decide the issue whether the 7,00,000 shares were acquired as trading assets or investments.
7. In support of the proposition that the Tribunal cannot come to a different finding from that arrived at for a different year by another Tribunal, the learned counsel of the assessee, Shri S. E. Dasture, relied upon the decision of the Hon’ble Bombay High Court in the case of CIT v. Goodlass Nerolac Paints Ltd. [1991] 188 ITR 1/55 Taxman 484 the decision of the Hon’ble Madras High Court in the case of CIT v. L. G. Ramamurthi [1977] 110 ITR 453. He pointed out that if the Tribunal wanted to come to a different conclusion from that arrived at by the earlier Bench of the Tribunal for the assessment year 1991-92, it should have got the case referred, in all judicial propriety, through the President of the Tribunal, to a larger Bench. He has also relied on the decision of the Apex Court in the case of Janki Ram Bahadur Ram v. CIT [1965] 57 ITR 21 for the proposition that it is for the revenue to establish that the profit earned in a transaction is of a revenue nature and pleaded that in the present case, such onus is not discharged, and that the Tribunal has wrongly placed such an onus on the assessee. It is also pleaded that the background of the assessee, to which a reference has been made to hold that the purchase and sale of the 7,00,000 shares in IGFCCL is of the nature of an adventure in trade is equally applicable to come to a contrary conclusion, but the Tribunal wrongly relied on the background to come to a conclusion adverse to the assessee. Apart from these arguments advanced in the course of the hearing, there are certain alleged mistakes in the order of the Tribunal pointed out in the present application of the assessee, to which we shall refer in due course.
8. The learned counsel for the Department, Shri D. Y. Chandrachud, has pointed out certain facts of the case like the date of engagement of the assessee, the date of acquisition of the 2,50,000 shares of IGFCCL and the subsequent acquisition of the 7,00,000 shares, to which we have already adverted in this order. In particular, he stressed that the sale of the first lot of 2,50,000 shares for about Rs. 1.05 crores was effected only on 11-9-1990 and the sale proceeds were received only on 11-10-1990, whereas the purchase of the second lot of 7,00,000 shares was effected much earlier, i.e., in the month of June 1990. It is stressed that in June 1990 when the 7,00,000 shares were purchased, the assessee could not have anticipated that the 2,50,000 shares sold in September 1990 would yield sale proceeds of the order of Rs. 1.05 crores. It is also pointed out that these shares would not have yielded more than about Rs. 49,00,000 at the ruling price of Rs. 18 or so per share. Referring to the argument of the assessee that the Tribunal had already decided the nature of the holdings of the 7,00,000 shares in its order for the assessment year 1991-92, the learned counsel for the Department pleaded that what was in issue before the Tribunal in the appeal for the assessment year 1991-92 was the dominant intention at the time of purchase of 2,50,000 shares and not the dominant intention at the time of purchase of 7,00,000 shares, which alone would decide whether the 7,00,000 shares in question were held as trading assets or capital assets. He readily conceded that the Tribunal did mention that the 2,50,000 shares were sold to fund the purchase of the 7,00,000 shares, but the learned counsel pointed out that the circumstances as to why the 7,00,000 shares were purchased was not an issue at all before the Tribunal. He also pleaded that what was considered by the Tribunal was an order under section 263 passed by the CIT revising the order of the Assessing Officer holding that the 2,50,000 shares were held as investment and the considerations that apply in respect of a 263 order are totally different. He also pointed out that the order of the Tribunal expressly contemplates that the facts considered by the Tribunal in the assessment year 1991-92 cannot be binding for the assessment year 1992-93 and that the assessee herself pleaded before the Tribunal for the assessment year 1991-92 that each assessment year is a separate unit and in this context he referred to the following argument of the learned counsel for the assessee contained at page 5 of the order of the Tribunal for the assessment year 1991-92 :-
“The assessee referring to the observations of the CIT in regard to the conclusion of the Assessing Officer for the assessment year 1992-93 having been confirmed by the Commissioner of Income-tax (Appeals) in his order submitted that merely because another officer had taken a different view does not mean that there was an error in the order of the Assessing Officer. It was further contended before the CIT that it is necessary to bring about the error in the order of the Assessing Officer and that should base on the records for that assessment year and should not have been based upon the records and conclusion of a different assessment year. It was accordingly submitted that there is neither any error nor any prejudice caused to the revenue.”
