JUDGMENT : S.D. Shah, J. On being directed by this court under section 256(2) of the Income Tax Act, 1961, the Income-tax Appellate Tribunal has referred the following questions of law for our opinion : "(1) Whether the claim of the assessee, namely, that it converted investment in Atul Products and Arvind Mills shares as stock-in-trade on November 9, 1961, i.e., being opening day of Samvat year 2018, and utilised the same for the purpose of ready business, is supported by evidence on record and consequently whether the claim of the respondent is admissible in law ? (2) Whether the loss of Rs. 5,28,578 for the assessment year 1963- 64 as claimed by the assessee is allowable in accordance with the provisions of section 43(5) of the Income Tax Act, 1961 ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in entertaining the appeal of the assessee, rejecting the preliminary objection of the Revenue that the point at controversy was concluded by the decision of the Tribunal in Income-tax Appeals Nos. 225 and 226(Ahd.) of 1970-71 decided on September 11, 1972, against the order of the Commissioner of Income-tax ?" 2. It may be stated that two reference applications being Reference Applications Nos. 42 and 43 were preferred before the Tribunal and two income-tax applications being Income-tax Applications Nos. 29 and 30 were preferred to this court when this court required the Tribunal to draw up the statements of case and refer the questions of law and thereupon the Tribunal has referred the aforesaid questions to us by two separate reference applications. These two references, therefore, ought to have been registered separately, but the Registry of this court has consolidated the same in view of the fact that only one statement of case is prepared by the Tribunal. We, accordingly, direct the Registry of this court to register the aforesaid references as Income-tax References Nos. 153 of 1978 and 153/(A) of 1978. 3. Before we proceed to deal with the aforesaid questions of law, it would be necessary to set out the relevant facts in the context of which we are required to answer the aforesaid questions of law : (i) The assessee is an unregistered firm which derived income from dividend and speculation in shares. 3. Before we proceed to deal with the aforesaid questions of law, it would be necessary to set out the relevant facts in the context of which we are required to answer the aforesaid questions of law : (i) The assessee is an unregistered firm which derived income from dividend and speculation in shares. For the assessment year 1963- 64, the previous year is Samvat year 2018, i.e., from November 9, 1961, to October 28, 1962. For the assessment year 1964-65, the previous year is Samvat year 2019. The assessee held 450 shares of Atul Products and 332 shares of Arvind Mills Ltd. at the beginning of Samvat year 2018, being the previous year relevant to the assessment year 1963-64. (ii) On the first day of Samvat year 2018 corresponding to the English date November 9, 1961, according to the assessee, he converted his ready share business in Atul Products shares and Arvind Mills Ltd. shares as stock-in-trade. Accordingly, the assessee had also placed an entry in its books of account. On the basis of the market value of the said shares as on that date, the assessee claimed that the value of shares of Atul Products and Arvind Mills Ltd. should be considered as value of stock-intrade and the said value should be adjusted against sale price realised by the assessee. It may be mentioned that the assessee sold shares of Arvind Mills Ltd. for a sum of Rs. 3,17,945 and 250 shares of Atul Products out of 450 shares for a sum of Rs. 1,19,918. These shares were sold in the assessment year 1963-64. The balance 200 shares of Atul Products were sold in the assessment year 1964-65. As a consequence of this transaction of sales based on conversion of the said shares into stock-in-trade, the assessee claimed adjustment loss of Rs. 5,28,578. (iii) The Income-tax Officer found that, for the assessment year 1963-64, no books of account were maintained except incomplete cash books prepared by the assessee on the basis of ankadas received from the brokers, etc. He also found that the assessee was holding the aforesaid shares in the two scrips since Samvat year 2011 and dividends therefrom were being shown. He, therefore, found that the assessee had sold the said shares which were held by him by way of investment with a view to meeting heavy speculation losses. He also found that the assessee was holding the aforesaid shares in the two scrips since Samvat year 2011 and dividends therefrom were being shown. He, therefore, found that the assessee had sold the said shares which were held by him by way of investment with a view to meeting heavy speculation losses. He also found that, in the earlier years, there were no sales and purchases of the said shares. He also found that the assessee did not make any sale or purchase transaction by handing over and taking over of shares on delivery basis in any of the said shares. He, therefore, disallowed the claim of the assessee for conversion of investment into stock-in-trade and he held that the shares in the aforesaid two scrips represented investment in shares and, therefore, he treated the income as gains income liable to tax. It may be stated that, for the assessment year 1964-65, by the same process of reasoning, the sale price of 200 balance shares of Atul Products was brought to tax as capital gains. (iv) Being aggrieved by the aforesaid order of the Income-tax officer, the assessee carried the matter in appeal before the Appellate Assistant Commissioner. However, before the appeal could be decided, the Commissioner of Income-tax, acting under section 263 of the Act, initiated proceedings as he was of the view that the assessment order made by the Income-tax Officer was erroneous and was prejudicial to the interests of the Revenue. After giving opportunity to the assessee to file his reply and after hearing the assessee, the Commissioner of Income-tax came to the conclusion that the assessee was holding these shares as stock-in-trade right from the beginning when the said shares were acquired. In the alternative, he held that the purchase and sale of shares of Arvind Mills and Atul Products will represent an adventure in the nature of trade and that it cannot be accepted that the assessee had converted the said shares from investment to stock-in-trade on November 9, 1961. He, therefore, held that the profits as computed by the Income-tax Officer should be assessed as business profit. (v) Being aggrieved by the order of the Commissioner of Income- tax, the assessee carried the matter in appeal to the Tribunal and the Income-tax Tribunal, in Income-tax Appeals Nos. He, therefore, held that the profits as computed by the Income-tax Officer should be assessed as business profit. (v) Being aggrieved by the order of the Commissioner of Income- tax, the assessee carried the matter in appeal to the Tribunal and the Income-tax Tribunal, in Income-tax Appeals Nos. 225 and 226/(Ahd) of 1970-71, held that the shares of Arvind Mills Ltd. and Atul Products were investment shares and that the Income-tax Officer was right in bringing the profits thereon to tax as capital gains. The decision of the Commissioner of Income-tax was, therefore, reversed. It may be mentioned that, while the aforesaid appeals against the order of the Commissioner of Income-tax were heard by the Income-tax Appellate Tribunal, the appeals preferred by the assessee against the order of the Income-tax Officer disallowing the case of the assessee that he converted his investment assets into stock-in-trade in the aforesaid two scrips were pending before the Appellate Assistant Commissioner. The Tribunal, therefore, in the said order, mentioned that the assessee's case that his investment assets were converted into stock-in-trade on the first day of the relevant year was not within the scope of the appeals before the Tribunal. (vi) In the appeals which were preferred by the assessee before the Appellate Assistant Commissioner, initially, the Appellate Assistant