B.P.JEEVAN REDDY - (1.) UNDER Section 256(2) of Income -tax Act, 1961, the Tribunal has referred the following questions for the assessment year 1969 -70 : '(1) Whether, on the facts and in the circumstances of the case, was the Tribunal right in allowing the full amount of loss or any part thereof on the sale of securities by the assessee ? (2) Whether, on the facts and in the circumstances of the case, was the Tribunal justified in treating the loss on sale of U. P. Development Loan as a business loss ?'
(2.) WITH respect to the assessment year 1968 -69, as many as five questions have been referred which read as follows : '1. Whether, on the facts and in the circumstances of the case, was there any partial partition of Seth Banarsi Dass Gupta (HUF). 2. Whether, on the facts and in the circumstances of the case, was the amount of interest paid or any part thereof to Seth Mohan Lal and Sons and Mohan Orchards allowable as a deduction ? 3. Whether, on the facts and in the circumstances of the case, was the Tribunal right in allowing the full amount of loss or any part thereof on the sale of securities by the assessee ? 4. Whether, on the facts and in the circumstances of the case, was the Tribunal justified in treating the loss on sale of U. P. Development Loan as a business loss ? 5. Whether, on the given facts and circumstances of the case, was the Tribunal justified in admitting the claim of the assessee that a partial partition among the members of the Hindu undivided family had taken place ? It would be seen that; the two questions referred for the assessment year 1969 -70 are also referred as questions Nos. 3 and 4 for the assessment year 1968 -69.
(3.) THE assessee is a partnership firm deriving income from manufacture and sale of crystal sugar. For the assessment year 1968 -69, it purported to set off a sum of Rs. 9,598 as toss occasioned on sale of securities. This amount, comprised Rs. 7,250 on account of loss and Rs. 2,348 paid by way of interest, for acquiring the said securities. The Income -tax Officer rejected the said claim on the ground that inasmuch as the assessee is not engaged in dealing in Government securities, it cannot seek to set off the loss occasioned therefrom. On appeal, the Appellate Assistant Commissioner allowed 'the appeal of the assessee following his order for the preceding assessment year. The appeal preferred by the Department was dismissed by the Tribunal. The assessee's case was that though it is not engaged in dealing in Government securities, it was obliged to purchase them with a view to satisfy the Government officials with whom they have to deal every day in connection with their business. In short, their argument is that the said securities wore purchased as a matter of business expediency.;