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Issues:
1. Whether the loss incurred by the assessee is a capital loss under section 24(2A) of the Income-tax Act? Analysis: The case involved an agreement where the assessee entered into a contract to purchase a property but later wanted to be absolved of the liability due to superstition about the property being considered unlucky. The assessee then found other buyers to purchase the property and paid a sum to the vendors to avoid completing the purchase himself. The question at hand was whether the loss incurred by the assessee in this transaction could be considered a capital loss under section 24(2A) of the Income-tax Act. The Income-tax Officer initially rejected the assessee's claim for deduction of the amount paid and costs incurred in the transaction as a loss from business or as a capital loss under section 12B. The Appellate Assistant Commissioner upheld this decision. The Tribunal also concurred that the transaction was not in the course of the assessee's business and that the loss incurred did not fall under section 12B of the Income-tax Act. The Tribunal referred the question of whether the loss could be considered a capital loss under section 24(2A) of the Income-tax Act. The High Court analyzed the transaction and concluded that the compensation or damages paid by the assessee for failing to carry out the contract to purchase the property could not be regarded as a loss arising from the sale, exchange, relinquishment, or transfer of a capital asset as per the provisions of the Income-tax Act. Therefore, the High Court answered the question in the negative, ruling that the loss incurred by the assessee was not a capital loss falling under section 24(2A) of the Income-tax Act. The assessee was directed to pay the costs of the Commissioner, and the question was answered accordingly.
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