Law:

Section:

Section 28(i), read with section 256 of the Income-tax Act, 1961 [Corresponding to section 10(1), read with section 66 of the Indian Income-tax Act, 1922] - Business loss - Allowable as - Assessment year 1945-46 - Assessee-HUF was carrying on business in commodities and also forward contract business in grain, silver, gunny bags etc. - During relevant account years assessee claimed that it sustained certain loss in forward contracts business - ITO rejected assessee's claim on ground that no Souda Bahi was maintained by it, in absence of which, profit and loss account could not be satisfactorily explained - On appeal, AAC as also Tribunal upheld disallowance of aforesaid claim - Whether finding of Tribunal were pure findings of fact and, therefore, no referable question of law arose from order of Tribunal - Held, yes FACTS The assessee-HUF was carrying on business in commodities and also forward contract business in grain, silver, gunny bags etc. For the assessment year 1945-46 the assessee produced accounts to show that certain profit was made from the forward contract business. The assessee also claimed that certain loss was sustained in the forward contract business for the material period. The ITO rejected the claim of the assessee mainly on the ground that no Souda Bahi or Nond Bahi was maintained by the assessee for the forward contract business. The ITO thought that the assessee was a habitual speculator and it could not carry on the speculative business without any Souda Bahi showing commitments, as and when made, and also settlement of accounts and carrying forward of transactions in each particular commodity. The AAC also took the view that the Souda Bahi was a most important criterion in the speculation business and in the absence of a Souda Bahi, the profit and loss account could not be satisfactorily explained. On second appeal, the Tribunal also took the view that in the absence of a Souda Bahi there was no guarantee that the assessee had accounted for all the speculative transactions in its account. The Tribunal therefore concluded that the loss should not be allowed as a deduction. On reference: HELD The question at issue in this case was a…

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