the purchase of the loan was approved by the board of directors and was ratified in the annual general meeting of the shareholders held on december 31 1961.
the income tax officer disallowed the loss in the view that it was a capital loss.
of india limited c.i.t.
for the assessment year 1963 64 the relevant accounting period being the year ended march 31 1963 the assessee claimed a loss of rs.53650 sustained by it on disposing of its subscription to the orissa government floated loan 1972.
at the instance of the revenue the appellate tribunal referred the case to the high companyrt of orissa for its opinion on the following question of law.
civil appellate jurisdiction civil appeal number 1359 nt of 1974 from the judgment and order dated 11.1.1974 of the orissa high companyrt in special jurisdiction case number 62 of 1972.
it was also numbericed that the sales shot up substantially.
v. meenakshi mills limited 63 itr 609 613 c.i.t.
73 itr 685 690 c.i.t.
it claimed that the loss suffered by it was revenue loss and therefore deductible against its profits for the year.
v. greaves companyton company limited 68 itr200 c.i.t.
1837062 was received by the assessee and a circular was also issued by the state government to various departments to make purchases of the vehicles required by them from the assessee.
the accountant member and the judicial member wrote separate but companycurrent orders.
s.desai p.k.
the assessee deals in automobiles and also sells spare motor parts.
govind das p.n.
taneja and p.k.
juneja for the appellant.
the appellate tribunal found that having regard to the sequence of events and the close proximity of the investment with the receipt of government orders the companyclusion was ines capable that the investment was made in order to further the sales of the assessee and boost its business.
the judgment of the companyrt was delivered by pathak j. this appeal by special leave is directed against the judgment of the high companyrt of orissa and raises the familiar question whether a loss suffered by the assessee is a capital loss or a revenue loss.
86 itr 11.
misra d.c.
bhatnagar and miss a. subhashini for the respondent.
v. madan gopal radhey lal 73 itr 652 656 hooghly trust limited v. c.i.t.
v. imperial chemical industries india limited 74 itr 17 and aluminium companypon.
on september 4 1961 the assessee made a deposit of rs.5 lakhs consequent upon a resolution of the board of directors passed about 6 weeks before after a statement made by the chairman during the board meeting that the government had approached him to subscribe to the government loan and that the companypany should do so as good orders companyld be expected.
because of the advance received from the government the assessee was able to save rs.45000 as bank interest during the year.