Pursuing the same line of argument, he also referred to the contention of the assessee for the assessment year 1991-92 that res judicata did not apply in income-tax proceedings as contained in the following observations of the Tribunal at pages 7 and 8 of its order for the assessment year 1991-92 :-
“He submitted that as has been held by the Gujarat High Court in CWT v. Amichand C. Shah (HUF) [1996] 218 ITR 659, ‘records’ should mean records of the assessment year. He submitted that if the records has to mean of records that may not be available to the Assessing Officer, then the action of the CIT is very well justified. But this does not appear to be the intention of the Law Makers. He submitted that when each assessment year is independent of the other assessment year and the principle of res judicata does not apply in assessment proceedings and on that basis if in the assessment year 1992-93 there were certain more informations that were available to the Assessing Officer based on which he had come to a different conclusion, it would not automatically lead to the conclusion that in the earlier year also such informations would have been available or were available but the Assessing Officer omitted to look into. He submitted that it is not the case of the CIT that these informations were available, existing while concluding the assessment for the present assessment year. He accordingly contended that in such a situation the action of the CIT is clearly unwarranted.”
The learned counsel for the Department has also pleaded that the finding of the Tribunal, that in the circumstances of the present case it is not bound by the earlier decision of the Tribunal is consistent with a line of Apex Court decisions, In this context, he referred to the following decisions :-
(1) Raja Bahadur Visheshwara Singh v. CIT [1961) 41 ITR 685;
(2) Dalhousie Investment Trust Co. Ltd. v. CIT [1968] 68 ITR 486;
(3) M. M. Ipoh v. CIT [1968] 67 ITR 106;
(4) CIT v. Brij Lal Lohia and Mahabir Prasad Khemka [1972] 84 ITR 273.
Referring to the contention of the assessee that the Tribunal had erroneously differed from the earlier order of the Tribunal and, in all fairness, should have got it referred to a larger Bench, the learned counsel for the Department pleaded that such an eventuality arises only in case the Tribunal differed from the earlier view. He stressed that in the present case, the Tribunal did not disturb the views of the earlier Tribunal in respect of the nature of the holdings of 2,50,000 shares, which alone was the issue before it for the assessment year 1991-92. The Tribunal accepted the view as correct and proceeded to consider the nature of the holdings of the 7,00,000 shares, which is altogether a different issue, as the facts relating to the assessment year 1992-93 are in a different compass. It is not that the earlier decision is wrong. It is correct in the context of the facts of that year. So, it is pleaded that there is no question of referring the appeal for the assessment year 1992-93 to a larger Bench. It is argued that, in fact, the earlier Tribunal itself held that a different view is permitted for the second year, as made out in the extracts of the order of the Tribunal given hereinabove. Adverting to the remarks of the learned counsel for the assessee that at certain places of the order, the Tribunal itself held that the 7,00,000 shares were funded through the sale of 2,50,000 shares but still it came to a contrary and erroneous finding that the 7,00,000 shares were financed through borrowed funds, the learned counsel for the Department pointed out that the Tribunal clearly held that on the date of the purchase of the 7,00,000 shares the assessee could not have contemplated the realisation of the sale proceeds of the order of Rs. 1.05 crores an he observed that the order of the Tribunal cannot be read in a piecemeal fashion. He also observed that a judgment cannot be read as a statute. The learned counsel for the Department concluded with the observation that the scope of an application under section 254(2) is strictly limited and no debatable issue can be raised in such an application. For this proposition, he relied upon the decision of the apex court in the case of T. S. Balaram, ITO v. Volkart Bros. [1971] 82 ITR 50 and the decision of the jurisdictional High Court in the case of CIT v. Ramesh Electric & Trading Co. [1903] 203 ITR 497 (Bom.).
