Trading loss on share sale must be judged on existing facts, not postponed pending a suit outcome.

Whether a loss on sale of shares was a trading loss had to be determined on the facts and circumstances existing when the loss was claimed, not by awaiting the result of a pending suit. The Tribunal was required to decide from the evidence on record whether the transactions were real and, if so, whether the loss was of a revenue character. Its approach was criticised because it failed to make that independent factual determination and instead treated the suit outcome as decisive. The question was answered in the negative, and the assessee did not succeed on this point.

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Issues: Whether the Tribunal was right in holding that the question whether the loss on sale of British India Corporation shares was a revenue loss depended on the pending suit and that, if the transactions were real, the loss had to be allowed as revenue loss.

Analysis: The Court held that whether a loss is a trading loss must be decided on the facts and circumstances existing when the loss is claimed, and not by deferring the issue to the outcome of a pending suit. The Tribunal was required to decide the matter on the evidence on record. Its approach was found unsatisfactory because it did not independently determine the factual question whether the transactions were real and whether the loss was of a trading character.

Conclusion: The question was answered in the negative and the assessee did not succeed on this point.

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