U.N. Bhachawat, J.
1. This is a reference under Section 256(1) of the Income-tax Act, 1961 (for short, hereinafter referred to as ' the Act '), at the instance of the Department as well as the assessee-company, whereby the Income-tax Appellate Tribunal, Bombay Bench 'A' (for short, hereinafter referred to as 'the Tribunal'), has referred the following two questions for decision by this court :
' (1) Whether, on the facts and in the circumstances of the case, theprofits of the assessee from transactions in shares of Hindustan Motors Ltd.are includible in its assessments for 1962-63 and 1963-64 under the head' Business '
(2) Whether, on the facts and in the circumstances of the case, the profits of the assessee from transactions in shares of Century Spinning and Weaving Company Ltd. are includible in its assessments for 1962-63 and 1963-64 under the head ' Business ' '
2. The assessee is a company having its registered office at Gwalior (M.P.) and carries on business at and from Gwalior. According to the memorandum and articles of association of the assessee-company, it was authorised to hold shares by way of investment as well as by way of stock-in-trade, i.e., it was an investor in shares and also a trader in shares.
3. The relevant assessment years are 1962-63 and 1963-64, the corresponding accounting years ending on March 31, 1962, and March 31, 1963.. In the two years under consideration, the assessee-company's resources were mainly utilised in holding shares by way of investment rather than by way of stock-in-trade, as is noticeable from the following data available from its balance-sheets:
4. The holdings of the assessee-company in shares included shares quoted on the Stock Exchanges at Bombay and Calcutta as well as shares not quoted on any stock exchange. These holdings included shares of Hindustan Motors Ltd. and of Century Spinning and Weaving Company Ltd. (hereinafter, for short, referred to as 'Century company' and its shares as ' Century shares ').
5. The Hindustan Motors Ltd. issued 5 laths, 6 per cent. free of income-tax cumulative convertible redeemable preference shares of Rs. 100 each in June, 1956. The prospectus of the assesaee-company clearly contained that the shareholders had the right to have the preference shares converted into ordinary shares between July 1, 1961, and June 30, 1966.
6. Holders of ordinary shares of the assessee-company as on May 25, 1956, were entitled to one such convertible preference share for every 10 ordinary shares held by them. At the time of the issue of the preference shares, the ordinary shares were quoted at a premium, i.e., at Rs. 23.64, for a share of the face value of Rs. 10.
7. The assessee-company purchased on April 11, I960, and May 6, 1960, 1,000 and 7,000 preference shares, respectively, for a total cost of Rs. 11,72,000.
8. The assessee-company got converted 8,000 preference shares into 80,000 ordinary shares on August 21, 1961. Out of these 80,000 ordinary shares, it sold 21,600 ordinary shares in four lots on December 5, 1961, and December 16, 1961, for a total consideration of Rs. 4,39,820 and earned a profit to the tune of Rs. 1,23,380. The balance of 58,400 ordinary shares was sold in three lots in December, 1962, and January, 1969, for a total consideration of Rs. 9,78,100 and thus it earned a profit of Rs. 1,22,540 in this transaction.
9. According to the final accounts of the assessee-company, the aforesaid transactions were shown in the share investment account.
10. The assessee-company held certain Century shares before April, 1960, as its stock-in-trade. The Century company issued right shares to holders of its shares. The assessee-company applied for 1,340 right shares in April, 1960. Out of these, it placed in investment account 631 right shares of the value of Rs. 75,720.
11. It received from Indore Products Company Ltd., at the stage of the amalgamation in October, 1960, 260 right shares of the value of Rs. 13,560 and thus it held on March 31, 1961, 744 right shares of the total value of Rs. 89,280. It further received on September 30, 1961, 186 bonus shares by virtue of its holding of 744 right shares, the corresponding value of which was Rs. 18,600. Thus, by the end of September, 1961, the assessee-company held 930 shares of the total value of Rs. 1,07,880.