9. The learned counsel for the assessee, Shri J. D. Mistry, mentioned in the rejoinder that the bedrock of the order of the Tribunal is that the acquisition of the 7,00,000 shares was out of borrowed funds and this finding is erroneous, because the shares in question are ‘B’ Group shares and the payment was required to be made only in October 1990 and by that time the sale proceeds of the 2,50,000 shares in question became available and so the portion of borrowed funds in the funding of the 7,00,000 shares was only Rs. 30,00,000. It is also pleaded that the Tribunal did not consider the period of holding or the type of asset or the previous history of the assessee and came to an erroneous conclusion that the acquisition of the 7,00,000 shares was out of borrowed funds and on this basis came to a conclusion adverse to the assessee. He also mentioned that the decision of the jurisdictional High Court in the case of Ashok Kumar Jalan v. CIT [1991] 187 ITR 316 (Bom.), on which the Tribunal relied, has been misapplied, as it was in favour of the assessee and was actually cited on behalf of the assessee before the Tribunal. He also observed that the applicant is a member of the Birla family and she had many options. She could have borrowed funds and paid for the purchase of the 7,00,000 shares even without selling the 2,50,000 shares. By implication, it is argued that even if the acquisition of the 7,00,000 shares had been funded through borrowals, it would not give rise to the inference that they were not held as investments. It is also pleaded that the decisions cited by the learned counsel for the Department are quite distinguishable.
10. We have gone through the application of the assessee running into 21 pages. We, however, fail to see how the order of the Tribunal for the assessment year 1992-93 requires to be recalled. The Tribunal correctly mentioned all the relevant facts, including the dates of acquisition of the first lot of 2,50,000 shares and the second lot of 7,00,000 shares and the respective dates of sale of the two lots. We may also mention that the argument of the learned counsel for the assessee that the shares in question were Group ‘B’ shares and so they had to be paid only by October 1990 was not raised in the course of the regular hearing. This is a fresh fact sought to be adduced in the course of the hearing of the miscellaneous application. Actually, this was not mentioned by Shri Dastur who advanced the main argument. This was mentioned only by Shri Mistry in the course of his rejoinder. It is not disputed that the 2,50,000 shares were sold subsequent to the purchase of the 7,00,000 shares. If the payment for the 7,00,000 shares can be delayed, it also follows that there would be delay in the receipt of the sale proceeds of the 2,50,000 shares. As the 2,50,000 shares, which are also of the same category, i.e., Group ‘B’ shares, are admittedly sold only in September 1990 and their sale proceeds of Rs. 1.05 crores were received in October 1990, we fail to see how the payment for the 7,00,000 shares admittedly purchased much earlier, i.e., in June 1990, could be delayed upto October 1990. There cannot be different rules for the payment of sale consideration and the receipt of sale consideration in respect of the same category of shares. The Tribunal clearly observed in its order that what is crucial to decide the nature of the 7,00,000 shares, i.e., whether they are held as trading assets or as capital assets, is the dominant intention at the time of their purchase, and it also observed that if the purchase is effected out of borrowed funds, it is, normally indicative of a trading transaction or an adventure in the nature of trade. The Tribunal further observed that even the 2,50,000 shares were acquired only out of borrowed funds and even the 7,00,000 shares were initially acquired out of borrowed funds or accommodation given by a broker and the subsequent discharge of the liability by the sale of 2,50,000 shares in no way detracts from the fact that the assessee assumed liabilities much beyond her known means and such assumption of liabilities without ostensible means for their discharge would constitute engagement in an adventure of the nature of trade, and for this proposition it has relied upon the decision of the jurisdictional High Court in the case of Ashok Kumar Jalan (supra) and the decision of the apex court in the case of CIT v. Sutlej Cotton Mills Supply Agency Ltd. [1975] 100 ITR 706. It relied on this decision of the Apex Court also for the proposition that a single transaction of purchase or sale outside the assessee’s line of business may constitute an adventure in the nature of trade. It relied upon the decision of the Apex Court in the case of Ramnarain Sons (P.) Ltd v. CIT [1961] 41 ITR 534 for the proposition that in considering whether a transaction is or is not an adventure in the nature of trade, the problem must be approached in the light of the intention of the assessee and the question whether the assessee’s transactions in shares, properties or investments amount to trading in them or not is a mixed question of law and fact. The Tribunal took into consideration the background of the assessee, the net worth of the assessee, the fact that the first lot of 2,50,000 shares of IGFCCL and the second lot of 7,00,000 shares of the said company were purchased at least initially out of borrowed funds or accommodation by family concerns or brokers and took the view that the acquisition of the second lot of 7,00,000 shares amounted to an adventure in the nature of trade. We do not find any rectifiable error in the order of the Tribunal insofar as these findings are concerned.
