Law:

Section:

Section 28(i) of the Income tax Act, 1961 - Business loss/deduction - Allowbale as - Assessment year 1952-53 - Assessee-company whose main activity was manufacturing biscuits, purchased shares from a sister concern - It incurred loss on sale of those shares - Tribunal held that it being solitary instance of purchasing of shares by assessee, said activity was not a trading activity but a mere investment and, thus, loss was not a trading loss - Whether Tribunal's finding of fact was not vitiated in any manner and, hence, loss in question was not deductible from profits of company - Held, yes FACTS For the assessment year 1952-53, the assessee-company whose main activity was manufacturing biscuits, incurred a loss as result of the sale of preference shares held by it in a sister concern. The Tribunal came to the conclusion that in view of the fact that the shares purchased were preference shares carrying a fixed rate of dividend and, therefore, not likely to appreciate in value, that the purchase was not made in open market but was made at the initial expansion of the sister concern, that the two companies were interlinked in the sense that they were dominated by the same group of directors and that it was a solitary instance in the history of the assessee company of purchasing of shares, the activity was not a trading activity but it was merely an investment and, hence, loss in question was not deductible. On reference, the High Court agreeing with the Tribunal held that the loss was not a trading loss. On appeal before the Supreme Court: HELD Normally, the finding of the Tribunal on the question whether a particular loss is a trading loss or not being essentially a finding of fact was not disturbed unless it was shown that the Tribunal had taken into consideration irrelevant circumstances or failed to take into consideration the relevant circumstances. It was not said in the instant case that the Tribunal had taken into consideration any irrelevant circumstance or that it had failed to take into consideration any relevant circumstance. In the above circumstances, the Tribunal's finding as aforesaid was not vitiated in any manner. Note : The case was decided in…

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