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TMI Blog1978 (4) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... srs. Muir Mills Co. Ltd. and 600 preference shares of Messrs. Muir Mills Co. Ltd., Kanpur. In the settlement, the ordinary shares were valued at Rs. 600 per share, while the preference shares were valued at Rs. 290 per share, on the footing that the debtor-company had purchased those shares at that rate. The balance was to be paid in instalments. The market value of the ordinary and preference shares on the date of settlement was Rs. 65 and Rs. 83 per share, respectively. The assessee in its own books credited the account of Messrs. Bengal and Assam Investors Ltd. with Rs. 9,750 being the market value of 150 ordinary shares at the rate of Rs. 65 per share and Rs. 49,800 being the market value of 600 preference shares at the rate of Rs. 83 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Messrs. Bengal and Assam Investors Ltd., threatened them to advance a sum of Rs. 20,00,000 to Messrs. Bengal and Assam Investors Ltd., Calcutta. This the assesseecompany did by borrowing Rs. 12,50,000 from Messrs. National Insurance Co. Ltd., and pooling its available resources to make up the balance and ultimately they paid Rs. 20,00,000 to Messrs. Bengal and Assam Investors Ltd., part of which was done by telegraphic transfers of moneys due to the sister concerns of the assessee-firm. The investment company repaid part of the loan but in the year 1960, it was in a bad financial condition and the assessee-company pressed for readjustment of its loan. At this stage, the J.K. organization came into the picture and pressurised and coerced th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee-company was pressurised into agreeing to advance the loan as well as to accept the part payment in satisfaction of the loan because its selling agency business from the various mills of the J.K. organization, was likely to be jeopardized. The advance was consequently held to be a business transaction and the loss resulting from it was not a capital loss because it was not a case of investment by the assessee in the shares of the Muir Mills Co. Ltd. The Tribunal ultimately allowed the claim of the assessee. At the instance of the department, the Tribunal has referred the following question of law for our opinion: " Whether, on the facts and in the circumstances of the case, the assessee-firm's claim of Rs. 2,04,450 ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only part of it could validly be recovered. No doubt, the assessee-company must be deemed to have known that the market value of the shares purchased by it was much less but, as found by the Tribunal, it acted as a true trader and tried to save as much of its money as well as business as was possible. The finding that the assessee acted on grounds of commercial expediency hence concludes the matter that it was a loss which was allowable under s. 10(1) or s. 10(2)(xv) of the Act. Learned counsel for the revenue relied upon Seth Banarsi Das Gupta v. ITO [1977] 108 ITR 377 (All). In that case, the Tribunal had found that the shares had been acquired as an investment by the assesseecompany. On this finding, it was held that the loss arising ..... X X X X Extracts X X X X X X X X Extracts X X X X
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