11. The crux of the argument of the assessee is that the Tribunal had already decided the nature of the 7,00,000 shares of IGFCCL when if decided the nature of the 2,50,000 shares in the appeal for the assessment year 1991-92. For this proposition, it relied upon the following remarks of the Tribunal in its order for the assessment year 1991-92, figuring at pages 11 and 12 :-
“On the face of it, it is clear that the desire to hold larger number of shares was the reason behind the transaction of purchase and the sale of the earlier holdings. The resultant effect, of course, is that the capital worth of the person also goes up substantially. But to conclude that the said transaction was intended with a profit motive in the circumstances of the case is not correct because, as observed earlier, the desire was to hold larger number of shares by funding the purchase by sale of lesser number of shares taking into account the share value as going up in the market. In the circumstances of the case, we are of the view that the transaction was one of capital transaction and not of business and, therefore, the result of the transaction, the gain thereof, is obviously a long-term capital gain because it suffice the condition of holding of shares.”
The plea taken by the assessee in the present application and also during the course of the hearing before us is that the above remarks of the Tribunal have already decided the nature of the second lot of 7,00,000 shares. We have extracted these remarks of the Tribunal at pages 9 to 11 of our order and we extensively dealt with this plea at pages 11 to 14 and rejected it. We can only reiterate that the above remarks of the Tribunal relate to or are in the context of deciding the nature of the acquisition of the first lot of 2,50,000 shares and they discuss the purchase and sale of this lot. The Tribunal has observed that the first lot of 2,50,000 shares were sold for holding the second lot of 7,00,000 shares. Any finding given about the reason for the sale of the first lot of 2,50,000 shares does not necessarily apply to the purchase of the second lot. Simply because the 2,50,000 shares were sold to discharge the liability incurred for the acquisition of the 7,00,000 shares, it does not follow that the 7,00,000 shares were acquired as capital assets. The lear-ned counsel for the assessee has set a lot of store by the expression “desired to hold larger number of shares” and pleaded that the word “hold” used by the Tribunal implies that it gave a finding that the 7,00,000 shares were acquired as capital assets. We do not agree with this contention. The Tribunal simply observed that the 2,50,000 shares were sold for acquiring the 7,00,000 shares. The remarks of the Tribunal are in no way determinative of the nature of the holdings of the 7,00,000 shares acquired. The Tribunal in the order for assessment year 1992-93 has also observed that to hold otherwise and to conclude that the Tribunal had already decided the issue relating to the acquisition of the 7,00,000 shares while disposing of the appeal for the assessment year 1991-92, would be, what is normally called “begging the question”, i.e., to assume the very premise that is yet to be decided. We do not see any rectifiable infirmity in this reasoning.
12. In para 6 of the application, the assessee contends that the Tribunal’s basis that the 7,00,000 IGFCCL shares were obtained from borrowed funds is “not only erroneous but visibly unstateable”. We do not see anything wrong with the finding of the Tribunal in this regard. The Tribunal observed that the 7,00,000 shares were purchased about three months before the sale of the 2,50,000 shares and so at one stage the assessee was holding about 9,50,000 shares of IGFCCL. The Tribunal further observed that the assessee could have expected to realise only about Rs. 45,00,000 through the sale of the 2,50,000 shares and not the amount of Rs. 1.05 crores which she actually realised in October 1990 through their sale. On this basis, the Tribunal observed at page 22 of its order that the assessee assumed a liability of about Rs. 1,35,25,000, being the cost of 7,00,000 shares, when the value of the 2,50,000 shares was only of the order of Rs. 45,00,000 on the basis of the average purchase price of 7,00,000 shares. The Tribunal also observed that she had to pay interest on the amount borrowed from outsiders or accommodation provided by brokers to purchase these 7,00,000 shares. It further observed that apart from the liabilities incurred in the context of 7,00,000 shares, she was owing funds to her family concerns. So it rejected the contention of the assessee that she had to borrow only Rs. 30,00,000 to acquire the 7,00,000 shares. The assessee was arguing with the benefit of hindsight. The Tribunal took into account the circumstances prevailing on the date of acquisition of the 7,00,000 shares to ascertain her intention for acquiring the said 7,00,000 shares and we do not find any rectifiable error in the method or the findings of the Tribunal in this behalf.