Commissioner did not deal with the nature and character of the holding of shares of Atul Products and Arvind Mills as the said question was the subject-matter of appeal before the Tribunal against the order of the Commissioner of Income-tax. The Appellate Assistant Commissioner, therefore, initially declined to interfere with the order passed by the Income-tax Officer. However, when the Tribunal disposed of the aforesaid appeals being Income-tax Appeals Nos. 225 and 226, the assessee approached the Appellate Assistant Commissioner to restore his appeals and pressed that the points raised by him in his appeal about the conversion of his investment assets into stock-in-trade on the first day of the accounting year relevant to the assessment year 1963-64 was required to be decided. The Appellate Assistant Commissioner disposed of the said contention by holding that the assessee's claim for conversion of investment into stock-n-trade in respect of the shares was not acceptable. The Appellate Assistant Commissioner disposed of the said contention by holding that the assessee's claim for conversion of investment into stock-n-trade in respect of the shares was not acceptable. (vii) Being aggrieved by the order of the Appellate Assistant Commissioner, the assessee preferred an appeal to the Tribunal and the Tribunal after considering the contentions advanced before it came to conclusion that the assessee had effected conversion of scrips of shares of Arvind Mills and Atul Products appearing on investment account into ready share accounts. The Tribunal also held that there was nothing on record to doubt the entries in the books of account of the assessee, more particularly, the entry dated November 9, 1961. On the question regarding the allowance of loss, the Tribunal found that, since the transaction in regard to the purchase and sale of shares were settled by way of differences ultimately did not exceed the total quantity of scrips handed over to the brokers, the claim of the assessee of hedging the loss was allowed. The Tribunal, therefore, allowed the appeals of the assessee. The aforesaid judgment of the Tribunal has given rise to the aforesaid questions of law for our opinion. Question No. 1 - Conversion of investment into stock-in-trade - Whether permissible ? (a) In the course of the assessment proceedings, the assessee claimed that his business in Atul Products shares and Arvind Mills shares should be treated as "ready share business" and that he should be allowed to convert his investments in the said shares into stock-in-trade at the market value on the opening day of Samvat year 2018 corresponding to English calendar day, i.e., November 9, 1961. On the basis of the market value of said shares on that day, the value of shares of Atul Products and Arvind Mills Ltd. should be considered and the said value should be adjusted against the sale price realised by the assessee. The assessee, accordingly, claimed that adjustment loss of Rs. 5,28,578 should be allowed for the assessment year 1963-64. On the basis of the market value of said shares on that day, the value of shares of Atul Products and Arvind Mills Ltd. should be considered and the said value should be adjusted against the sale price realised by the assessee. The assessee, accordingly, claimed that adjustment loss of Rs. 5,28,578 should be allowed for the assessment year 1963-64. The claim of the assessee for conversion of his investment into stock-in-trade was negatived by the Income-tax Officer because, firstly, the assessee did not carry on ready share business in the said scrips of Arvind Mills Ltd. and Atul Products since Samvat year 2011 ; secondly, the assessee held the shares by way of his investment since Samvat year 2011 and he had never sold the said shares ; thirdly, the said shares were sold during the respective year with a view to meet the heavy speculation loss incurred by it ; fourthly, there were no sales and purchase transactions in the scrips of the aforesaid two companies in the earlier years ; and, lastly, because the assessee did not make any sale or purchase transaction of handing over and taking over on delivery basis in any of these shares during the respective accounting year, but the entire block was sold. The claim of the assessee for conversion of investment into stock-in-trade thus came to be disallowed. The Appellate Assistant Commissioner confirmed that view while the Tribunal allowed the appeal of the assessee. (b) In the aforesaid fact-situation, we are called upon to decide the question as to whether the assessee who held investment shares in Atul Products and Arvind Mills Ltd. was entitled in law to convert his investment in shares by converting them into stock-in-trade so as to commence business in shares and subsequently to claim adjustment loss. In the case of CIT v. Bai Shirinbai K. Kooka [1962] 46 ITR 86, a Bench of seven judges of the Supreme Court, speaking through S. K. Das J. (Sarkar J., dissenting), was called upon to decide an identical question. Before the Supreme Court, the assessee, a Parsi lady, held by way of investment a large number of shares of different companies. The dividend income from such shares was assessed to income-tax for several years prior to April 1, 1945. The assessee converted her shares into stock-in-trade and carried on trading activity, namely, "business in shares". Before the Supreme Court, the assessee, a Parsi lady, held by way of investment a large number of shares of different companies. The dividend income from such shares was assessed to income-tax for several years prior to April 1, 1945. The assessee converted her shares into stock-in-trade and carried on trading activity, namely, "business in shares". Her income for the assessment year 1946- 47 was computed on the basis of the profits which she made by the sale of her shares as trading activity, the profits being calculated on the difference between the ruling market price at the beginning of the accounting year and the sale proceeds. The Income-tax Officer calculated the profits by deducting from the sale proceeds the cost calculated on the basis of market price of shares at the beginning of the accounting year. The question before the court was : What should be the basis of computation of the profits made by the assessee by the sale of her shares in the relevant year ? The Supreme Court held that, in order to arrive at the real profits, one must consider the accounts of the business on commercial principles and construe the profits in their normal and natural sense, a sense which no commercial man will misunderstand. Normally, the commercial profits out of the transaction of a sale of an article is the difference between what the article costs the business and what it fetches on sale. So far as the business or trading activities are concerned, the market value of the shares on the conversion date was what it cost the business. There was no question of notional sale. The shares which were converted into stock-in-trade were sold by the assessee which was an actual sale and not a notional sale. Such sale has resulted in profit and the question was as to how such profit should be computed. The Supreme Court adopted the language of Lord Radcliffe and held that (at page 96) : " the only fair measure of assessing trading profits in such circumstances is to take the market value at one end and the actual sale proceeds at the other, the difference between the two being the profit or loss, as the case may be". The Supreme Court adopted the language of Lord Radcliffe and held that (at page 96) : " the only fair measure of assessing trading profits in such circumstances is to take the market value at one end and the actual sale proceeds at the other, the difference between the two being the profit or loss, as the case may be". In this case, the Supreme Court was also required to consider whether the majority decision of the Supreme Court in the case of Sir Kikabhai Premchand v. CIT [1953] 24 ITR 506, requires reconsideration. In Sir Kikabhai's case [1953] 24 ITR 506 (SC), a part of stock-in-trade was withdrawn from business ; there was no sale nor any actual