12. Out of these above-mentioned Century shares, the assessee-company sold on February 10, 1962, 167 shares for Rs. 1,19,185 and the corresponding gain has been determined in the assessment for 1962-63 at Rs. 95,545.
13. Out of the balance of 763 shares, the assessee-company sold 7 shares on February 12, 1963, for Rs. 3,675 and the corresponding gain ofRs. 2,871 has been included in the assessment for 1963-64 as the profit relating to trading transactions.
14. The assessee-company was then left with a balance of 756 shares on March 31, 1963, and it held on to these holdings up to March 31, 1971.
15. The assessee-company then in the year ended on March 31, 1972, sold 287 more shares and there was a corresponding gain of Rs. 1,91,538. This has been assessed in the assessment for 1972-73 as a capital gain and not as a trading profit.
16. As detailed hereinabove earlier, the assessee-company sold certain shares of the above-mentioned two companies and also of HM and CSP certain other shares in the two years under consideration. The assessee-company took the stand that the transaction in shares held by it in the investment account, as shown by its balance-sheets, were not trading transactions and that the corresponding profits were not taxable under the head ' Business '. The Income-tax Officer did not fully accept this stand and treated some of the transactions as trading transactions and assessed the corresponding profits as business profits. In the first appeal, the Appellate Assistant Commissioner of Income-tax, only partly accepted the stand of the assessee. The assessee-company filed two appeals before the Tribunal raising an objection to the findings in this regard which were against it in so far as the transactions in shares of Hindustan Motors Limited and Century shares are concerned.
17. The Tribunal found that the transactions in Hindustan Motors Limited shares were in the nature of trading transactions and those relating to Century shares were not trading transactions.
18. The Tribunal basing its judgment on the following factors conclude^ that the transactions in Hindustan Motors Limited shares were in the nature of trading :
(i) at the time of the issuance of the preference shares, it was known that there was an option to convert them into ordinary shares ;
(ii) the ordinary shares were known to be quoted at a higher rate and there was an advantage in converting the preference shares into ordinary shares;
(iii) the assessee company actually converted the preference shares into ordinary shares;
(iv) the magnitude of the transaction of purchase was large, though in the immediately preceding eight years there were no transactions;
(v) the shares were quoted on the Stock Exchange and were easily disposable :
(vi) the conduct of the assessee in converting shares and selling them through brokers in large lots and borrowing monies for the initial purchase.
19. The Tribunal, with regard to the transactions in Century shares as not trading transactions, took into account the following factors:
(i) the assessee had placed in its investment account 631 shares out of the total of 1,340 shares ;
(ii) there was only one transaction of sale in each of the two years ;
(iii) it did not enter into any transaction of sale thereafter till 1972 ;
(iv) the Revenue had held in the assessment for the assessment year 1972-73 that the profit made in that year was in the nature of a capital gain.
20. Before we proceed to dwell upon the individual questions referred for our decision, we would like to point out that the learned counsel for the parties referred to the various authorities of the Supreme Court in support their respective arguments relating to the fore-quoted two questions, which are listed hereinbelow :
(i) Rameskwar Prasad Bagla v. CIT : 87ITR421(SC) ;
(it) Ramnarain Sons (P.) Ltd. v. CIT : 41ITR534(SC) ;
(iii) Raja Bahadur Kamakhya Narain Singh v. CIT : 77ITR253(SC) ;
(iv) Manipur Administration v. Nila Chandra Singh : 1964CriLJ465 ;
(v) Ashoka Viniyoga Ltd. v. CIT : 84ITR264(SC) ;
(vi) CIT v. Associated Industrial Development Co. (P.) Ltd. : 82ITR586(SC) ;
(vii) CIT v. Sutlej Cotton Mills Simply Agency Ltd. : 100ITR706(SC) ; and
(viii) Dalhousie Investment Trust Co. Ltd. v. CIT : 68ITR486(SC) .
