HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Commissioner of Income-tax, Delhi and Rajasthan v. M/s National Finance Ltd.
Civil Appeal No. 559 of 1960
[1962] Supp. 2 SCR 865 ·
Indian Income-tax Act, 1922: section 66(3) · Historical capital-loss versus trading-loss classification
Sources & disclosures includedDownload original judgment / order
3-judge bench; unanimous judgment delivered by M. Hidayatullah, J. · S. K. Das, J. · M. Hidayatullah, J. · J. C. Shah, J.
Assessment years: 1951-52
01 · Facts of the case
A commonly controlled group acquired about 80% of Madhusudan Mills at a large premium, changed its board and obtained a profitable purchasing and selling agency for National Finance. National Finance later sold 3,000 shares within the group and claimed the loss as trading loss (SCR pp.870-876; PDF pp.6-12).
Source: Primary judgment: facts
02 · Discussion by the Hon’ble Court
The real commercial intention governed. The premium, control, agency benefit, coordinated group financing and non-market disposals showed an enduring capital purpose rather than ordinary stock-in-trade. Exceptional circumstances also justified the direct merits appeal despite a separate one-day reference delay (SCR pp.867-883; PDF pp.3-19).
Source: Primary judgment: discussion
03 · Judicial decision
Revenue's appeal was allowed with costs; the claimed loss on the 3,000 shares could not be set off as a trading loss (SCR p.883; PDF p.19).
Source: Primary judgment: decision
04 · Outcome / in whose favour
In favour of Revenue on a final capital-account classification (SCR pp.876-883; PDF pp.12-19).
Source: Primary judgment: outcome
05 · AKHB REVIEW POINT
AKHB analysis: classify a controlling share block by contemporaneous commercial object, including premium, control, agency rights, financing flows and disposal pattern. The case does not erase corporate separateness or make every controlling block capital.
Source: Primary judgment: review point
Source & verification
Download original judgment / order · Open cited source rendition
Full 19-page SCR asset read and visually inspected; the next report beginning on physical p.19 was excluded.
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Statutory scope
Historical managing-agency and 1922 Act setting; no current company-law, anti-avoidance or loss-treatment clearance.
Later treatment
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