profit. The ratio of the decision was that, under the Income-tax Act, the State has no power to tax a potential future advantage ; all it can tax is income, profits and gains made in the relevant accounting year. While the Supreme Court found that, in the case before it (Kikabhai's case [1953] 24 ITR 506), the admitted position was that there has been a sale of the shares in pursuance of a trading or business activity and actual profits have resulted from the sale. The question before the court was not whether the State has a power to tax potential future advantage but the question was how the actual profits be computed when, admittedly, there has been a sale in the business sense and actual profits have resulted therefrom. The Supreme Court referred to the decision of the House of Lords in Sharkey v. Wernher [1956] 29 ITR 962. In the said case, the wife of the assessee carried on a stud farm the profits of which were agreed to be chargeable to income-tax under Case I of Schedule D. She also carried on the activities of horse racing and training, which were agreed not to constitute trading. Five horses were transferred from the stud farm to the racing stables. The cost of breeding these horses was debited to the stud farm accounts. On the question of the amount to be credited as a receipt, the assessee contended before the Special Commissioners that the proper figure to be brought in respect of the transferred horses was the cost of breeding. The Revenue contended that the market value of the animals which was considerably higher was the proper figure. On the question of the amount to be credited as a receipt, the assessee contended before the Special Commissioners that the proper figure to be brought in respect of the transferred horses was the cost of breeding. The Revenue contended that the market value of the animals which was considerably higher was the proper figure. The House of Lords decided in favour of the assessee. Lord Radcliffe pointed out that, when a horse was transferred from the stud farm to the owner's personal account, there was a disposition of trading stock, though the disposition might not be by way of trade. He then referred to the three methods of recording the result of the disposition in the stud farm trading accounts. One of them was that there might be no entry of a receipt at all and Lord Radcliffe pointed out that this method would give the selfsupplier an unfair tax advantage. The second method would be to enter the cost price ; this again would be fictional because no sale in the legal sense had taken place, nor had there been any actual receipt. The third method was to enter as a receipt a figure equivalent to the current realisable value of the stock item transferred. Lord Radcliffe gave two grounds in favour of the third method. The first ground was that it gave a fairer measure of assessable trading profit as between one taxpayer and another, for it eliminated variations which were due to no other cause than any one taxpayer's decision as to what proportion of his total product he would supply to himself. The second ground was that it was better economics to credit the trading owner with the current realisable value of any stock which he had chosen to dispose of without commercial disposal than to credit him with an amount equivalent to the accumulated expenses in respect of that stock. (c) Based on the above opinion of the House of Lords, the Supreme Court determined the actual profits by taking the market value on the one hand and the actual sale proceeds on the other, the difference between the two weighing the profit or loss, as the case may be. (c) Based on the above opinion of the House of Lords, the Supreme Court determined the actual profits by taking the market value on the one hand and the actual sale proceeds on the other, the difference between the two weighing the profit or loss, as the case may be. From the aforesaid decision, it becomes clear that the shares held as investment assets can be converted into stock-in-trade of business in shares and such shares can be sold subsequently, and to such conversion there does not appear to be any legal impediment. However, factually, it shall have to be seen as to whether the transaction of such conversion was genuine and was supported by evidence on record. True it is, that such an exercise would indirectly invite this court to reappreciate the findings already reached by the authorities, but if we turn to the language employed in question No. 1 referred to us for our opinion, we shall have to at least refer to the evidence in order to record our opinion as to whether the transaction of conversion is supported by evidence on record. (d) We may first refer to the copy of the entry posted in the journal of Samvat year 2018 on Kartik Sud 1 which, according to the English calendar year, would be referable to November 9, 1961. As per the said entry, the amount of Rs. 6,68,980 is referable to conversion of shares of Arvind Mills Ltd. and Atul Products into business and as such the market value thereof is credited to the ready share business at purchase price debiting the ready share business account. The second entry on the debit side is that of Rs. 2,46,600, which is conversion of investment shares into business shares. It may be stated that the genuineness of this particular entry in the books of the assessee is not challenged by the Revenue at any stage and even before us the genuineness of this entry is not challenged. The entries in the books of account of the assessee were not challenged as a device or as a cloak to evade tax. Nowhere on the record, has the Revenue challenged that the entries did not reflect the real transaction between the parties. The entries in the books of account of the assessee were not challenged as a device or as a cloak to evade tax. Nowhere on the record, has the Revenue challenged that the entries did not reflect the real transaction between the parties. In the absence of any such challenge, it is not open to the Revenue to contend before us that the transaction of conversion from investment to stock-in-trade for ready share business was not a permissible transaction. In the case of CIT v. Amitbhai Gunvantbhai [1981] 129 ITR 573, the Division Bench of this court has observed as under (at page 580) : "The basic principle is the same in the law relating to income- tax as well as in civil law, namely, that if there is no challenge to the transaction represented by the entries or to the genuineness of the entries, then it is not open to the other side - in this case the Revenue - to contend that that which is shown by the entries is not the real state of affairs. " 4. We shall have, therefore, to accept the entry in the books of account of the assessee, dated November 9, 1961, as an admissible piece of evidence for the purpose of establishing conversion of its investment shares into stock-in-trade for ready share business. (e) The assessee has also produced a letter addressed by it to the Income-tax Officer, dated March 24, 1968. The said letter was written by the assessee to the Income-tax Officer in connection with the particulars called for by the Income-tax Officer from the assessee and in such letter full details including the details about the entry in the books of account were given by the assessee. In this letter, the assessee also informed the Income-tax Officer that it is not carrying on any purchase or sale of Arvind Mills and Atul Products shares from Samvat years 2012 to 2017. Its intention, however, was to make investment in shares. The dividend income thereof was assessed under the head "Other sources". In this letter, the assessee also informed the Income-tax Officer that it is not carrying on any purchase or sale of Arvind Mills and Atul Products shares from Samvat years 2012 to 2017. Its intention, however, was to make investment in shares. The dividend income thereof was assessed under the head "Other sources". It was also pointed out that the said investment shares were converted into stock-in-trade in the beginning of Samvat year 2018 and it was urged that, where capital investment is converted into