21. On a survey of these decisions, what is obtainable is that it is not possible to have an iron cast die by exhaustively listing the factors for determining whether a given transaction is a trading activity of the assesaee or is by way of investment. It depends upon the totality of the facts and circumstances of an individual case. No single factor has decisive significance of a fact which, in the setting of the facts and circumstances of a given case, may be a ground for the conclusion that the transaction falls, within the head 'Business' and that very factor in the setting of the facts and circumstances of another case may be a ground for conclusionthat the transaction was by way of investment. To put it differently, the line to separate the two classes of cases is difficult to define and each case must be considered according to its facts.
22. It is a settled law that the High Court, in a reference under Section 256 of the Act, is not constituted as a court of appeal against the order of the Tribunal. Its jurisdiction is only advisory. The finding of fact of the Tribunal is final. The High Court, in a reference under Section 256 of the Act, can, however, go into the question as to whether the conclusion of the Tribunal on a question of fact was based upon relevant evidence, if it finds that there was no such evidence to support the finding of fact of the Tribunal that circumstances would give rise to a question of law and could be agitated in a reference. It is also well established that when a Tribunal acts on a material which is irrelevant to the enquiry or considers material which is partly relevant and partly irrelevant, or bases its decision partly on conjectures, surmises and suspicions and partly on evidence, then, in such a situation, an issue of law arises and the finding of the Tribunal can be interfered with.
23. We shall quote with advantage the observation of the Supreme Court in CIT v. S.P. Jain : 87ITR370(SC) , at pp. 382-383, which we are of the opinion, must be borne in mind while deciding a reference under Section 256 of the Act:
' Whether we adopt the extended view advanced by Lord Radcliffe or the view of Lord Simonds, what has to be safeguarded against is that any crystallization of the views of this court and its reluctance to interfere with the findings of fact should not make the Tribunals or the income-tax authorities smug in the belief that, as the courts do not interfere with the findings which form the bed-rock upon which the law will be based, they can act on that assumption in finding facts or by their mere ipsi dixit that they are findings of fact wish it to be so assumed irrespective of whether they are sustainable in law or on the materials on record.'
24. It would also be relevant to point out that the Supreme Court in Sutlej Cotton Mills Supply Agency's case : 100ITR706(SC) , while deciding the question ' whether the inference of the Tribunal that the profit of Rs. 2,13,150 arising from the sale of Rs. 1,58,200 shares of Gwalior Rayon Silk . is assessable as business profit is correct ' at one stage observed (p. 710):
' 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.'
and in the ultimate analysis, on a survey of the various cases, held (p. 715):
' 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 CIT v. Ashok Marketing Co. : 83ITR439(SC) .'
25. It is now in the backdrop of the aforesaid legal position that we propose to decide the specific questions, referred to hereinabove for our decision, ad seriatim.
Question No. (1) regarding transaction relating to the shares of Hindustan Motors Ltd.--The nub of the argument of the learned counsel for the assessee company can be capsulised under the following heads :
(i) the Tribunal has taken into account certain neutral factors into consideration and acted on conjectures also ; and
(u) it has omitted certain material facts from consideration.
26. We proceed to deal with the arguments of the learned counsel for the assessee company under the above two heads ad seriatim.
27. The first point submitted by the learned counsel was that the discussion in para 16 (at page 65 of the paper book) of the order of the Tribunal indicates that from the conduct of the assessee-company's purchasing preference shares, which were convertible into ordinary shares, that were being quoted at the time of purchase above par, the Tribunal was led to conclude that the motive of the assessee-company in purchasing those shares was to trade, but this fact can equally be a motive for investment also.
28. While developing his argument on this point, learned counsel submitted that had the motive behind the transactions been to trade, the assessee-company would not have entered into these transactions at intervals detailed In paras 4.02 and 4.03 of this judgment, i.e., in the purchase of preference shares, their conversion into ordinary shares and the sale of the ordinary shares ; it would have entered into these transactions immediately without so much of interval so as to earn profit and returned the loan that was taken by it for the initial purchase.
