BENNET, J. - This is an application by an assessee in income-tax for this Court to require the Commissioner of Income Tax to state a case under Section 66 (3), Income Tax Act, XI of 1922. In stating the case the Income Tax Commissioner states the facts and on these facts this Court comes to a finding on a point of law. It is not open to this Court to find facts for itself. At the most under sub-section (4), Section 66, if the Court is not satisfied with the statement in a case the Court may ask for an additional statement or alterations. In the present case the assessee in his application to this Court states that he carries on banking and money-lending business, and for the purpose of that business the assessee sells and purchases shares and Government securities; that for the last 30 years shares in different companies have been purchased from time to time by the assessees father and after his death by the assessee, and at present the assessee owns about Rs. 13 lacs of shares at par value; that in the course of the 30 years the assessee has sold shares amounting to rupees one lac and a half only; that in the books of the assessee he shows the dividend earned on the shares purchased and the interest accruing on Government Securities under the head of 'profits' and he shows the loss on sales of shares in the category of losses in his books. He does not say that he shows in his books any profit which accrues from selling shares or securities at a higher price than the purchase price.
The assessee claims that two losses on shares and securities should be deducted from the sum which is taken as his income for the purpose of income tax. Those losses are, firstly, Rs. 60,000, on account of loss incurred from the liquidation of the Tinnevelly Textiles Limited at Calcutta, and secondly, Rs. 4,912, on account of the purchase and sale of rupees one lac of Government Promissory Notes. These matters were held against the assessee by the Income Tax Officer, and the assessee filed an appeal before the Assistant Commissioner of Income Tax and the order of the Assistant Commissioner of Income Tax, dated 1st October, 1931, was also against the applicant. The Assistant Commissioner upheld the finding of the Income Tax Officer that both the items of loss in question were losses of capital and could not be allowed. The finding is as follows :
'The Income Tax Officer has found that the assessee does not carry on any business either in the purchase and sale of shares or in Government securities, and as such the investment of capital in shares and in Government securities is purely an investment for the purpose of earning interest and dividends and not for the purpose of carrying on any business.'
The finding proceeds further that some years ago the question arose in regard to the British India Corporation in which shares had been purchased for over 30 years, and on two occasions these shares had been sold as the dividends declined. At that time it was held that the assessee was not carrying on any business in the purchase and sale of shares, but had only invested his money in shares in order to earn dividends. The assessee purchased the Tinnevelly Textiles Limited shares some 6 or 7 years ago; and he did not sell those shares, but the company had gone into liquidation in the year 1929-30. The Assistant Commissioner concluded that as the shares of the Tinnevelly Textiles Limited had been held for 6 or 7 years and there had been no sale of these shares, the purchase of these shares was only by way of an investment of capital, as the assessee had never dealt in the purchase and sale of these shares. In regard to the purchase of rupees one lac of Government Promissory Notes, this was made in the year 1928-29, and eight months later the Government Promissory Notes were sold in two lots.
The sale was made in order to enable the assessee to advance a loan of rupees one lac to one B. Udai Singh Jain of Aligarh. The assessee is found to have been investing his capital in Government Securities for a considerable number of years, and except for the securities in question the assessee has only once before made a sale of Government Securities, otherwise the assessee has held Government Securities until payment became due. The Assistant Commissioner held that for these reasons there was no business of purchase and sale of Government Securities, and the investments were not made in Government Securities for the purpose of earning any profits by selling the securities, but for the purpose of earning interest, and the sale was made because the loan was required. It is not possible for us to controvert the findings of fact which have been made. Learned counsel however, apparently argued that those findings of fact were arrived at under a misapprehension of law. The argument which the learned counsel addressed to us was based on the definition of 'business' in Section 2 (4), Income Tax Act, and the provisions of Sections 4, 6 and 24. In Section 2 (4), Income Tax Act, 'business' is defined as follows :
'Business includes any trade, commerce, or manufacture or any adventure or concern in the nature of trade, commerce or manufacture.'
This definition is no doubt wide so far as the activities are mentioned which may be included under the term 'business.' A distinction is however drawn between 'business' as so defined and receipts which are of a casual and non-recurring nature mentioned in Section 4 (3) (vii). This sub-section says that the Act does not apply to any receipts not being receipts arising from business or the exercise of a profession, vocation or occupation, which are of a casual and non-recurring nature. The question therefore is whether the profits or loss from sales of securities or shares would be of a casual and non-recurring nature, or whether they would be of the nature of business. The distinction is further shown by the fact that the Act itself is styled an Income-tax Act, that is, an Act which is to tax income, and not an Act which is to tax the gains of capital other than the interest or profits which accrue on the capital. In the Income-tax Manual in the comment on Section 4 (3) (vii), it is stated that where A makes a practice of speculating in the purchase and sale of shares, his profits are liable to income-tax; that is, where there is a purchase with the intention of speculating. It is the intention with which the purchase is made which makes the difference. A man may either buy shares or securities with the object and intention of making a gain from the sale when these shares or securities have risen to a higher price, or he may purchase the shares or securities with the intention of keeping his capital safe and receiving meanwhile a certain amount of dividend or interest. The intention must be deduced from the facts and from the circumstances of the case. Where a man makes a business of speculating this will be deduced by the Court from the fact that he makes numerous purchases and sales, the sales being within a short time of the purchase.
On the other hand where a man makes few sales, although he may make a number of purchases, and where the sales are made at long intervals after the purchases, the conclusions to be drawn is that he is not indulging in the business of speculating in these stocks and shares, but that he is investing his capital in these stocks and shares. In this view of the law it appears to us that the Assistant Commissioner has not made any error in drawing his conclusions from the facts which he found. Accordingly we do not see that we can with any advantage call upon the Commissioner of Income Tax to state a case. We therefore dismiss this application with costs to the Crown, which we assess at Rs. 75. One month is allowed to the Crown Counsel to certify the amount of the fee.