13. It is contended in para 10 of the present application that the 2,50,000 shares were sold only for the acquisition of the second lot of 7,00,000 shares and as the first lot of 2,50,000 shares had been held by the Tribunal to be capital assets or investment, it “inexorably follows that the holding of 7,00,000 IG shares must also be held to be an investment”. It is also pleaded that the binding decision of the Tribunal for the earlier year has been ignored while reaching a contrary decision for the assessment year 1992-93 and so there is an apparent mistake in the order of the Tribunal for the assessment year 1992-93. We do not see the so-called “inexorable” logic in this contention. The case laws cited by the learned counsel for the Department are authorities for the proposition that there is no res judicata in income-tax proceedings and when there is an additional evidence, a different finding can be arrived at from the one arrived at in the earlier year. In the case of Dalhousie Investment Trust Co. Ltd (supra), the Apex Court upheld the finding of the Tribunal that certain shares were held as stock-in-trade in the subsequent year even though in the earlier year, the dealings in shares were by way of investments. In the case of Brij Lal Lohia and Mahabir Prasad Khemka (supra) again the Apex Court held that the Tribunal was justified in holding certain gifts as genuine in a subsequent year even though the very same gifts were pronounced as non-genuine in the earlier year. In the present case, as we have already explained, the Tribunal has not come to a different conclusion on the same issue in the subsequent year. The issue that the Tribunal had to decide for the assessment year 1991-92 related to the first lot of 2,50,000 shares and the issue for the present assessment year, i.e., 1992-93, is altogether different, i.e., the nature of the holdings of 7,00,000 shares. So there is no question of the Tribunal coming to a different conclusion on the same issue. That is why the Tribunal held in its order that it is not necessary to deal with the case law cited by the learned counsel for the assessee to the effect that the Tribunal cannot come to a different conclusion on the same issue. As the issues are different, there was no need to discuss that case law. We may also clarify that in the case of L. G. Ramamurthi (supra), and relied upon by the learned counsel for the assessee, the Hon’ble Madras High Court dissented from the decision of the Hon’ble Bombay High Court in the case of H.A. Shah & Co. v. CIT [1956] 30 ITR 618 and held that a Bench of the Tribunal, on identical facts, cannot be allowed to come to a conclusion strictly opposed to the conclusion reached by another Bench of the Tribunal on an earlier occasion. In this case, the genuineness of the same gifts were under consideration by two different benches of the Tribunal. It was held that the Tribunal cannot come to a different conclusion on the same issue in the subsequent year. We do not see how this decision helps the assessee because we have already taken pains to explain that the issues before the Tribunal for the assessment years 1991-92 and 1992-93 are different. Simply because the acquisition of the 7,00,000 shares was before the Tribunal, it does not follow that the nature of the holdings of the 7,00,000 shares was determined by the Tribunal along with the nature of the 2,50,000 shares, which alone was the issue before it. To hold otherwise would be to assume that the Tribunal was a forum for giving advance rulings. Actually, the Tribunal itself observed in its order for the assessment year 1991-92 that the findings of one year are not binding for the subsequent assessment year, and actually, as pointed out by the learned counsel for the Department and as is evident from some of the extracts quoted by us from the order of the Tribunal for the assessment year 1991-92 hereinbefore, that was even the argument of the assessee. At that stage, the assessee argued that whatever was the finding for the assessment year 1992-93 about the nature of the 7,00,000 shares was not determinative of the nature of the 2,50,000 shares, which was the issue under consideration for the assessment year, 1991-92. It may also be observed that even though the order under section 263 for the assessment year 1991-92 had been passed subsequent to the order of the CIT(Appeals) for the assessment year 1992-93, the Tribunal took up the hearing of only the appeal relating to the assessment year 1991-92 and at that stage, the assessee did not seek even consolidation of the appeals. If the same issue had been involved for both the years, normally such consolidation would have been sought for.
14. We may also mention that the jurisdictional High Court in the case of H.A. Shah & Co. (supra), has held that if the first Tribunal failed to take into consideration some material facts and the second Tribunal was satisfied that the decision was arrived at because of the failure to take into consideration those material facts, then it is permissible for the second Tribunal to consider those material facts and arrive at a different conclusion. Even though the Hon’ble Madras High Court while deciding the case of L. G. Ramamurthi (supra) dissented from this decision, this decision being that of the jurisdictional High Court, is binding on the Tribunal. In the present case, it is not that the material facts were omitted to be considered by the Tribunal for the assessment year 1991-92, but addition at facts were considered by the Tribunal while disposing of the appeal for the assessment year 1992-93. It took into consideration the extent of borrowed funds which is not the same as the percentage of borrowed funds in the total funds, and the subsequent sale of the 7,00,000 shares and the acquisition of railway bonds through their sale proceeds and the subsequent sale of even those railway bonds. It is pleaded before us that the mention of the railway bonds is not germane to the issue at all. This is a fact considered by the Tribunal to indicate that the assessee was not “married” to the 7,00,000 IGFCCL shares so as to consider them as investments or even to the railway bonds and she was only treating the 7,00,000 shares as trading assets.