29. The second point submitted by the learned counsel was that the Tribunal committed an error of law in treating the factor of borrowing funds by the assessee-company for the initial purchase of the shares. The learned counsel, in elaboration of his argument on the point, submitted that the fact of borrowing is a neutral factor, and relied on the decisions of theSupreme Court in Rameshwar Prasad Bagla's case : 87ITR421(SC) and Ramnarain Sons (P.) Ltd.'s case : 41ITR534(SC) .
30. The third point submitted by the learned counsel was that, as stated in the statement of ,the case in paragraph 18(iv) at page 9 of the paper book and also in paragraph 10 of the order of the Tribunal at page 63 of the paper book, the Tribunal has taken into account the magnitude of the purchase of shares in arriving at the impugned conclusion, but the magnitude is not that much. The proportion of these shareholdings qua the total assets and investment is not much.
31. The Tribunal in its order, in paragraph 16, has, as summarised in the statement of the case in paragraph 18(v) at page 9 of the paper book, taken the quoting of the shares on the Stock Exchange as a factor to conclude that the transaction in question were in the nature of trading activity of the assessee-company, but it is a neutral factor as even an investor would make investment looking to the quotations at the Stock Exchange, Thus, what is true about the trading activity in relation to the Stock Exchange would be true about investment also.
32. The learned counsel then argued that the following material facts were not taken into account by the Tribunal, which, if considered, according to him, would lead to the conclusion that the transactions were not in the nature of trading activity of the assessee-company, and the Tribunal has thus committed an error of law in arriving at the impugned conclusion :
(i) Plurality of transactions is a conclusive test for determining whether a particular transaction is by way of investment or in the nature of trading activity, but the Tribunal failed to see that in the instant case there is no chain of transactions, i.e., no plurality of transactions. In support of this contention, the learned counsel, while referring to the dates of the various transactions is question, relied on the decisions of the Supreme Court in Raja Bahadur Kamakhya Narain Singh's case : 77ITR253(SC) and Neela Chandra Singh's case : 1964CriLJ465 .
(ii) though the Tribunal has mentioned in paragraph 12 of its order at page 63 of the paper book, that it was argued on behalf of the asses-see-company that the price of the shares was falling during the period of sale, but it did not consider its impact, which virtually leads to an inference that this material factor has not been taken into account. Had it been so considered, it would have led to the conclusion that the transactions were not in the nature of trading activity The learned counsel, while developing this point, had referred to the dates and the prices at which the shares were sold, and submitted that the Tribunal, without considering this aspect, has rejected it on conjectural grounds ; and
(iii) as is evident from paragraph. 3 of the order of the Tribunal at page 60 of the paper book, as also from what is stated in paragraph 5 of statement of the case, at page 5 of the paper book, the Tribunal has stated that the assessee-company held the shares by way of investment rather than as stock-in-trade, but the Tribunal only referred to this by way of a fact without considering and discussing its impact on the point in controversy. In other words, by not making it to be a ratio of the decision, it can well be said that the Tribunal ignored this material fact which, would have affected its conclusion.
33. We have hereinabove given a resume of the various points raised by the learned counsel for the assessee-company during the course of his argument. We now proceed to decide the question. In order to avoid repetition and making the order cumbersome, we propose to deal with all these points as a package.
