Ajit K. Sengupta, J. - (1.) In this reference under Section 256(1) of the Income-tax Act, 1961, for the assessment year 1984-85, the following question of law has been referred to this court : "Whether the Income-tax Appellate Tribunal, on the facts and in the circumstances of the case, was justified in holding that the loss on sale of investments of Rs. 54,982 is not allowable in computing the income of the assessee and/or treated as application of income ?"
(2.) The brief facts of the case are that during the year of account ending on March 31, 1984, the assessee-trust incurred a loss of Rs. 54,982 on sale of certain preference shares and debited the said amount to the income and expenditure account under the head "Loss on sale of investment". The Income-tax Officer refused to allow the said loss on the ground that the loss on sale of shares was not allowable in the case of the trust. On appeal to the Appellate Assistant Commissioner of Income-tax, the claim of the assessee was allowed and the Income-tax Officer was directed to deduct the loss in arriving at the total income and then recompute the benefit under Section 11.
(3.) On appeal to the Tribunal by the Income-tax Officer, it has been held that the loss in question cannot be regarded as an expenditure. It has also been held that the said loss was incurred not on revenue account but on capital account. The Tribunal has also taken the view that the circumstances that the assessee sold the shares with a view to conforming to the provisions of the amended Section 13(1)(d) of the Income-tax Act, 1961, cannot be conclusive of the matter. The order of the Appellate Assistant Commissioner of Income-tax was, accordingly, reversed and the Department's appeal was allowed. While allowing the Department's appeal, the Tribunal has relied on the decision reported as CIT v. New India Assurance Co. Ltd. [1969] 71 ITR 761 (Bom) and CIT v. S. C. Kothari. The Tribunal has also found that the various decisions cited by the assessee's counsel, namely, the decision of the Karnataka High Court in CIT v. Society of the Sisters of St. Anne [1984] 146 ITR 28, the Calcutta High Court in CIT v. Jayashree Charity Trust [1986] 159 ITR 280 and the Gujarat High Court in CIT v. Ganga Charity Trust Fund [1986] 162 ITR 612 do not support the assessee's case because the above decisions did not deal with the case of loss on the sale of shares.;