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3. One of the main objects for which the company was incorporated was to enter into transactions relating to land and properties. The assessee purchased several villages, including lands at Chincholi and Dindoshi Villages, and before the taxing authorities and the Tribunal it was stated that the object for which the assessee-company was formed was to have a model dairy, a model settlement and a model engineering college established thereon for the convenience of the middle class people. A couple of letters were produced on behalf of the assessee with a view to support the contention that such were the objects with which these lands were purchased. From the Sindhi Estate Account and other statements filed on behalf of the assessee before the ITO, he came to the conclusion that in pursuance of the objects for which it was formed, the assessee-company purchased several lands, developed them and regularly sold them for profit and those purchases and sales constituted business transactions.

(3) Whether from and after the assessment year 1952-53, the assessee-company had effected purchase in respect of other pieces of land or effected sales in respect of any other piece of land.

(4) Whether the assessee-company did anything in relation to the land after it was purchased by it either with a view to develop or otherwise deal with it.

17. Pursuant to these directions of this court, in the supplementary statement of case it is pointed out that the aggregate area of land purchased by the assessee-company was 4,195 acres situated in several villages and all these purchases were effected in the year 1945. Particulars of these purchases are given in the annexures annexed to the supplementary statement of case. These annexures show that the aggregate area of 4,195 acres of land that was purchased was from six villages, viz., Chincholi, Dindoshi, Ghodbunder, Mira, Bhayander and Shimpoli. As stated in this annexure, the lands in Chincholi village admeasure 154 acres, out of which 92 acres were in the physical possession of the assessee. Lands in Dindoshi village admeasure 347 acres 32 gunthas and out of this, 140 acres were in the physical possession of the assessee-company. The total area of land purchased from Godbunder, Mira and Bhayander village admeasures 3,689 acres 331/2 gunthas, out of which 5 acres, 23 acres and 68 acres of land from each one of the said villages were, respectively, in the physical possession of the assessee-company. In Shimpoli village 3 acres 311/2 gunthas of land were purchased and the whole of it was in the physical possession of the assessee-company. By effecting these purchases only Khoti rights in the said villages were purchased by the assessee. In the annex. "X" to the supplementary statement of case details are given in respect of the areas of land which were in physical possession of the occupants, who are merely liable to pay land revenue to the assessee-company as the owner thereof. The lands in Ghodbunder, Mira and Bhayander villages were purchased in March and April, 1945, while those in Chincholi, Dindoshi and Shimpoli were purchased in December, 1945. Out of the lands situate at Chincholi and Dindoshi villages under the various transactions with the parties an aggregate area of 74 acres 13 gunthas was sold. In respect of these pieces of land conveyances were executed on January 30, 1957, September 14, 1962, and September 26, 1963, respectively, while in respect of the lands sold to Famous Cine Laboratory, no conveyance was executed even at the date of reference to this court. Apart from the above sales, a small piece of land was sold for Rs. 600 to Bai Basantibai G. Sekseria on July 31, 1953, and an area admeasuring 3,730 sq. yds. was sold to Sarvodaya Education Society for Rs. 37,820 oh July 31, 1958. Till the date of the filing of the supplementary statement of case no other sale was effected by the assessee-company. The assessee-company has also not effected purchase in respect of any other piece of land. It is also pointed out in the supplementary statement of case that, apart from writing a couple of letters to the Government authorities, the assessee-company has not done anything with a view to develop the lands. As regards the motive of the assessee, the contention of the assessee that the lands were purchased with a view to have a model dairy, a model settlement and a model engineering college for the convenience of middle class people, etc., has not been accepted by the Tribunal.

51. Coming to the facts of the case, we have already pointed out some of the primary objects which are relevant for the purpose of determination of the questions in issue. The company was incorporated on February 3, 1945, and, apart from taking the lands at Ghodbunder, Mira and Bhayander, which was one of the specific objects mentioned in the objects clause of the memorandum, within a few months of its incorporation it purchased khoti rights in villages, Chincholi, Dindhoshi and also purchased some lands at Simpoli. The lands at Chincholi admeasure 154 acres, out of which 92 acres were in the physical possession of the assessee, while the lands at Dindoshi admeasure a little more than 347 acres, out of which 140 acres were in the physical possession of the assessee. It is not as if small and tiny pieces of lands were the subject-matter of sales, but fairly large areas admeasuring several acres were the subject-matter of these transactions. Strong reliance was placed by Mr. Dastoor upon the two letters, one dated November 8, 1946, and the other dated January 7, 1947, addressed by the manager of the assessee-company to the Minister in-charge of the Reconstruction Department, Secretariat, Fort, Bombay, and the other written by him to the Housing Commissioner, Military Barracks, Nicol Road, Ballard Estate, Bombay. The subject-matter of the first letter is the scheme for the development of Greater Bombay and the ad joining territory, in which it is, inter alia, stated that the assessee-company has managed to start a milk dairy and dry farm at Dindoshi and has constructed a kachha murum road from Dindoshi up to Bombay-Ghodbunder Road. It is also stated that the assessee-company had in view a scheme for the development of the villages of Chincholi and Dindoshi. The housing scheme, it is stated, was meant specially for middle class people and they had also a desire to have a model industrial school established at Chincholi and Dindoshi. In the other letter, it is stated that the purchase of lands at Dindoshi and Chincholi was effected with a view to have a model dairy, a model cattlement and a model engineering college for the convenience of middle class people and the housing scheme, when ready, was going to be entrusted to a co-operative society.