34. It cannot be gainsaid that where there is evidence to consider, the decision of the Tribunal is final, even though the court might not, on the material, have come to the same conclusion if it had the power to substitute its own judgment. To put it differently, the possibility of this court coming to a conclusion different from the one arrived at by the Tribunal, if the evidence is reappraised, would not entitle this court to interfere with the finding of the Tribunal treating it as a question of law. When a conclusion has been reached by the Tribunal on an appreciation of a number of facts, established by evidence, the question whether the conclusion is sound or not must be determined not by considering the weight to be attached to each single fact in isolation, but by assessing the cumulative effect of all the facts in their setting in the picture as a whole. Thus, the argument of the learned counsel that the Tribunal has committed an error of law in taking into account the facts, which, in his submission were neutral, i.e., could well be the factors for concluding that the transactions in question were by way of investment, holds no water. It falls from the learned counsel's own argument that these factors can reasonably be the basis for the impugned conclusion of the Tribunal. The six per cent. preference shares were purchased knowing that they were convertible into ordinary shares by borrowing money for their purchase at a time when the ordinary shares were being quoted at a premium. In this context, the borrowing of money is a strong factor pointing to a conclusion that the conversion of the preference shares into ordinary, shares and their subsequent sale decidedly at a varying price but at a premium price, were in the nature of trading, activity of the assessee-company. It cannot be gainsaid that the returns on the preference shares as compared to the profits on the, sale of the ordinary shares were comparatively less. In Dalhousie InvestmentTrust Co. Ltd.'s case : 68ITR486(SC) as also in Sutlej Cotton Mills Supply Agency's case  100 ITR 706, it has been held that in a given set of circumstances, borrowal of money for purchase of shares would be a strong circumstance that the dealing in the shares was in a commercial spirit. The relevant excerpts from these decisions are these : 68ITR486(SC) :
'This circumstance that the shares were purchased at a time when their prices were falling and the return on investment was not at all substantial while loans had been taken to purchase these shares, strongly points to a conclusion that the shares could not have been purchased as an investment to earn income from dividends and that the purchases of these shares were with the object of selling them subsequently at a profit.'In CIT v. Sutlej Cotton Mills Supply Agency Ltd. : 100ITR706(SC) :
' The finding, therefore, that the shares were purchased with borrowed funds on which the assessee was paying interest, was a finding support ed by the 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. '
35. The time-lag in the dates of purchase of the preference shares, their conversion into ordinary shares and the sale of these ordinary shares is not very much, and then there is no rule of thumb that if the transactions are at a particular specified interval, it would then only be in the commercial spirit, otherwise it would be by way of an investment. It cannot also be said, as a rigid formula, that only when there would be a chain of transactions or a plurality of transactions, then alone that activity would be concluded to be in the commercial spirit or a trading activity. It would be relevant at this stage to quote with advantage the observation of their Lordships of the Supreme Court in Sutlej Cotton Mills Supply Agency's case : 100ITR706(SC) :
'The principles underlying the distinction between a capital sale and an adventure in the nature of trade were examined by this court in G. Venkataswami Naidu & Co. v. CIT 0065/1958 : 35ITR594(SC) , where this court said that the character of a transaction cannot be determined solely on 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 the 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 plungeis 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 of trade will depend on the facts and circumstances.'
36. The case of Raja Bahadur Lamakya Narain Singh : 77ITR253(SC) cited say the learned counsel for the assessee company, does not advance his contention. Firstly, for the reason that in that case, the assessee had after the sale of the Government securities and the gold, reinvested the amount in the purchase of shares and debentures, whereas, in the instant case, there is no reinvestment of the proceeds obtained on the sale of the ordinary shares; secondly, in that case, the transactions were not diversified nor were gradual according to the opportunities offered by fluctuating market price, whereas, in the instant case, it is so. As is evident from annexure C3, at page 26 of the paper book, on December 5, 1961, in three different lots, i.e., 4,300, 10,000 and 2,300 ordinary shares were sold at a price of Rs. 20.20 per share; then on December 16, 1961, another lot of 5,000 ordinary shares was sold for Rs. 20'90 per share; then on December 4, 1962, a lot of 20,100 shares was sold at Rs. 16.04 per share and then on January 8, 1983, in two lots--one of 37,500 and the other of 800, --these ordinary shares were sold at the rate of Rs. 17.12 per share. These details go to show that the transactions were gradual according to the opportunities offered by fluctuating market price. It is a matter o! common knowledge that if a businessman finds that the prices are fluctuating and the general trend goes to show that there is a gradual fall in prices without any expectation of rise in the near future, he would like to dispose of his holdings so as to earn available profit, apprehending loss in future waiting on account of the gradual depression in the market price. In the instant case, at the time of conversion, the price of the ordinary shares was Rs. 23.64 per share and thereafter it showed a gradual decline. In this setting of the circumstances, the Tribunal was justified in inferring as an inference of fact that the transactions were in the nature of trading activity of the assessee-company.
