Pathak, J. - (1.) This appeal by special leave is directed against the judgment of the High Court of Orissa and raises the famiIiar question whether a loss suffered by the assessee is a capital loss or a revenue loss.
(2.) The assessee deals in automobiles and also sells spare motor parts. For the assessment year 1963-64, the relevant accounting period being the year ended March 31, 1963, the assesses claimed a loss of Rs. 53,650/- sustained by it on disposing of subscription to the Orissa Government Floated Loan 1972. It claimed that the loss suffered by it was revenue loss and, therefore, deductible against its profits for the year. The Income-tax Officer disallowed the loss in the view that it was a capital loss. The assessee's appeal was dismissed by the Appellate Assistant Commissioner of Income-tax. But on second appeal the Income-tax Appellate Tribunal accepted the contention of assessee that the subscription to the Government Loan was conducive to its business and the loss arose in the course of the business, and that, therefore, the assessee was entitled to a deduction of the loss claimed by it. The Accountant Member and the Judicial Member wrote separate but concurrent orders. At the instance of the Revenue the Appellate Tribunal referred the case to the High Court of Orissa for its opinion on the following question of law: "Whether, in the facts and circumstances of the case, the loss of Rs. 53,650/- sustained by the assessee on the sale of the Government Loan is a capital loss or a revenue loss."
(3.) Disagreeing with the findings of the Appellate Tribunal the High Court held that the loss was a capital loss and accordingly answered the reference in favour of the revenue and against the assessee.;