COMMISSIONER OF INCOME TAX Vs. KRISHNA PROPERTIES LTD

JUDGEMENT

(1.) In this reference under Section 256(2) of the Income-tax Act, 1961, made at the instance of the Revenue, the following questions have been referred by the Tribunal for the opinion of this court:

(2.) The dispute in this case relates to the deduction claimed by the assessee on account of losses sustained in the previous years relevant to the assessment years 1964-65, 1965-66 and 1966-67 in the sales of shares of Ochterlony Valley Estates (1938) Ltd. (hereinafter for the sake of brevity referred to as "O.V.E. Ltd.").

(3.) The deductions claimed by the assessee on account of these losses in the assessments for the assessment years 1964-65, 1965-66 and 1966-67 are Rs. 5,979, Rs. 74,788 and Rs. 12,976, respectively. The Income-tax Officer disallowed the claim for deduction of these losses on the ground that the shares in question were acquired by the assessee as capital and not as stock-in-trade and, therefore, the losses, if any, arising from the sales of these shares could only be regarded as capital loss but not as business loss. The reasoning of the Income-tax Officer in disallowing the claim is as follows :