37. The Tribunal, in the context of the facts that the ordinary shares were being quoted at a far higher premium and that the preference shares were convertible, found that the magnitude of the purchase of the preference shares worth about Rs. 12 lakhs, when the assets and the total investments were to the tune of Rs. 40 lakhs and Rs. 30 lakhs, respectively, was in the course of commercial spirit, i.e., trading activity, as rightly found by the Tribunal, is reinforced from the subsequent conduct of the assessee-company, i.e., of conversion and sale of the converted shares. Further, it is in this setting of the facts that the Tribunal gave importance to arrive at its conclusion that the transactions in question were in the nature of trading activity of the assessee-company and to the fact that the shares were quoted on the Stock Exchange, because it cannot be gainsaid that on account of the quotations in the Stock Exchange, the buyers as well as the sellers have a ready access for knowing the fluctuations in the price, and thus the buyers can easily find sellers and vice versa. The Tribunal was also right in holding that the transactions of sale, through the brokers, superadded as a factor for the conclusion that they were in the nature of trading activity of the assessee-company, obviously for the reason that brokers are employed for a bargain in an attempt for getting a better price has to be made.
38. On a perusal of the order of the Tribunal, we are unable to persuade ourselves to hold that the Tribunal has ignored from consideration the material facts, as submitted by the learned counsel for the assessee-company, and which are detailed hereinabove in paragraph 18 of this judgment. The Tribunal has in its order given the details of the transactions with reference to their numbers and dates and, as such, it cannot be said that the Tribunal was not alive to the question of solitariness or plurality of transactions. Before considering the rival contentions, the Tribunal has prefaced the consideration by referring to the principle discernible from the decision of the Supreme Court in Jankiram Bahadur Ram v. CIT : 57ITR21(SC) ,
'At the same time it has been observed that no single fact has decisive significance and the answer to the question whether a transaction is an adventure in the nature of trade must depend upon the collective effect of all the relevant materials brought on record. Further, the general criteria which have to be applied and which are indicated in the relevant observation at page 25 of the Report are whether a commodity is purchased and sub-divided, altered and sold or is converted into a different commodity and then sold, magnitude of the transaction of purchase, the nature of the commodity, subsequent dealings and the manner of disposal.'
39. Further, in the light of what we have discussed in paragraph 20.01 of this judgment, the question of existence or absence of the plurality of transactions is of no consequence. The matter has to be decided in the context of the features of an individual case.
40. The Tribunal has also taken note of the gradual fall in the price of the ordinary shares and has stated that though the prices were falling, still they were higher than the face value. We have already discussed this point in paragraph 20.02 of this judgment and, therefore, do not propose to dilate furthermore on this question.
41. With regard to the point which has been raised by the learned counsel for the assessee-company and is mentioned in paragraph 18(iii), we are unable to understand as to how it would have a material bearing on the question. What has been stated by the Tribunal in paragraph 3 of its order, at pages 59-60 of the paper book, is by way of statement of a fact. The learned counsel was also unable to demonstrate the bearing of this point so as to indicate the likelihood of the balance being titled in favour of the assessee-company.
42.The upshot of the foregoing discussion is that the Tribunal has considered the evidence on record and applied the correct test. There is no scope for interference in the findings of the Tribunal. We, therefore, answer question No. (1) in the affirmative, i.e., against the assessee-company and in favour of the Department.
43. We now proceed to consider question No. (2) regarding transactions relating to the Century shares. The Tribunal has decided the question relating to the transactions of the Century shares bearing in mind the same principle which it bore in mind while deciding the question relating to the transactions of the shares of Hindustan Motors Ltd., as would be indicated from its observation:
' We have indicated earlier the guidance available from a decision of the Supreme Court in deciding such a matter.'
