PINAKI CHANDRA GHOSE, J. - (1.) This appeal was admitted in terms of the following questions : (1) Whether the Tribunal misdirected itself in law in holding that the transactions relating to shares in Hindusthan Aluminium Co. Ltd. were not covered by proviso (b) to Section 43(5) or that the same were speculative transactions or the loss of Rs. 2,67,782 incurred therein was speculative loss and not hedging loss or that the assessee had not explained any aspect of the said transactions and its purported findings in this behalf are based on any material and/or have been arrived at by ignoring the relevant materials and/or by taking into consideration irrelevant and/or extraneous materials and/or are otherwise arbitrary, unreasonable and perverse ? (2) Whether the Tribunal misdirected itself in law in holding that the assessee was not carrying on money lending business in a general manner for earning interest or that it granted accommodation loans to sister concerns only or that the loans to sister concerns were granted not in the ordinary course of money lending business, but only to help them and in disallowing the claim for bad debts of Rs. 22,75,000 and its purported findings in this behalf are based on any material and/or have been arrived at by ignoring the relevant materials and/or by taking into consideration irrelevant and extraneous materials and/or are otherwise arbitrary, unreasonable and perverse ? (3) Whether and in any event the Tribunal should have allowed the assessee's claim in respect of the sum of Rs. 22,75,000 as a business/trading loss ?
(2.) THE facts of the case briefly are as follows : The appeal was admitted in respect of an order passed by the Tribunal on 30th of March, 2001. The issue is involved in this matter that the assessee/appellant has claimed a loan (loss) as hedging loans (loss) in dealing with the shares relating to a loss of Rs. 2,67,782. Such loss of Rs. 2,67,787 in respect of the shares of M/s Hindusthan Aluminium Co. Ltd. dealt with by the assessee during the period from 1st July, 1988 to 31st March, 1989. It is admitted that the transactions were settled through the broker M/s Hindusthan Aluminium Co. Ltd. on different dates. It is the case of the appellant that the transactions cannot be treated as speculative transactions in terms of the Clause (b) of the proviso to Sub -section (5) of Section 43. The AO as well as CIT(A) in appeal and Tribunal did not accept the contention of the assessee that the assessee was holding investment in the shares of the said company any anticipated loss in the value of such holdings due to probable reduction in the price of the shares was tried to be off -set by transactions in the same shares by way of forward sales. However, AO after noting the market value of the shares shot up from Rs. 78 on 31st March, 1988 to Rs. 261 as on 31st March, 1989 could not accept the explanation given by the assessee and as a result whereof the appeal was filed but was of no effect before the two other judicial authorities. - -
(3.) IT appears from the discussion made by the CIT(A) that the CIT(A) agreed with the opinion expressed by the AO and held that the claim towards expenditure under the proviso to Section 43(5) requires the discharge of the burden of proof by the assessee as had been held by the Hon'ble Supreme Court in the case of CIT v. Joseph John : (1968) 67 ITR 74 (SC). The CIT(A) also relied on a judgment of the Madras High Court in the case of CIT v. SK. AR. K. AR. Somasundaram Chettiar and Co. : (1975) 101 ITR 832 (Mad) and held that the assessee could not get the benefit of the proviso to Section 43(5).;