Shah, J. - (1.) The appellant is a Hindu undivided family which derives its income from property, managing agency, dividends and forward transactions. In proceedings for assessment for 19455-46, the appellant claimed before the Income-tax Officer, Ajmer, that as a result of speculation in silver, gold and cotton, it had suffered a net loss of Rs. 1,58,080 in the previous year. In support of its claim the appellant produced entries in the cash book, journal, ledger and and as of the original contracts received from commission agents, which according to the appellant proved the looses. The appellant also contended that it had sold family ornaments of the value of Rs. 85,137 to satisfy some of the losses in speculation. The Income-tax Officer rejected the claim of the appellant that it had incurred losses in speculation and treated Rs. 85,137 as income from an undisclosed source. The Appellate Assistant Commissioner of Income-tax, B-Range, Delhi, confirmed the order of the Income-tax Officer. The Income-tax Appellate"... we are of opinion that there is not justification for making this addition.... There is nothing improbable in the assessee selling the gold ornaments for the purpose of paying the speculation loses. They were sold, according to the books, in 4 or 5 lots. We would, therefore, direct that the addition of Rs. 85,137 may be deleted."
(2.) The appellant then applied under section 66(1) of the Income- tax Act, 1922, for reference of the following questions to the High Court of Judicature at Allahabad : "(i) Whether there is any evidence on record to justify the finding of the Tribunal that the assessee fields to prove that they had suffered speculation losses to the tune of Rs. 1,58,080 (ii) Whether the loss suffered by the assessee in speculation, viz., Rs. 1,58,080, is an admissible deduction under the Income Tax Act -
(3.) The Tribunal rejected the application holding that no question of law arose out of its order. The appellant then moved the High Court of Allahabad under section 66(2) of the Income Tax Act and prayed that the Tribunal be called upon to slate the case and refer the questions of law stated in the application. The High Court was of the view that the order of the Tribunal disallowing losses claimed by the appellant in speculative business was founded on appreciation of evidence, and no question of law arose therefrom, on which a statement of the case could be called for. But the High Court observed : "The argument of learned counsel for the assessee is that, in view of this finding which amounts to acceptance of the case of the assessee that there were some speculation losses, the Tribunal was entirely wrong in disallowing the claim of speculation losses at least toe the extent of the sum of Rs. 85,137. In court opinion this point raised on behalf of the assessee is a question of law on which we should ask for a statement of the case from the Tribunal. In the circumstances, we direct the Tribunal to state the case on this point as indicated by us above after framing an appropriate question." ;