44. The learned counsel for the Department, to assail the finding of the Tribunal, has made three submissions :
(1) The Tribunal did not consider the presumption that arises in such cases, as laid down by the Supreme Court in CIT v. Madan Gopal Radhe Lal : 73ITR652(SC) ;
(2) the Tribunal has ignored from consideration the fact that the balance of 605 shares was not sold till 1972-73 ; and
(3) the reasoning of the Tribunal that since in the assessment year 1972-73, the sale of the balance shares has been treated as a capital gain, the same should be adopted for the transactions in these shares in the years 1962-63 and 1963-64 also is erroneous, as the principles of res judicata do not apply in income-tax matters.
45. The learned counsel for the assessee-company reiterating the reasonings of the Tribunal, supported the order of the Tribunal. He further submitted that though the principle of res judicata does not apply, the rule of consistency has to be observed even in income-tax cases. He also submitted that what is true regarding the determining factors for the transactions of the shares of Hindustan Motors Ltd. is true about these shares also and, on those tests, the findings of the Tribunal cannot be different from what it has arrived at.
46. In our opinion, for the reasons to follow, the argument of the learned counsel for the Department is devoid of substance.
47. What is sauce for the goose is sauce for the gander.--Thus, the conclusion of the Tribunal arrived at bearing in mind the facts and circumstances of the case, is a conclusion of fact, after considering all the relevant materials on record, which cannot be interfered with, as no question' of law arises. With regard to the presumption, it was submitted by the learned counsel that the right shares received by the assessee-company should be presumed to be an accretion to its stock-in-trade in the light of the decision of the Supreme Court in Madan Gopal Radhey Lal's case : 73ITR652(SC) . On a clear reading of the decision in Madan Gopal Radhey Lal's case, it is apparent that that decision is contrary to what the learned counsel has submitted. It would be useful at this stage to set out hereinbelow the relevant part from this decision (p. 655 of 73 ITR):
' We are unable to agree with the judgment of the Bombay High Court (to which reference was made by the Tribunal) in CIT v. Maniklal Chunnilal and Sons Ltd. (Income-tax Reference No. 16 of 1948) that bonus shares received by a shareholder who carries on business in shares and securities ' ipso facto become accretion to his stock-in-trade.' Bonus shares would normally be deemed to be distributed by the company as capital and the shareholder receives the shares as capital. The bonus shares are accretions to the shares in respect of which they are issued, but on that account those shares do not become stock-in-trade of the business of the shareholder. A trader may acquire a commodity in which he is dealing for his own purposes, and hold it apart from the stock-in-trade of his business. There is no presumption that every acquisition by a dealer in a particular commodity is acquisition for the purpose of his business ; in each case, the question is one of intention to be gathered from the evidence of conduct and dealings by the acquirer with the commodity.
Bonus shares having been received by the assessees in respect of their stock-in-trade did not, therefore, become part of their stock-in-trade merely because they were accretions to the stock-in-trade. The bonus shares were received as capital; they could be converted by the assessees into their stock-in-trade or retained as a capital asset.'
48. Bearing this decision in mind, the Tribunal has found.: ' Therefore, the point made on behalf of the Department that the right shares were received by virtue of the assessee's shareholdings which were so held as its stock-in-trade is of no significance. ' Here, it would also be pertinent to point out that the question posed before us for opinion is not that the finding of the Tribunal that there is no evidence to support that the rightshares were not in the nature of revenue, is erroneous, and, as such, the point raised by the learned counsel deserves no consideration. However, from the discussion in the impugned order of the Tribunal, we find that the Tribunal has well discussed all the circumstances in support of its finding and, as such, even if this argument is held to be available to the Department, it is not sustainable. In this respect, we would quote with advantage the observation of the Supreme Court in Madan Gopal Radhey Lal's case : 73ITR652(SC) :
' The question posed for the opinion of the court was not whether the conclusion of the Tribunal was founded on evidence, but whether the sale proceeds of the bonus shares were of the nature of revenue. On this question an inquiry into whether the conclusion of the Tribunal is supported by the evidence cannot be made. '
49. The Tribunal has taken into account the fact of the year of sale of the balance shares numbering 605 in arriving at the conclusion and, as such, it is wrong to say that the Tribunal did not consider this fact. This apart, the learned counsel for the Department did not point out as to how this factor was so material as to tilt, in the setting of the facts and circumstances of this case, the balance in favour of the Department. For this reason, the second contention of the learned counsel for the Department has to be repelled and is accordingly repelled.