stock-in-trade for business in ready shares, the cost price should be taken as the market price as prevailing on the date of conversion by specific reference to the decision of the Supreme Court in the case of Bai Shirinbai [1962] 46 ITR 86. This letter provides contemporaneous evidence of transaction of conversion of investment shares into stock-in-trade for business in ready shares. The genuineness of this letter is rightly not challenged at any stage by the Revenue. (f) The third piece of evidence consists of various ankadas showing the subsequent conduct of the assessee while dealing with the aforesaid shares. The said ankadas produced at pages 216 to 248 of the paper book amply establish the fact that the delivery of the aforesaid share certificates was effected to three brokers and that the brokers have in their turn on behalf of the assessee entered into a number of transactions of sale and purchase thereby either requiring the assessee to make payment to the broker or entitling the assessee to receive payment from the brokers. According to the assessee, the said three brokers entered into transactions of purchase and sale as per the instructions because they had in their hands share certificates with duly filled in and signed share transfer forms. The assessee, therefore, carried on business in ready shares of Atul Products and Arvind Mills Ltd. which would go to establish that the investment shares were converted into stock-in-trade for the ready share business. (g) Lastly, the assessee has also produced on pages 249 to 256 of the paper book the ready share business account of Samvat year 2018 from the books of account of the assessee. Various transactions reflected by the ankadas referred to hereinabove were duly incorporated by the entries in this "ready share business account". The genuineness of this ready share business account is also not in dispute before us. Various transactions reflected by the ankadas referred to hereinabove were duly incorporated by the entries in this "ready share business account". The genuineness of this ready share business account is also not in dispute before us. From the aforesaid evidence which was also in existence before the Assessing Officer and other authorities, it becomes clear that the transaction of conversion of investment shares as stock-in-trade on November 9, 1961, i.e., the opening day of Samvat year 2018, was fully supported by evidence on record and following the decision recorded in the case of Bai Shirinbai Kooka [1962] 46 ITR 86 (SC), the Tribunal was right in holding that the claim of the assessee that it converted investments in Atul Products and Arvind Mills shares into stock-in-trade on November 9, 1961, being the opening day of Samvat year 2018, was supported by evidence on record. (gg) Our attention was also invited to the unreported decision of the Division Bench of this court in the case of Ansuyaben (deceased) v. CIT (Income-tax Reference No. 45 of 1972 decided on October 22, 1974). Based on the decision in the case of Bai Shirinbai Kooka [1962] 46 ITR 86 (SC), the Division Bench of this court took the view that it is open to an assessee to convert his investment into a trading asset of the business which the assessee may start and, in such a case, there is no question of a notional sale and, for the purpose of computation of the profit from such assets converted into trading assets, the market value on the date of conversion, is a basis for determining the actual profits realised when such trading assets are sold. The Division Bench further held that, for judging the character of such transactions (of conversion of investments into trading assets) several factors are to be taken into account, such as the magnitude of the transaction of sale or purchase, the subsequent dealings of the assessee, the manner of disposal of the assets or properties to ascertain as to whether they were of trading nature. The Division Bench also found that it is essential that there should be a business in existence of which the property could form the stock-in-trade. The Division Bench also found that it is essential that there should be a business in existence of which the property could form the stock-in-trade. A business connotes some real, substantial and systematic and organised course of activity carried on by the assessee to show that he had desire to launch upon an adventure in the nature of trade. In our opinion, in the facts of the case before us, the assessee was already dealing in shares by way of ready share business. So far as other activities were concerned, it was easy for him, therefore, to convert his investments in the aforesaid two scrips into stock-in-trade for ready share business. The aforesaid decision, therefore, does not, in any way, run counter to our conclusion. (h) At this stage, we may also mention one submission made by Mr. K. C. Patel, learned advocate for the assessee. In his submission, this court should decline to answer question No. 1 inasmuch as it is purely a question of fact which the court is not required to answer in its advisory jurisdiction. By reference to the aforesaid documentary evidence, he submitted before us that the the conclusion was based by the Tribunal on some evidence on which conclusion could be arrived at and, therefore, no question of law, as such, arises calling for opinion of this court. In the case of CIT v. Orissa Corporation P. Ltd. [1986] 159 ITR 78, the Supreme Court confirmed the judgment of the Orissa High Court which confirmed the action of the Tribunal in refusing to refer any statement of the case to the High Court. The Supreme Court found that the conclusions reached by the Tribunal were based on evidence. Such conclusions, therefore, cannot be said to be based on no evidence. Therefore, even if the High Court could have reached different conclusions on reappreciation of evidence, it was not open to it to interfere with such conclusions which were reached by the Tribunal. The findings reached by the Tribunal cannot be said to be unreasonable, perverse or based on no evidence and, therefore, according to the Supreme Court, the High Court was justified in not calling for the reference of the question of law under section 256(2) of the Act. 5. In the case of CIT v. Karam Chand Thapar and Bros. The findings reached by the Tribunal cannot be said to be unreasonable, perverse or based on no evidence and, therefore, according to the Supreme Court, the High Court was justified in not calling for the reference of the question of law under section 256(2) of the Act. 5. In the case of CIT v. Karam Chand Thapar and Bros. P. Ltd. [1989] 176 ITR 535 (SC), once again, in the context of the powers of the High Court under section 256 of the Income Tax Act, 1961, the Supreme Court held that the Tribunal is the final fact-finding body. The questions whether a particular loss is a trading loss or a capital loss and whether the loss is genuine or bogus are primarily questions to be determined on the appreciation of facts. The findings of the Tribunal on these questions are not liable to be interfered with unless the Tribunal has taken into consideration any irrelevant material or has failed to take into consideration any relevant material or the conclusions arrived at by the Tribunal are perverse in the sense that no reasonable person, on the basis of the facts before the Tribunal, could have come to the conclusions to which it has come. (i) Very recently, in the case of CIT v. Cellulose Products of India Ltd. [1991] 192 ITR 155, the Supreme Court reiterated the law by stating that it is settled that the High Court hearing a reference under the Income- tax Act does not exercise an appellate or revisional or supervisory jurisdiction over the Appellate Tribunal and that it acts in a purely advisory capacity. If the Tribunal, after considering the evidence produced before it on a question of fact, records its finding, the finding cannot be interfered with by the High Court unless such a finding was not supported by any evidence, was perverse or was patently unreasonable. (j) Based on the above position of law, Mr. K.C. Patel, learned counsel