1990 (8) TMI 109 - HC - Income Tax

Summary

Issues:
1. Allowance of loss on the sale of securities for the assessment year 1969-70.
2. Treatment of loss on sale of U. P. Development Loan as a business loss for the assessment year 1969-70.
3. Partial partition of Seth Banarsi Dass Gupta (HUF) for the assessment year 1968-69.
4. Allowance of interest paid to Seth Mohan Lal and Sons and Mohan Orchards as a deduction for the assessment year 1968-69.
5. Allowance of loss on the sale of securities as a business loss for the assessment year 1968-69.
6. Admissibility of the claim of partial partition among the members of the Hindu undivided family for the assessment year 1968-69.

Analysis:
The High Court of Allahabad addressed various issues raised under the Income-tax Act, 1961. For the assessment year 1969-70, the Tribunal referred questions regarding the allowance of loss on the sale of securities and the treatment of the loss on the sale of U. P. Development Loan as a business loss. The Court considered a similar case decided by the Supreme Court where the loss on investments was allowed as a revenue loss due to commercial expediency. The Court found in favor of the assessee, holding that the loss was incidental to the business, and answered the questions in favor of the assessee for both the assessment years 1968-69 and 1969-70.

Regarding the partial partition of Seth Banarsi Dass Gupta (HUF) for the assessment year 1968-69, the Court noted that the Tribunal had already accepted the partial partition in a previous order. Therefore, the Court upheld the acceptance of the partial partition for the current assessment year. The Court also addressed the allowance of interest paid to certain parties as a deduction, stating that once the partial partition was accepted, the interest amounts should be allowed as deductions. Consequently, the Court answered these questions in favor of the assessee.

In conclusion, the High Court answered the income-tax reference in favor of the assessee for all the issues raised, including the allowance of losses on securities, treatment of losses as business losses, acceptance of partial partition, and allowance of interest payments as deductions. The Court's decision was based on the commercial expediency and business nature of the transactions involved, aligning with previous legal interpretations and judgments.