Law:

Section:

Section 28(i), read with section 2(42A) of the Income-tax Act, 1961 - Business loss/deductions - Allowable as - Assessment year 1967-68 - Assessee was carrying on business in imports and exports - It claimed loss arising on sale of National Defence Remittance Certifficates as business loss - It was however, seen that there was no material on record from which an inference was possible that purchase and sale of N.D.R. certificates was actually interlinked with business of assessee - Whether in view of facts of case and having regard to provision in section 2(42A) to effect that loss arising out of National Defence Remittance Certificates should be taken to be loss arising out of sale of long-term capital assets, loss incurred by assessee on sale of certificates in question would not be allowed as business loss - Held, yes FACTS The assessee-company was carrying on business in imports and exports. It claimed loss arising from transaction of purchase and sale of N.D.R. certificates, as business loss. The ITO held that in view of section 2(42A), the loss arising out of the sale of N.D.R. Certificates should be treated as having arisen out of the transfer of long-term capital assets. He also held that the loss arising out of the sale of N.D.R. Certificates could not be treated to be a business loss as the purchase and sale of the said certificates had no nexus to the actual business carried on by the assessee as importers and exporters. The AAC upheld the order of the ITO. The Tribunal held that the transaction of sale and purchase of N.D.R. Certificates having occurred during the normal course of business carried on by the assessee, the loss incurred in such a transaction should be considered as a business loss. On reference: HELD The Tribunal had not referred to any material from which an inference was possible that the purchase and sale of N.D.R. Certificates was actually interlinked with the business of import and export. It had not been shown by the assessee that the purchase and the holding of N.D.R. Certificates was necessary or essential for carrying on the business of import and export, and that but for the purchase and sale of N.D.R. Certificates, the…

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