V.G. Oak, C.J. - (1.)THE question for consideration in this income-tax reference is whether certain shares purchased by an assessee were its stock-in-trade or by way of investment. M/s. Bagla Brothers are the assessee. THE assessment years are 1951-52 and 1952-53.
(2.)THE assessee is a partnership firm dealing in shares, and consists of two partners, Rameshwar Prasad Bagla and Satyanarain Bagla. THEse two persons and Satyanarain's father, Hari Shanker Bagla, constitute another partnership firm, " M/s. Gangadhar Baijnath ". THE assessee held 108 shares of Maheshwari Devi Jute Mills Co. Ltd. (hereafter referred to as "jute mills"), at the commencement of the accounting period corresponding to the assessment year 1951-52. During the course of the accounting period the assessee purchased a number of shares of the jute mills at different rates. THE shares were valued at Rs. 100 per share at the close of the accounting period. THE assessee claimed a loss of Rs. 4,38,291, representing the difference between the purchase price of the shares and valuation at the close of the year.
Again, the assessee purchased 1,983 ordinary shares and 546 preference shares of the Muir Mills Co. Ltd. during the course of one year. The assessee claimed a net loss of Rs. 9,581, representing the difference between the purchase price of the Muir Mills Co. Ltd. and the valuation at the close of the accounting period.

The Income-tax Officer declined to allow the two losses claimed by the assessee on the ground that the shares had been purchased by the assessee by way of investment, and the two losses were in the nature of capital losses. This view was upheld by the Appellate Assistant Commissioner.

(3.)THE assessee, however, succeeded before the Appellate Tribunal, Allahabad. THE Tribunal held that the shares purchased by the assessee relating to the jute mills and Muir Mills Co. Ltd. were both stock-in-trade.
The Commissioner of Income-tax, U. P., applied for referring this question to the court. The application was dismissed by the Tribunal. This court, however, directed the Tribunal to state a case. Accordingly, the Appellate Tribunal has referred the following question of law to this court:

" Whether, on the facts and circumstances of the case, it could be held in law that the shares of the Maheshwari Devi Jute Mills Co. Ltd. and of the Muir Mills Co. Ltd. acquired during the previous year relevant to the assessment years 1951-52 and 1952-53 were the stock-in-trade of the assessee ? "