15. The assessee has mentioned in the present application that the percentage of borrowed funds in respect of 2,50,000 shares is more than that in respect of the 7,00,000 shares, because, in respect of 2,50,000 shares, the percentage of borrowed funds was cent per cent. What is determinative of the issue on hand is not simply the percentage but the size or extent of the liabilities assumed while acquiring the assets in question.
16. It is also mentioned in para 11 of the present application that the Tribunal made a differentiation between the act of purchase of 7,00,000 shares and the act of finding the purchase of 7,00,000 shares and such differentiation is not valid. It is made out that what is relevant is only how the purchase was ultimately funded or paid for and not the position of the funds available on the date of purchase. We are of the view that to ascertain the intention of the assessee as to whether the 7,00,000 shares were purchased as trading asset or as investment, the financial position of the assessee has to be ascertained on the date of contract or on the date of purchase and not the position that emerges after the lapse of a considerable period of time when the purchase price was paid for. At any rate, this is not a matter which can be regarded as a rectifiable error in the order of the Tribunal.
17. The Tribunal worked out by simple arithmetic the extent of liabilities the assessee has assumed for acquiring the 7,00,000 shares on the date of purchase. It took into consideration the background of the assessee, which need not again be reiterated, the size of the holdings, the nature of the assets involved, and their subsequent sale and came to the conclusion that the 7,00,000 shares of IGFCCL were acquired as trading assets and not as investments, notwithstanding the fact that the earlier lot of 2,50,000 shares was acquired as investments, as held by the Tribunal for the assessment year 1991-92. As already mentioned, Shri Mistry argued that the assessee, being from the family of Birlas, had many options and she did not have to sell even the 2,50,000 shares to acquire the 7,00,000 shares. We have only to mention this contention to reject it. The Tribunal can go only by the options placed on record. It is also pleaded at para 13 of the present application that the Tribunal has misapplied the decision of the Hon’ble Bombay High Court in the case of Ashok Kumar Jalan (supra). It is pleaded that the assessee cited this decision and it was relied upon by the Tribunal to come to a conclusion adverse to the assessee. The Tribunal only took into account the indicia laid down in this case by the jurisdictional High Court, such as the size of holdings, the duration of holdings and whether acquired out of borrowed funds for judging whether an asset is a trading asset or an investment. We do not see any such misapplication of the judgment. For the reasons mentioned above, we find that the case law cited by the learned counsel for the assessee is distinguishable on facts. In the case of Goodlass Nerolac Paints Ltd (supra), relied on by the learned counsel for the assessee and cited supra, the Hon’ble Bombay High Court has mentioned that when a Tribunal is of the view that the finding given by an earlier Tribunal requires reappraisal, it should have the matter placed before the President of the Tribunal so that the case can be referred to a larger Bench of the Tribunal for adjudication. However, the Court upheld the finding of the Tribunal in the subsequent year that certain secret commission payments claimed to have been made by the assessee were proved, even though in the earlier year the Tribunal came to a contrary finding in respect of the secret commission payments. This case is an authority for the proposition that a finding of fact given by the Tribunal is not normally disturbed by the High Court in exercise of its advisory jurisdiction under section 256(2) unless the finding is perverse. The remarks of the Hon’ble High Court regarding the referal to the President of the Tribunal are in the context of the second Tribunal differing from the earlier Tribunal on the same issue, as in the case of payment of secret commission. The Tribunal observed in para 10 at page 17 of its order for the assessment year 1992-93 that the issue raised in the present appeal is not like the status of an assessee, which, once decided, becomes applicable necessarily for all the years. In other words, it held that the issue whether a certain lot of shares was held as trading assets or investments has to be decided in the light of the facts and circumstances surrounding that transaction. As the issue involved in the appeal for the assessment year 1992-93 is totally different from, though similar to, that involved in the assessment year 1991-92, we are of the view that the remarks of the Hon’ble Bombay High Court in this decision – Goodlass Nerolac Paints Ltd case (supra) – are not of any assistance to the assessee.
