Business-linked bond sale loss treated as revenue loss and held deductible under income tax principles.

Loss on sale of U.P. State Development Bonds purchased in connection with the assessee's business was treated as a revenue loss under sections 28 and 29 of the Income-tax Act, 1961, because the Tribunal found the bond acquisition was business-linked. That factual finding was not disturbed in advisory jurisdiction, and the Supreme Court's ruling on similar facts supported treating the transfer loss as arising in the course of business. The loss was therefore deductible and was correctly allowed by the Tribunal.

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Issues: Whether the loss on sale of U.P. State Development Bonds, purchased in connection with the assessee's business, was allowable as a revenue loss under sections 28 and 29 of the Income-tax Act, 1961.

Analysis: The Tribunal found that the purchase of the bonds was connected with the assessee's business, and that factual finding was not open to disturbance in advisory jurisdiction. Following the Supreme Court decision on similar facts, the loss on transfer of such bonds was treated as a loss arising in the course of business and, therefore, as a revenue loss.

Conclusion: The loss of Rs. 11,839 was deductible as a revenue loss and was rightly allowed by the Tribunal.

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