for the assessee, submitted that since there was more than sufficient evidence on record before the authorities to justify the conversion of investment shares into stock-in-trade for the ready share business and since genuineness of such evidence was at no stage doubted, there was sufficient material before the Tribunal to reach the findings which it has reached and, therefore, this court should decline to answer question No. 1. In fact, we have already discussed hereinabove the evidence which was before the Tribunal, and we have independently come to the conclusion that the Tribunal was justified in recording the findings it has reached on the evidence which was before it. Hence, we do not think it proper to decline to answer this question though we are of the opinion that question No. 1 partially requires this court to reappreciate the evidence and to record its findings as regards sufficiency or otherwise of the evidence for the purpose of reaching a finding which was reached by the Tribunal. (k) We, accordingly, answer question No. 1 in the affirmative, i.e., in favour of the assessee and against the Revenue. Question No. 2 - Hedging transaction : (a) It is the case of the assessee that, after converting investment shares in Atul Products and Arvind Mills Ltd. to stock-in-trade for business in ready shares, it gave delivery of ready shares to three brokers with a view to hedging against loss in its holdings of stocks of shares through price fluctuations as permissible under clause (b) of sub-section (5) of section 43. It is the case of the assessee that, against the hedging of these shares, it carried on business of purchase and sale by handing over the delivery of said shares of Arvind Mills Ltd. and Atul Products to three brokers along with delivery of share certificates and duly filled in and signed share transfer forms. According to the assessee, it carried on business in ready shares of Atul Products and Arvind Mills Ltd. and, therefore, it was entitled to claim loss of Rs. 5,28,578 for the assessment year 1963- 64 as allowable under section 43(5)(b) of the Income Tax Act, 1961, and on the same basis, the assessee had also claimed that it should be allowed loss for the assessment year 1964-65. (b) Before we proceed to discuss the genuineness or otherwise of the hedging transaction of the assessee, it would be proper to look at the provisions of the Act. Section 28 of the Income Tax Act, 1961, inter alia, provides that incomes enumerated therein shall be chargeable to income- tax under the head "Profits and gains of business or profession". Explanation 2 to section 28 being relevant is reproduced herein : "Explanation 2. Section 28 of the Income Tax Act, 1961, inter alia, provides that incomes enumerated therein shall be chargeable to income- tax under the head "Profits and gains of business or profession". Explanation 2 to section 28 being relevant is reproduced herein : "Explanation 2. - Where speculative transactions carried on by an assessee are of such a nature as to constitute a business, the business (hereinafter referred to as ' speculation business ') shall be deemed to be distinct and separate from any other business." 6. Section 43 is a statutory dictionary for certain terms relevant to income from profits and gains of business or profession. Section 43, inter alia, provides that, unless the context otherwise requires, in sections 28 to 41 and in section 43 "speculative transaction" means : "a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips : Provided that for the purposes of this clause - . . . . (b) a contract in respect of stocks and shares entered into by a dealer or investor therein to guard against loss in his holdings of stocks and shares through price fluctuations ; or . . . . shall not be deemed to be a speculative transaction." 7. We are, in this case, concerned with clause (b) of sub-section (5) of section 43. (c) According to section 43(5) of the Income-tax Act, "speculative transaction" means, a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by actual delivery or transfer of the commodity or scrips. Explanation 2 to section 28 of the Act of 1961, enjoins that, when an assessee enters into speculative transactions so as to constitute business, such business is deemed to be a distinct and separate business or any business of his. By section 73(1) of the Act of 1961, it is enacted that any loss in respect of a speculative business would not be set off except against profits and gains, if any, of another speculative business. By section 73(1) of the Act of 1961, it is enacted that any loss in respect of a speculative business would not be set off except against profits and gains, if any, of another speculative business. In other words, the Legislature has, after carving out a subordinate source of business income styled as speculative business, enjoined that this loss cannot be set off against profits and gains, from any non-speculative transaction, though it may be part of the larger head of income of business or profession. In the income-tax law, this new class of speculation business, as defined in section 43(5) of the Act of 1961, has one more distinguishing feature than the one which is attributed to such transactions in the law of contract. The distinguishing feature is that the question of intention of seller or purchaser is not very material in the income-tax law, as it is settled otherwise than by actual delivery, it would amount to speculative transaction. However, clauses (a), (b) and (c) of the proviso to section 43(5), by a legal fiction, take out of the purview of speculative transactions forward contracts effected with a view to guarding against the loss due to adverse price fluctuations. In speculative transactions, the modus operandi of persons indulging in them is that, when a person enters into a contract of purchase, he also simultaneously enters into one or more contracts of sale against the same quantity deliverable at the same time either to the original vendor or to someone else, so as either to secure a profit or to minimise loss, before the vaida day ; and similarly, when he enters into a contract of sale, he simultaneously enters into one or more contracts to purchase the same quantity before the vaida day. The result of such dealings, when the sale and purchase are to and from the same person, has the effect of cancelling the contracts leaving only the difference to be paid. (d) Hedging contracts are those contracts which hedge against prejudicial price fluctuations. Hedging transactions are required to be distinguished from these speculative transactions. Hedging transactions are genuine transactions entered into for the purpose of insuring against adverse price fluctuations. In hedging transactions, neither delivery nor transfer is contemplated, and yet, they cannot be considered as speculative transactions in commercial parlance. (d) Hedging contracts are those contracts which hedge against prejudicial price fluctuations. Hedging transactions are required to be distinguished from these speculative transactions. Hedging transactions are genuine transactions entered into for the purpose of insuring against adverse price fluctuations. In hedging transactions, neither delivery nor transfer is contemplated, and yet, they cannot be considered as speculative transactions in commercial parlance. By hedging transactions, a trader, by corresponding contract of sale and purchase in the forward market, tries to offset the likely loss which may arise in the ready market due to adverse price fluctuations. (e) We may also refer to the decision of a Full Bench of this court in the case of Pankaj Oil Mills v. CIT [1978] 115 ITR 824. In this case, in the context of section 43(5) and more particularly, proviso (a), the court was required to decide the question as to whether the decision of the Division Bench of this court in the case of Chimanlal Chhotalal v. CIT [1968] 69 ITR 129, was rightly decided in so far as it restricted the operation of hedging contracts covered by proviso (a) to a contract of purchase only of raw materials or merchandise. The court held that the interpretation