Sabyasachi Mukharji, J. - (1.) In this reference the assessee was not represented before us. In order to determine this reference properly we requested Mr. R.N. Dutta to help us and appear as amicus curiae. Pursuant to our request he has appeared and made his submissions to this court. We express our gratitude for the help he has rendered.
(2.) In this reference for the assessment year 1956-57, the following two questions have been referred to us : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the loss of Rs. 80,491 was not a speculation loss and was incidental to the carrying on of the assessee's business and as such allowable as revenue expenditure ? 2. Whether, on the facts and in the circumstances of the case and in view of the fact that the assessee maintained its books on the mercantile system, the Tribunal was right in holding that the liability for Rs. 80,491 accrued and became ascertained only in 1955 when the claim was settled and the assessee's account was debited by the bank and in that view deleting the disallowance of Rs. 80,491 for the assessment year 1956-57 ? " 2. In order to determine these questions we might refer to the facts as appearing from the orders of the various authorities. The ITO in his assessment order dealing with this amount observed, inter alia, as follows: "...... Rs. Rs. Loss in foreign hund is claimed at Rs. 80,491. The amount had been debited by Hindusthan Mercantile Bank Ltd. 80,491 5,94,424 Net loss to assessees a/c. on 13-2-56, 22,75,727 It represents (1) Rs. 4,239, exchange differences, and (2) Rs. 76,252, interest charged by the bank on four contracts entered into by the assessee with the bank for arranging foreign exchange. The contracts as well as the payments of interest and exchange differences relate to the a/c. year 1951-52.
(3.) It has been contended by the assessee that such contracts were entered into in order to arrange for foreign exchange for importing goods in his import departments (lubricating oils & machinary). Only a part (55,000) of one of the contracts (for 1,00,000) was utilised by the assessee for importing goods. The balance of this contract and all other contracts were settled by the assessee otherwise than by actual delivery. The assessee has not been able to produce any evidence to prove that such contracts were obviously of a speculative nature. Moreover, the payments do not relate to transactions of the a/c. year and hence, cannot be charged against profits of this year. The claim is, therefore, disallowed. ";