SHAKUNTALA DEVI KILLA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE following question has been referred at the instance of the assessee by the Appellate Tribunal under Section 256(1) of the Income-tax Act, 1961 :

(2.) THE assessee is an individual. THE assessment relates to the assessment year 1981-82. THE original return as well as a revised return show total income of Rs. 10,890. A sum of Rs. 59,678 was shown as short-term capital loss in the original return and business loss in the revised return. THE loss, it was said, arose on account of purchase and sale of shares. THE assessing authority held that the loss arose in connection with speculative transactions as defined in Section 43(5) of the Act and, therefore, cannot be treated as business loss. He directed that the same may be set off against future gains from business. THE Appellate Assistant Commissioner of Income-tax as well as the Appellate Tribunal affirmed this decision. Hence, this reference.

(3.) ON the above facts and in consideration of notes of contract, the Tribunal came to the conclusion that both transactions were completed as sales, that there was nothing to suggest that delivery of shares had been obtained by Messrs. Jhunjhunwala on behalf of the assessee, that there was no evidence that shares were delivered to the assessee, that even assuming that payment was made on April 9, 1981, and delivery was effected on the same day to the assessee, there was no evidence to show that payment was made to the assessee by Messrs. Laxmi and Co. on or after March 2, 1981, and that there was no evidence to show that the assessee or her broker actually delivered the shares to Messrs. Laxmi and Co., and that the names of the sellers and purchasers were not brought on record. ON these findings, the Tribunal came to the conclusion that the transactions were settled otherwise than by actual delivery or transfer of the shares and Section 43(5) of the Act was attracted in the instant case. It was on this basis that the Tribunal declined to reckon loss caused on account of the transaction in shares.