Deb, J.:— This reference, under section 66(1) of the Indian Income-tax Act, 1922, relates to the assessment years 1955-56, 1956-57, 1960-61 and 1961-62. The assessee is an investment company. It was formed in 1946. Andrew Yule & Co. held the majority shares of the assessee and is acting as its secretaries. In 1946, the assessee purchased a large number of shares of Calcutta Discount Company Ltd., which held many shares of Andrew Yule & Co. On December 29, 1954, the assessee purchased shares of Andrew Yule & Co. of the value of Rs. 83,38,234 and in December, 1959, Andrew Yule & Co. also purchased all the shares of Calcutta Discount Company.

2. The Income-tax Officer has assessed the assessee on the surplus arising out of the sale of many shares in these assessment years and the appeals filed by the assessee have been dismissed by the Appellate As???istant Commissioner.

3. In the appeals filed by the assessee before the Appellate Tribunal it was submitted on its behalf that it was an investment company and was not a dealer in shares as wrongly found by the authorities below. It was urged that it was formed with the main object of acquiring the holding shares and securities of joint stock companies. In support of the above contentions reliance was placed on certain clauses of its memorandum of association, certain articles of its articles of association, and statements of purchases and sales of investments since its incorporation including certain resolutions filed before the Tribunal. It was also argued that the assessee held shares mostly of companies managed by M/s. Andrew Yule & Co. and in the accounting years it has sold those shares with the intention of changing its investment and, therefore, the surplus arising out of such sales was a capital accretion and not its commercial profit. In support of the above contentions reliance was placed on a number of well-known decisions and it was also argued that the revenue has failed to discharge the burden of proving that the said surplus was taxable in the hands of the assessee.

4. Many documents were filed by the departmental representative before the Tribunal and it was argued that the assessee had changed those investments in the course of its business and, therefore, the said surplus was its business profit and in support of this contention a few cases were cited by accepting the position that the assessee was not a dealer but an investor in shares. After taking into consideration all relevant facts and materials on the record including the cases cited and the submission made before it, the Tribunal has allowed those appeals filed by the assessee.

5. There was another dispute relating to the quantum of relief which was to be granted to the assessee under section 49B(b)(ii) of the Indian Income-tax Act, 1922, in the assessment year 1961-62. The assessee, as a shareholder, has received Rs. 5,07,503 as dividend (agricultural) in that year. The gross income of the assessee in that year was Rs. 19,30,326 and the total expenditure to earn it was Rs. 2,02,149 out of which the tax officer, by allocating Rs. 53,147 as the proportionate expenditure on the said dividend income has granted relief at 20% on Rs. 4,54,356 to the assessee.

6. The appeal filed by the assessee was dismissed by the Appellate Assistant Commissioner, but the Tribunal has allowed the appeal filed by the assessee by holding that the relief should be worked out not on Rs. 4,54,356 but Rs. 5,07,503 for the reasons recorded in its order.

7. On the main question, namely, whether these receipts were revenue or capital receipts, the Tribunal has expressed its opinion in the following terms:

“It is to be seen that for the first 8 years there was no sale at all and also in subsequent years when the sales were made, they were for the special reasons as mentioned above, viz., in pursuance of the policy of the assessee-company to invest in the shares of those companies only in which Andrew Yule & Co. were managing directors. It was for the assessee-company to decide its own business policies and to act upon them. The asses-see's intention is clear from the objects clause of the memorandum of association. In our opinion, the case laws referred to above and relied upon by the assessee's representative for the various propositions mentioned therein and reproduced in his submissions aforesaid do support the submissions of the assessee. In our opinion, the realisation from change of certain investments would not ipso facto become business income in all cases. The question whether a particular assessee is a dealer or an investor must be determined on the consideration of the entire facts and the impression created in one's mind after considering the facts and circumstances disclosed in a given case. The circumstances tabulated in the submissions of the assessee's representative referred to above, in our opinion, lend support to the assessee's contention. In our opinion what may be originally a capital investment may subsequently be converted into a trading activity by the conduct of the assessee in dealing with the shares, but for the said action of the assessee there must be clear evidence on record which, in our opinion, in the instant case is missing. We do not agree with the submission of the departmental representative that the history of the case as referred to above shows that the assessee being an investment company changed investments as a part of its activity of carrying on the said business. The change of investments, on the facts of the instant case, cannot, in our opinion, be termed as ‘business profit’ as having been obtained in the course of investment, as was argued by the departmental representative. It may, however, be mentioned that it was the case of neither party that the assessee-company was a dealer in shares at any point of time. In these circumstances, we hold that the said amounts of Rs. 2,74,014, Rs. 4,60,250, Rs. 2,08,396 and Rs. 59,321 in respect of assessment years 1955-56, 1956-57, 1960-61 and 1961-62, respectively, representing the surplus amounts received on sales of investments were not liable to be assessed as business profits.”

8. We are now concerned with the following questions numbered by me and referred to us by the Appellate Tribunal:

“1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the surplus derived by the assessee from the sale of its shares in the relevant previous years was not assessable as business profit?

