Law:

Section:

Section 256, read with section 28(i), of the Income-tax Act, 1961 - Reference to High Court - Questions of fact - Assessee-company claimed that loss incurred in dealings in purchase of shares of company B was a trading loss and be set off against profits of that year - ITO disallowed assessee's claim on ground that assessee speculated in shares and shares were not purchased or sold from real shareholders - On appeal, AAC found that purchases and sales had been made either from or to H and only purpose of these transactions was to enable H either to acquire control of other companies or to amalgamate or to help others to dispose of his own shares - AAC also found that broker S denied having purchased shares in question from assessee and assessee had filed a suit in High Court for recovery of amount due from S - Whether questions as to whether there was a trading loss or not and whether such loss had taken place in any particular year were questions of fact and, therefore, Tribunal was not justified in holding that whether loss on sale of shares in question was a revenue loss was dependent on suit pending in High Court - Held, yes FACTS The assessee-company claimed that the trading loss incurred in dealings in purchase of shares of company B, be set off against the profit of the year. The ITO held that the assessee speculated in shares and the shares were not purchased or sold from real shareholders and the transactions were done through the brokers as blank transfers. The ITO also held that it was not the intention of the assessee to take delivery of the shares which were sold within the month of the purchase and never registered in the assessee's name. He, therefore, disallowed the assessee's claim. On appeal, the AAC found that the purchases and sales had been made either from or to H and it appeared that the only purpose of those transactions was to enable H either to acquire control of other companies or to amalgamate or to help him to dispose of his own shares. He also found that the brokers denied having purchased the aforesaid shares from the assessee and the assessee had filed a suit in the High Court for the recovery of the amount due from S. The AAC…

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