Revenue loss treatment for share-dealing losses confirmed where transactions formed part of business stock-in-trade.

A share dealer's losses from purchase, revaluation and sale of shares were treated as revenue losses because shares acquired in the course of business ordinarily form part of stock-in-trade unless the transactions are shown to be outside the ordinary course or to amount to capital investment. The factual indicators, including the nature of the dealings, purchase and sale prices, use of borrowed funds and short holding period, supported the commercial character of the transactions. On that basis, the losses were not capital in nature, and they could be carried forward and set off in later assessment years.

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Issues: Whether the losses arising from purchase, revaluation, and sale of shares by a share dealer were capital losses or revenue losses, and whether the assessee was entitled to carry forward those losses to later assessment years.

Analysis: The assessee was a dealer in shares, so the shares acquired in the course of business would ordinarily form part of stock-in-trade unless it was shown that the transactions were outside the ordinary course of business or amounted to capital investment. The relevant facts, including the nature of the transaction, the purchase and sale prices, the use of borrowed funds, and the short holding period, supported the conclusion that the shares were dealt with as business assets. The surrounding circumstances did not displace the commercial character of the transactions, and the Tribunal's factual findings were based on the correct legal principles.

Conclusion: The losses were revenue losses and not capital losses, and the assessee was entitled to carry forward and set off those losses in the later years.

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