2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee was entitled to the relief under section 49B of the Indian Income-tax Act, 1922, on the total amount of Rs. 5,07,503 as claimed by it and not on Rs. 4,54,356 as computed by the Income-tax Officer?”

9. On question No. 1, Mr. B.L Pal, the learned counsel for the revenue, has made the following submissions before us. The assessee is an investor in shares; the sale of shares is its normal trading activity; those shares were sold by the assessee in the course of “carrying on or carrying out of” its business or by way of “variation of its investments” amounting to a “dealing in investment” in course of its normal trading activities. Hence, these receipts are revenue receipts in view of the law laid down by the Judicial Committee of the Privy Council in the case of Punjab Co-operative Bank Ltd. v. Commissioner of Income-tax [1940] 8 ITR 635 (PC), by the Supreme Court in the case of Dalhousie Investment Trust Co. Ltd. v. Commissioner of Income-tax [1967] 66 ITR 473 (SC), by the Calcutta High Court in the case of Indra Singh & Sons Ltd. v. Commissioner of Income-tax [1951] 19 ITR 1 (Cal) and affirmed by the Supreme Court in Sardar Indra Singh & Sons v. Commissioner of Income-tax [1953] 24 ITR 415 (SC) and followed by the Calcutta High Court in the case of Birds Investments Ltd. v. Commissioner Of Income-Tax, Calcutta [1965] 55 ITR 284 (Cal).

10. Mr. Pal has also contended that whether a particular receipt is a revenue or capital receipt is a mixed question of law and fact, but this contention of Mr. Pal has not been accepted by Mr. Kalyan Roy, the learned counsel for the assessee.

11. Mr. Roy, however, by accepting the law laid down in the above cases cited by Mr. Pal, has contended before us that inasmuch as the Tribunal, after taking into consideration all essential and relevant facts including the law laid down in those cases cited by Mr. Pal and also the cases cited on behalf of the assessee, has found as a fact that those shares were sold not “as a part of” the assessee's “activity of carrying on the said business”, and that it was merely a change of investment, it must be held that the receipts were not revenue but capital receipts, for “the mere fact that an investment company periodically varies its investment does not necessarily mean that the profits resulting from such variation is taxable under the Income-tax Act”, as laid down by the Supreme Court in the case of Dalhousie Investment Trust Co. Ltd. v. Commissioner of Income-tax [1967] 66 ITR 473, 476 (SC).

12. It is also the submission of Mr. Roy that, as the revenue has not challenged the facts found by the Tribunal as perverse or based on no evidence or irrelevant consideration or by ignoring any relevant matters, it is no longer open to Mr. Pal to assail the above facts found by the Tribunal and those facts are also binding on us. His last submission is that the assessee has no case to meet on this question inasmuch as it is not the case of the revenue that the Tribunal has in any way misdirected itself in law.

13. I will deal with the last contention of Mr. Pal before going into the merits of the case. He has cited the cases of Commissioner of Income-tax v. East Coast Commercial Co. Ltd. [1970] 75 ITR 8 (Cal) and Oriental Investment Co. Ltd. v. Commissioner Of Income Tax, Bombay [1957] 32 ITR 664 (SC). It has been held in these cases that whether a transaction is a dealing in shares or investment, is a mixed question of law and fact and whether an assessee is a dealer or an investor in shares is a question of law on the facts found by the Tribunal. But these two decisions do not assist Mr. Pal, because it is not his case that the assessee is a dealer in shares and further he has accepted the position that the assessee is an investor in shares. He then cited the case of Finsbury Securities Ltd. v. Bishop (H.M Inspector of Taxes) [1966] 43 TC 591 (HL) in support of his contention that whether a particular receipt is a capital receipt or a revenue receipt is a mixed question of fact and law, but it is clear from the judgments of the learned law Lords that the main question before them was whether the Commissioners have misdirected themselves in law in arriving at the conclusion reached by them. Hence, reliance on the case was misplaced by him.

14. Mr. Pal has, however, cited the case of Karam Chand Thapar and Bros. P. Ltd. v. Commissioner of Income-tax [1971] 82 ITR 899 (SC). In this case the Supreme Court has held that whether a particular loss is a capital or a revenue loss is a mixed question of law and fact. Therefore, we are not impressed by the contention of Mr. Roy that whether a particular receipt is a revenue or a capital receipt is a pure question of fact.

15. But, at the same time, we accept the contention of Mr. Roy that this question is primarily or essentially “a question of fact” as held by the Supreme Court in the cases of Sardar Indra Singh & Sons Ltd. v. Commissioner of Income-tax [1953] 24 ITR 415, 418 (SC), Patiala Biscuit Manufacturers P. Ltd. v. Commissioner of Income-tax [1971] 82 ITR 812 (SC), Commissioner of Income-tax v. Dalmia Jain and Co. Ltd. [1972] 83 ITR 438 (SC) and Commissioner of Income-tax v. Ashoka Marketing Co. [1972] 83 ITR 439 (SC).