placed by the Division Bench in Chimanlal Chhotalal's case [1968] 69 ITR 129 (Guj) was not correct. On a true construction and effect of proviso (a) to section 43(5) of the Income Tax Act, 1961, every contract, irrespective of whether it was sale or purchase of raw materials or merchandise entered into by a person in the course of his manufacturing or merchandising business, would not be deemed to be a speculative transaction, if its purpose is to guard against any loss through future price fluctuations in respect of his contracts for actual delivery of goods manufactured by him or merchandise sold by him. While holding that the decision of the Division Bench in Chimanlal's case [1968] 69 ITR 129 (Guj) was not rightly decided, the Full Bench held that the hedging contracts, in order to be out of speculative transactions, must be in respect of only raw materials so far as the manufacturer is concerned though these contracts may be both with regard to sales and purchases. The court also held that the hedging contracts need not succeed the contracts for sale and actual delivery of goods manufactured, but the latter may be subsequently entered into, provided they are within the reasonable time not exceeding generally the assessment year. The court also held that, in order to be genuine and valid hedging contracts of sales, the total of such transactions should not exceed the total stocks of the raw materials or the merchandise on hand which would include existing stocks as well as stocks acquired under firm contracts of purchase. (f) In the aforesaid case, the Full Bench referred extensively to the technique of hedge trading as explained by the well-known economist, W. R. Natu, in his book Regulation of Forward Markets, at page 9, as under (at page 829 of 115 ITR) : "The hedge contract is so called because it enables the persons dealing with the actual commodity to hedge themselves, i.e., to insure themselves against adverse price fluctuations. A dealer or a merchant enters into a hedge contract when he sells or purchases a commodity in the forward market for delivery at a future date. His transaction in the forward market may correspond to a previous purchase or sale in the ready market or he may propose to cover it later by a corresponding transaction in the ready market, or he may offset it by a reverse transaction on the forward market itself. To take an illustration, a merchant may go to the ready market and purchase cotton. He may purchase it for selling it again later to a mill for manufacturing it into cloth, in which case, he might hold it in his stock for a time, say, one month. If he buys the cotton at Rs. 800 per candy, and during the month, the price falls to Rs. 750 per candy, he would be making a loss of Rs. 50 per candy. He thus undertakes a risk when he buys cotton in the ready market and stocks it for a period of time, and naturally tries to find a way by which the risk can be reduced. He, therefore, goes to the forward market and sells cotton on forward contract for delivery after one month, at, say, Rs. 770 per candy. The purchase transaction in the ready market is thus counterbalanced by a sale transaction in the forward market. He, therefore, goes to the forward market and sells cotton on forward contract for delivery after one month, at, say, Rs. 770 per candy. The purchase transaction in the ready market is thus counterbalanced by a sale transaction in the forward market. At the end of one month, if the ready price has fallen by Rs. 50, he would be put to a loss in the ready market when he offsets his original purchase by a sale in that market. At the same time, however, he would also be offsetting his original sale on the forward market by a corresponding purchase in that market. Since the course of prices in the forward market generally follows the same trend as in the ready market, he would be purchasing in the forward market also at a lower price, perhaps at Rs. 720 per candy, making a profit of Rs. 50 per candy. He would thus make a profit on the forward market which would reduce or at times even more than wipe out the loss that he suffers on the ready market. In this way, he is able to reduce his risk and cut his losses by recourse to the forward market and might even in favourable circumstances end up with a profit on balance. . . . Thus, by resorting to counterbalancing transactions in the market for the ready commodity on the one hand and in the hedge market on the other hand, the hedger seeks to safeguard his position. The movement of prices in the two markets may not always follow an identical course and the hedger might at times gain and at times lose but such a gain or loss would be marginal and far less than what it would be if the person had not hedged at all. While, however, the hedging operation protects the hedger against loss arising from adverse fluctuations in prices, it also prevents him from making windfall profit owing to favourable fluctuations in prices as well. The forgoing of such a possible windfall profit is the price which he pays for the insurance against loss." 8. While, however, the hedging operation protects the hedger against loss arising from adverse fluctuations in prices, it also prevents him from making windfall profit owing to favourable fluctuations in prices as well. The forgoing of such a possible windfall profit is the price which he pays for the insurance against loss." 8. Having so quoted the technique of hedge trading as explained by W. R. Natu, the Full Bench observed as under (at page 830 of 115 ITR) : "This well-known technique of hedge trading clearly implies forward contracts both ways, namely, for sale and purchase with a view to guarding against adverse price fluctuations. These forward contracts by way of hedge transactions usually afford a cover to a trader inasmuch as his loss in the ready market is offset by a profit in the forward market and vice versa. It, therefore, follows that in order to effectively hedge against adverse price fluctuations of the manufactured goods or merchandise, a manufacturer or merchant has necessarily to enter into forward transactions of sale and purchase both, and without these contracts of sale and purchase constituting hedge transactions, there would be no effective insurance against the risk of loss in the price fluctuations of the commodity manufactured or the merchandise sold. " 9. It becomes clear from the aforesaid quotations that hedging transactions are those transactions where persons hedge themselves, i.e., insure themselves against adverse price fluctuations and proviso (b) to section 43(5) clearly permits such transactions. In the absence of proviso (b) of section 43(5), such a transaction would have been a speculative transaction. A dealer in stocks and shares can enter into a contract to guard against loss in his holding of stocks and shares which may arise due to adverse price fluctuations. However, the only condition which should be satisfied before he can claim that a contract entered into by him should not be considered as a speculative transaction is that he must have entered into such a contract to guard against the loss due to adverse price fluctuations of shares in respect of which he might have entered into a contract of sale by actual delivery. The Full Bench of this court, in this connection, also referred to the decision of the Central Board of Revenue which has decided as under (at page 836 of 115 ITR) : "Board's decision : The intention has always been that where bona fide forward sales are entered into with a view to guarding against the risk of raw materials or merchandise in stock falling in value, the losses arising as a result of such forward sales should not be treated as speculation losses. Accordingly, Income-tax Officers should not treat such transactions as speculative transactions within the meaning of Explanation 2 to section 24(1). It is to be noted in this connection that a hedging sale can be taken to be genuine only to the extent the total of such transactions does not exceed the total stocks of raw materials or merchandise in hand. If the forward sales exceed the ready stock, the loss arising from the excess transactions should be treated as loss arising from speculative transactions and not from genuine hedging transactions." 