- (1.) This appeal is directed against the Judgment, dated 24-1-1969, of the High Court of Delhi answering in the affirmative the following question referred to it under Section 66 (1) of the Indian Income-tax Act, 1922 (for short, the Act) by the Commissioner of Income-tax: "Whether on the facts and in the circumstances of the case the capital loss of Rs. 28,662/- could be determined and carried forward in accordance with the provisions of Section 24 of the Indian Income-tax Act, 1922, when the provisions of Section 12B of the Income-tax Act,1922 itself were not applicable in the assessment year 1955-56."
(2.) The assessee respondent is a Private Limited Company. The assessment year under reference is 1955-56 and the relevant previous year is from 1-5-1953 to 30-4-1954. On 10-1-1952 the assessee purchased 1124 shares of M/s. Intercontinent Travancore Pvt. Ltd. at a cost of Rs. 1,12,400/- from M/s. Escorts (A and M) Ltd. In the relevant accounting year ending on 30-4-1953 the assessee received 562 bonus shares from the same company. It thus acquired a total number of 1686 shares. On 3-953, i.e. during the relevant previous year the assessee sold all these 1686 shares to M/s. Escorts (Agents) Ltd. for Rs. 84,300 and claimed a loss of Rs. 84,862/- in the income-tax return filed by it. The Income-tax Officer disallowed the entire loss of Rupees 84,862 on the ground that it was a loss of a capital nature.
(3.) The assessee carried an appeal to the Appellate Assistant Commissioner and contended that this loss of Rs. 84,862/- was a revenue loss arising out of dealing in shares. The Appellate Assistant Commissioner found that the assessee's claim was exaggerated and that the actual loss was to the tune of Rs. 28,662/- only. He further held that this loss of Rs. 28,662/- was not a 'revenue loss' but a 'capital loss' arising out of change of investments.;