16. In support of his contention that we should answer this question on the facts found by the Tribunal inasmuch as the revenue has not questioned them, Mr. Roy has relied on the following observations of this court in the case of Commissioner of Income-tax v. East Coast Commercial Co. Ltd. [1970] 75 ITR 8, 17 (Cal):

“The nature of the transaction was before the Tribunal and it appears to us that the Tribunal had adverted itself to the main points of controversy in this case bearing in mind the correct principle in approaching this problem. Bearing in mind the correct principles the Tribunal had, on material before it, come to its conclusion which cannot be described as perverse or based on no evidence. We cannot, therefore, interfere with the same even though we, on re-appreciation of facts, may be inclined to take a different view of the matter.”

17. The revenue has not challenged the facts found by the Tribunal, as rightly contended by Mr. Roy. Further, it is not the case of the revenue that the Tribunal has misdirected itself in law. We also do not find anything in the order of the Tribunal from which it can be said that the Tribunal has wrongly drawn any inference of fact by misapplying the law on the subject. Save that the assessee is an investor in shares, the facts stated by Mr. Pal and recorded earlier are not the facts stated or found by the Tribunal. The facts stated by Mr. Roy as hereinbefore stated are the facts stated and found by the Tribunal. Hence, the contentions of Mr. Pal must fail and it must be held that those receipts are not revenue but capital receipts.

18. We have already stated the facts. relating to question No. 2 and now to appreciate the contentions of Mr. Pal it is necessary to refer to section 49B of the Act which reads as follows:

“49B. Relief to shareholders in respect of agricultural income-tax attributable to dividends.—Where a company pays to a shareholder any dividend out of its profits and gains which is assessed to agricultural income-tax by any State Government, the shareholder shall be entitled to a reduction from the tax payable by him under this Act, of a sum equal to—

(a) that proportion of the agricultural income-tax (including super-tax, if any) paid by the company as the amount of the dividend attributable to the profits of the company assessed to agricultural income-tax bears to its total profits, assessed to agricultural income-tax, reduced by the amount of refund, if any, allowed to him by the State Government; or

(b) Where the shareholder—

(i) is not a company, the amount of income-tax (but not super-tax) payable by him under this Act; and

(ii) is a company, twenty per cent.;

on that portion of the dividend which is attributable to the profits of the company assessed to agricultural income-tax;

whichever is less.”

19. The submission of Mr. Pal, in his own words, is as follows:

“The word ‘any dividend’ used in section 49B refers to gross dividend paid by the dividend paying company and, therefore, by using the expression ‘on that portion of the dividend’ in the latter part of the section the legislature must have intended not the whole of that gross dividend but only that portion of that gross dividend which has suffered tax under this Act and, hence, the relief of 20% must be worked out in the manner in which it has been done by the tax officer.”

20. But the expression “that portion of the dividend” used in the latter part of the section refers to the words “attributable to the profits of the company assessed to agricultural income-tax” and, therefore, the construction suggested by Mr. Pal is not permissible or possible. This section gives relief to the shareholder who has received the dividends from the company, paying such dividend out of the profits and gains, where such profits and gains have been assessed to the agricultural income-tax in the hands of the dividend paying company. The quantum of relief is also specified in the section itself.

21. Our above view is also supported by the decision of the Kerala High Court in the case of Commissioner of Income-tax v. A.V Thomas & Co. Ltd. [1974] 96 ITR 343, 347 (Ker) and hence we overrule the above submission of Mr. Pal.

22. In the premises, we return our answer to both the questions in the affirmative and in favour of the assessee. In the facts and circumstances of this case, we do not propose to make any order as to costs.

Dipak Kumar Sen, J.:— I entirely agree with the judgment delivered by my learned brother and the conclusions to which he has arrived. I would only like to add a few words for myself. The cases decided in different courts in India have considered situations arising from a company dealing in shares. A company may deal in shares for different purposes: (a) it may deal in shares for the purpose of carrying on the business of buying and selling securities; (b) it may also deal in shares for the purpose of investment and invest its capital in shares; (c) such investment may be made in certain cases for obtaining the control of another company.

24. If the business consists of buying and selling shares, then whatever surplus the company receives from such business must necessarily be a revenue receipt. The problem is not so simple when the company is an investment company and has invested its capital in shares. In such a case the company can still deal in shares as a normal incident of or step in its business. Again, the surplus as a result of such dealing in shares may be treated as revenue receipt, vide cases of Sardar Indra Singh & Sons v. Commissioner of Income-tax [1953] 24 ITR 415 (SC) and Californian Copper Syndicate v. Harris [1904] 5 TC 159.

25. But it is also settled law that profits realised on a change of investment simpliciter from one type of share to another or arising on mere realisation of investment in shares may not be treated as revenue receipts and hence taxable.

26. The matter in the instant case has been concluded by the specific finding of the Tribunal that what was done was not in the course of the company's business. The only other fact on which the revenue can rely is that the company concerned is an investment company. If we accept the contentions of Mr. Pal we have to hold that any dealing in shares by an investment company for whatever purpose is a transaction in the nature of its business and all surplus arising therefrom are revenue receipts. This we do not accept.