10. From the aforesaid decision of the Board, it becomes clear that, in order to be a genuine hedging transaction, the sale should be confined to the total stock of raw materials or merchandise in hand or of ready stock shares in possession. The forward sales should not exceed the ready stock. If the forward sales exceed the ready stock, the transaction would be a speculative transaction, and not a genuine hedging transaction. In other words, it is implicit that hedging transaction in order to be out of speculative transaction must not exceed the total stock-in-trade which would necessarily include existing stocks as well as firm contracts of purchase of stock-in-trade. (e) The Full Bench of this court, in the case of Pankaj Oil Mills [1978] 115 ITR 824, also found that there should be a reasonable nexus as to the time so as to enable a manufacturer or merchant to claim that his hedging transactions are not speculative transactions and the loss suffered thereunder be allowed to be set off against the profits and gains of any other business. What would be reasonable connection is always a question of fact depending on the circumstances of each case. Nevertheless, the second set of contracts, though they may be subsequent in point of time to the first set, cannot be generally beyond the assessment year. What would be reasonable connection is always a question of fact depending on the circumstances of each case. Nevertheless, the second set of contracts, though they may be subsequent in point of time to the first set, cannot be generally beyond the assessment year. (f) The Assessing Officer, therefore, shall have first to examine whether a hedge transaction is a genuine one or not by applying the aforesaid relevant factors. If it is a genuine one, and it is by way of future sale of commodity against stock of the same commodity, the loss arising out of this transaction should be excluded from the purview of speculation. (g) Keeping the aforesaid principles in mind, we may now proceed to examine the submission made by Mr. M. J. Thakore, learned counsel for the Revenue, that the transactions in question in the case before us are not hedging transactions. In his submission, in order to be a genuine hedging transaction, there should be a spot purchase and forward sale or a spot sale and forward purchase and that the said transaction must be so inter-connected that one is reflected in the other. However, this submissions cannot be accepted as it stands counter to the nature of hedge transactions described by W. R. Natu in his book. The transaction of a person in the forward market may correspond to a previous purchase or sale in the ready market or he may propose to cover it later by a corresponding transaction in the ready market or he may offset it by a reverse transaction on the forward market itself. It is, thus, clear that a purchase transaction in the ready market can be counter-balanced by a sale transaction in the forward market. It is, therefore, not essential that in order to be a genuine hedge transaction there must be a ready purchase and forward sale or ready sale and forward purchase. (h) We may also mention that the series of transactions entered into by the broker on behalf of the assessee have been reflected by various ankadas resulting in either payment by the broker to the assessee or by the assessee to the broker would show that they were coupled with delivery of the share certificates to the brokers. (h) We may also mention that the series of transactions entered into by the broker on behalf of the assessee have been reflected by various ankadas resulting in either payment by the broker to the assessee or by the assessee to the broker would show that they were coupled with delivery of the share certificates to the brokers. Firstly, the assessee has by posting entries in the books of account indicated his intention to transfer the aforesaid two scrips from the investment account to the ready share account. The Income-tax Officer has not challenged the said entries as sham or bogus or as not bona fide entries. Secondly, the assessee has, thereafter, delivered his total holdings in the aforesaid two scrips to the brokers along with duly signed and filled-in transfer forms. What the assessee had, thereafter, carried on are hedging transactions to hedge against the said stock. Various entries made in the books of account of the assessee in support of such hedging transactions were also not doubted by the Income-tax Officer. True it is, that ultimately in such a transaction loss is caused to the assessee and, therefore, he has claimed the said loss as hedging loss. Section 43(5), proviso (b), permits hedging in respect of stock-in-trade to guard against fluctuations in prices. It is pertinent to note that the transactions connected with the purchase and sale of the said shares which were settled by way of payment of dues ultimately did not exceed the total quantity of scrips handed over to the brokers and, therefore, the genuineness or otherwise of the said transaction cannot be doubted. We are, therefore, of the opinion that when the assessee had, as permitted by law under proviso (b) to section 43(5) of the Act, entered into hedging transactions to hedge against price fluctuations in the aforesaid two scrips, the assessee was entitled to claim hedging loss, and the Tribunal, in our opinion, was right in upholding the claim of the assessee. (i) Mr. M. J. Thakore, learned counsel for the Revenue, has raised an additional challenge in this reference and, based on the decision of the Supreme Court in the case of McDowell and Co. (i) Mr. M. J. Thakore, learned counsel for the Revenue, has raised an additional challenge in this reference and, based on the decision of the Supreme Court in the case of McDowell and Co. Ltd. v. CTO [1985] 154 ITR 148, contended that the entire transaction beginning from conversion of investment shares in the aforesaid two scrips into stock-in-trade for the business of ready shares and all subsequent hedging transactions either by payment or receipt of differences in prices was nothing but a colourable device with a view to avoid payment of tax and that this court should not permit such colourable devices. True it is, that, in the said decision, the Supreme Court has condemned the art of dodging tax without breaking the law. The court has also pointed out that the distinction made between tax avoidance and tax evasion by the English courts is now given a decent burial and the judicial attitude towards tax avoidance has changed and the smile, cynical or even affectionate though it might have been at one time, has now frozen into a deep frown. Therefore, while broadly agreeing with the aforesaid principles, we shall have to see whether, in our advisory jurisdiction under section 256 of the Income Tax Act, 1961, we can permit the Revenue to raise such a question. Firstly, we are of the opinion that such a question does not directly arise from the questions of law referred to us for our opinion. It is also not permissible for us to call for such a question from the Tribunal because such a question does not arise out of the judgment of the Tribunal inasmuch as the Tribunal has factually found that conversion of investment shares into stock-in-trade for business in ready shares was effected on November 9, 1961, as supported by entries in the books of account. The Tribunal has found that such conversion was permissible in view of the decision of the Supreme Court in the case of Bai Shirinbai K. Kooka [1962] 46 ITR 86. The posting of entries in the books of account of the assessee was not doubted by the Income-tax Officer at any stage. Therefore, in our opinion, the assessee acted within law in converting his investment shares into stock-in-trade for the ready share business, and, thereafter, the assessee entered into hedging transactions as permissible under proviso (b) to section 43(5) of the Act. Therefore, in our opinion, the assessee acted within law in converting