1. SAEEDUZZAMAN SIDDIQUI, J.--The following question has been referred to this Court by the Income-tax Tribunal for decision under section 66 (l) of the Income-tax Act at the instance of applicant assessee :- "Whether in the facts and circumstances of the case the Tribunal was right in the holding that the surplus of Rs. 12,78,252 arising or, sale of Karnaphuli Paper Mills shares in the account year ending on 31-1112-1960 was a revenue and not a capital receipt ?"
2. The admitted position in tile case is that the applicant firm which carries on business of Investors and Financiers, disposed of 1,40,000 shares of Karnaphuli Paper Mills Ltd., for a sum of Rs. 26,44,362 between the period 28th of January, to 30th January, 1960. These shares were purchased by the applicant during June, 1955 to February, 1956 for a sum of Rs. 13,36,110. As a result of sale of these shares the applicant received a sum of Rs. 12,73,252 over and above the purchase price. This amount was treated by the Income-tax Officer is a revenue receipt during the assessment year 1961-62 and was added to the profits of the firm and tax was demanded accordingly. The applicant appealed against the decision of income-tax Officer treating the sum of Rs. 12,78,252 as --revenue receipt to the Income-tax, Appellate Tribunal. It was contended by the assessee that it was neither a dealer in shares nor the surplus of Rs. 12,78,252 received by it on account of the sale of the shares of Karnaphuli Paper was in the nature of a trade venture and, therefore, it could not be treated as a revenue receipt. It was further untended before the I. T. Tribunal that after sale of the shares of Karnaphuli Paper Mills Ltd., the amount was reinvested in other shares and securities and, therefore, it was only the change of investment. The surplus of Rs. 12,78,232 -was therefore, it was claimed, a capital gain and not the revenue receipt. To support the argument that the surplus amount received by sale of Karnaphuli Paper Mills' shares was a capital gain and not a revenue receipt it was urged both before the Income-tax Officer as well as before the Tribunal that in previous assessm ent years the company had suffered losses on sale of shares but these losses were not claimed as business losses but was treated by the Company as a loss of capital. The Income-tax authorities did not accept the contention of the applicant and treated the sum of Rs. 12,78,252 as revenue receipt, The applicant, therefore, moved the appellate Tribunal to refer the above question to this Court under section 66 (1) of the Income-tax Act and in consequence thereof the Income- tax Tribunal has referred the above question to this Court for decision.
3. We have heard Mr. A.I Athar and Mr. Nasrullah Awan, the learned counsel for the applicant and respondent respectively. The Income-tax Tribunal while rejecting the appeal of the assessee observed that it was not the case of the Department that the appellant is a dealer in shares our the sum of Rs. 12,78,252 was taxed as profits of a trade in the nature of venture but in spite of these conclusion: the Tribunal maintained the order of the Income---tax Officer treating the sum of Rs.
4. 12,78.2552 as revenue receipt relying on its earlier decision in I. T. As. Nos. 2496, 2497, 2498 and 2,199 of 1966-67, decided on 9-9-1968. The learned counsel for the applicant pointed out that the view expressed by the Tribunal in the aforesaid case: relied by the Tribunal was not accepted by this Court in the case of Pakistan Industrial Credit Investment Corporation Limited v. The Commissioner of Income-tax (1980 PTD 322). The Judgment in the above ease applies on all fours to the case before us and the learned counsel for the Department was unable to distinguish the same in any manner. In fact the question referred to this Court an the above cited case is the same as is now before us in this Reference, We further find that the P I C I C's case has also been followed in a later decision of this Court in the case of Yousuf Hakimuddin v. The Commissioner of Income-tax (1981 PTD 3). We are in respectful agreement with the view expressed in the aforesaid two cases and for reasons stated therein we hold that the Tribunal was not justified in holdingthe surplus of Rs.
5. 12,78,252 arising on sale of Karnaphuli Paper Mills there was a revenue receipt. The Reference is accordingly answered in the negative but we will snake no order as to costs.