50. With regard to the third point, we would like to say that the question posed before us is not whether the Tribunal has committed an error of law in applying the principles of res judicata. However, though it is true that the principles of res judicata do not apply, the rule of consistency does apply. In the instant case, the Department has failed to point out that the circumstances for treating the gain in the transactions for the assessment year 1972-73 as a capital gain were different from those in the assessment years 1962-63 and 1963-64 and, as such, the finding has to be consistent. The Tribunal has, therefore, not committed any error. In this respect, we would like to set out hereinbelow an excerpt from the decision of the Orissa High Court in CIT v. Belpahar Refractories Ltd. : 128ITR610(Orissa) :
' Chagla C.J., speaking for the court, in the case of H.A. Shah and Co. v. CIT : 30ITR618(Bom) , indicated : ,
'Therefore, in our opinion, an earlier decision on the same question cannot be reopened if that decision is not arbitrary or perverse, if it had been arrived at after due inquiry, if no fresh facts are placed before the Tribunal giving the later decision and if the Tribunal giving the earlier decision has taken into consideration all material evidence. We should also like to sound a note of warning especially with regard to a Tribunal like the Appellate Tribunal, that, it should be extremely slow to departfrom a finding given by an earlier Tribunal. Even though the principle of res judicata may not apply, even though there may be no estoppel by record, it is very desirable that there should be finality and certainty in all litigations including litigations arising out of the Income-tax Act'.'
51. This view has received support in the case of Annamalai Reddiar v. CIT : 53ITR601(Ker) and Jivatlal Purtapshi v. CIT : 65ITR261(Bom) . The famous judge, Cardozo, in his inimitable language, had once observed (The Nature of the Judicial Process, p. 29).
' I own that it is a good deal of a mystery to me how judges, of all persons in the world, should put their faith in dicta. A brief experience on the Bench was enough to reveal to me all sorts of cracks and crevices and loopholes in my own opinions when picked up a few months after delivery, and re-read with due contrition. '
52. Roscoe Pound observed :
' Law must be stable and yet it cannot standstill. ' Justice Holmes joined by saying :
'The truth is that the law is always approaching, and never reaching, consistency. It forever adopted new principles from life at one end, and it always retains old ones from history at the other, which have not yet been absorbed or sloughed off. It will become entirely consistent only when it ceases to grow '. (The Common Law)
53. Notwithstanding these observations, we think it appropriate to follow the guidelines indicated by Lord Devlin in Samples of Law Making, where the Law Lord stated (p. 613): '
' Precedent keeps the law predictable and so more or less ascertainable. A lawyer cannot always say with confidence exactly how a judge will decide a point of law. But he can put the decision between fairly narrow limits. In any matter of novelty he will know that the boldest judge will not move more than a small distance beyond that which has already been decided. '
54. We think it unwise to deviate from the earlier conclusion and would, therefore, answer the two questions referred to us against the assessee by saying:
We do not propose to discuss the authorities in Raja Bahadur Visheshwara Singh v. CIT : 41ITR685(SC) and CIT v. Associated Industrial Development Co. (P.) Ltd. : 82ITR586(SC) , as they are distinguishable on facts and do not advance the contentions raised by the learned counsel for the Department.
55. In the result, question No. (2) is answered in the negative, i.e., in favour of the assessee-company and against the Department.
56. The reference is answered accordingly. No order as to costs.