his investment shares into stock-in-trade for the ready share business, and, thereafter, the assessee entered into hedging transactions as permissible under proviso (b) to section 43(5) of the Act. It will not be out of place to mention at this stage that the Income- tax Officer has verified the genuineness or otherwise of the hedging transactions by cross-checking the account books of the brokers and by tallying their accounts with the accounts of the assessee. The Income-tax Officer, therefore, did not and could not doubt the genuineness or otherwise of the hedging transactions which ultimately resulted in business loss to the assessee. It is also found that the assessee has given delivery of the share certificates to the brokers along with duly signed and filled in transfer forms of the said two scrips. It is also found that, at no point of time, the hedging transactions exceeded the stock of the assessee in the aforesaid two scrips and, therefore, the genuineness or otherwise of the transactions could not be challenged by the Income-tax Officer and the Tribunal, based on the aforesaid findings, reached the conclusion that the hedging transactions were permissible in law and the assessee was entitled to claim loss. It cannot, therefore, be said that the entire transaction was a device to evade the payment of tax. In fact, none of the authorities have found this transaction of hedging to be a device or pre-planned scheme. We, therefore, do not permit Mr. Thakore, learned counsel for the Revenue, to agitate this question, for the first time, before us especially, on the facts found by the three authorities, it is not permissible to record a finding that the entire transaction was a colourable device to evade tax. (j) Mr. M. J. Thakore also invited our attention to the decision of this court in the case of CIT v. Minal Rameshchandra [1987] 167 ITR 507, where the court found that the device has been adopted to evade tax, and therefore, the court was entitled to unravel the device. The court held that the court must examine the substance of the transaction and then decide whether the transaction is such that the judicial process may accord approval to it. The court held that the court must examine the substance of the transaction and then decide whether the transaction is such that the judicial process may accord approval to it. The court also found that there was no evidence in support of the transaction excepting an entry entered in the books of account of the assessee to show that the land was converted into stock-in-trade. On evidence, the court found that the entry in the books of account was not a genuine entry and that the entries in the books of account were not contemporaneous. The court also found that the question regarding the device to avoid tax did arise before the Tribunal and in fact the Commissioner has held that the assessee has adopted the device to avoid tax. In the aforesaid factual situation, the Division Bench of this court applied the ratio of the decision in the case of McDowell [1985] 154 ITR 148 (SC). In our opinion, the aforesaid decision is based purely on facts which obtained before the Division Bench of this court where, before the Appellate Assistant Commissioner, a clear finding was reached on evidence that the assessee had adopted a device to avoid tax. The Tribunal did not scrutinise the entire transaction in greater detail which called for interference by this court. However, in the facts and circumstances which obtained before us, it is found that at no stage the Income-tax Officer has doubted the entries in the books of account as sham or bogus and/or not bona fide ones as well as the subsequent hedging transactions. On the contrary, the Income-tax Officer has verified all the hedging transactions by crosschecking the books of account of various brokers and has found that the transactions should be genuine. In that view of the matter, independently, we have also examined the entries in various transactions and we do not find that the entire transaction was a device to avoid tax. We, therefore, do not permit the Revenue to raise this new submission. (k) In the result, we answer question No. 2 in the affirmative, i.e., in favour of the assessee and against the Revenue. We, therefore, do not permit the Revenue to raise this new submission. (k) In the result, we answer question No. 2 in the affirmative, i.e., in favour of the assessee and against the Revenue. Question No. 3: (i) As stated hereinabove, while stating the facts giving rise to the present reference against the judgment and order of the Commissioner of Income-tax in second appeal preferred to the Tribunal, the Income-tax Appellate Tribunal decided by its judgment dated September 11, 1972, that the Commissioner of Income-tax was not right and the Income-tax Officer was right in holding that the assessee was liable to tax on the capital gains as a consequence of sale of the said shares. However, it is required to be noted that the original order of assessment passed by the Income-tax Officer was subject to appeals preferred by the assessee which were pending before the Appellate Assistant Commissioner. During the pendency of the said appeals, the Commissioner of Income-tax exercised power under section 263 of the Act and it was the said decision of the Commissioner of Income- tax which was challenged before the Tribunal. While dealing with the said appeal, the Tribunal, in paragraph 3 of its judgment, noticed that the claim of the assessee that the investment shares were converted into stockin-trade in the relevant year was not within the scope of the appeal before it. In fact, against the finding reached by the Income-tax Officer in not upholding the said claim of the assessee, the appeals of the assessee were pending before the Appellate Assistant Commissioner and they were subsequently disposed of. The assessee has, thereafter, moved the Appellate Tribunal to decide the questions which were not answered by the Appellate Assistant Commissioner. The Tribunal has, however, recorded in paragraph 7 of its judgment a finding that the surplus arising out of Arvind Mills and Atul Products shares should be treated as capital gains as has been rightly held by the Income-tax Officer. Based on this finding of the Tribunal in the earlier appeal, it was contended before the Tribunal by the Revenue that the subsequent appeals against the order of the Appellate Assistant Commissioner were not maintainable because this ground was already concluded by the Tribunal in its earlier order in Income-tax Appeals Nos. 225 and 226 (Ahd.) of 1970-71. Based on this finding of the Tribunal in the earlier appeal, it was contended before the Tribunal by the Revenue that the subsequent appeals against the order of the Appellate Assistant Commissioner were not maintainable because this ground was already concluded by the Tribunal in its earlier order in Income-tax Appeals Nos. 225 and 226 (Ahd.) of 1970-71. The Tribunal, while dealing with the said preliminary objection, rightly found that, while deciding the earlier appeals, the Tribunal has not actually gone into the question of conversion of investment shares into stock-in-trade for ready share business. It is, no doubt, true that the observations made by the Tribunal in paragraph 3 of its earlier judgment are inconsistent with the observations made in paragraph 7 of its judgment. After going through the earlier judgment of the Tribunal, we are of the opinion that the Tribunal has, on the earlier occasion, not decided the question of conversion of investment shares into stock-in-trade for ready share business and in fact the observations made by the Tribunal, in paragraph 7 of its judgment, while deciding the earlier appeals, were subject to the appeals preferred by the assessee before the Appellate Assistant Commissioner. In our opinion, therefore, the Tribunal was right in entertaining the appeal of the assessee on merits, and in rejecting the preliminary objection raised by the Revenue. (ii) In the result, we answer question No. 3 in the affirmative, i.e., in favour of the assessee, and against the Revenue. No costs.