18. In the case of CIT v. Shree Nirmal Commercial Ltd [1995] 213 ITR 361 (Bom.) (FB), the Department tried to argue that the income derived from a flat allotted to a shareholder by a company by virtue of his shareholdings in the company has to be assessed under the head ‘Property’ on the ground that he is the owner, whereas in the earlier year it took a different view and held that the same income from the flat belonged to the company, as the flat was owned by the company. The jurisdictional High Court held that the department cannot be allowed to take such a contradictory stand in respect of the same issue. Again, this decision is not of much assistance to the assessee because, as we have tried to explain, the issues involved for the two assessment years in question are different. Hypothetically, certain lot of shares acquired in one year may be sold in two different years. Having held that the lot of shares was acquired as investments in one year, if the Tribunal should give a different finding in the second year about the same lot of shares when the subsequent portion of that lot is sold, such contradictory finding would be unwarranted and would be hit by the ratio of the decision cited by the learned counsel for the assessee. In the present case, the Tribunal has not disturbed the finding given about 2,50,000 shares which was the subject of appeal for the assessment year 1991-92. The Tribunal only felt free to consider the nature of the 7,00,000 shares which was the subject involved in the appeal for the assessment year 1992-93 with due regard but not being fettered by the finding given by the Tribunal for the assessment year 1991-92 in respect of the 2,50,000 shares. Such a view is supported by the decisions of the Apex Court cited by the learned counsel for the department which we have referred hereinbefore.
19. It is also made out that the Tribunal erred in mentioning that in the order for the assessment year 1991-92, the Tribunal did not have the occasion to consider the fact that the purchase of 7,00,000 IGFCCL shares was met out of borrowed funds since the sale of 2,50,000 shares were subsequent to the acquisition of the 7,00,000 shares. As observed by the learned counsel for the department, a decision cannot be read as a statute. What the Tribunal mentioned in para 21 at page 24 of its order was not that the Tribunal in its order for the assessment year 1991-92 was not aware of the fact that the 2,50,000 shares were sold subsequent to the acquisition of the 7,00,000 shares. The Tribunal observed that the market fluctuated from day to day and so it could not have hoped to acquire the 7,00,000 shares on the day of its acquisition by selling the 2,50,000 shares in question. In other words, the assessee could have hoped to obtain only 250,000 shares held by her as there is no difference in the category of the shares. The Tribunal observed that if the net worth of the assessee permitted her to acquire shares, even borrowed funds may not necessarily indicate a trading transaction. Where the net worth of the assessee on the date of acquisition is negative or very small as in the present case and larger number of shares are acquired out of borrowed funds, the Tribunal held that the transaction is only on revenue account, as otherwise there is no means to discharge the liabilities incurred. Even if no interest payment is involved, at least the liabilities have to be discharged, as it was nowhere the case of the assessee that the funds in question were received by way of gift. In the circumstances, the Tribunal held that sufficient numbers of relevant circumstances have been adduced by the department so as to discharge the onus lying on it of proving that the transaction in question is on revenue account.
20. As mentioned by the learned counsel for the department and as is evident from the authority cited by him, no debatable issue can be raised in an application under section 254(2). For these reasons, we hold that there is no rectifiable error in the order of the Tribunal and accordingly reject the application No. MA 111/Mum/98.
21. In the miscellaneous application No. 112/Mum/98, the assessee mentions that a ground has been raised before the Tribunal regarding the levy of interest under sections 234B and 234C which has not been considered by the Tribunal.
22. We find that the assessee has raised the following grounds before the Tribunal in this regard :-
“II.1. The CIT(A) erred in not considering the ground relating to chargeability of interest of Rs. 62,37,072 under section 234B and Rs. 88,852 under section 234C of the Act’
2. He failed to appreciate and ought to have held that in the facts and circumstances of the case there can be no levy of interest under section 234B and 234C of the Act.
3. The Appellant prays that the levy of interest of Rs. 62,37,072 under section 234B and Rs. 88,852 under section 234C, be deleted.”
We also find that the assessee has raised the above grounds before the CIT(A), which have not been considered by him. In the circumstances, we remit the matter to the file of the CIT(A) for the limited purpose of disposing of the grounds raised before him in respect of the levy of interest under sections 234B and 234C.
23. Subject to the above, the miscellaneous application No. 112/Mum./98 is allowed.