Capital loss on shares prevails where investment treatment and factual indicators show no regular share-dealing business.

Loss on sale of shares was treated as capital loss, not deductible business loss, because the Tribunal found the shares were held as investments rather than as stock-in-trade. It relied on the manner of purchase and sale, the assessee's own accounting treatment, the absence of organised or regular share-dealing activity, and the fact that the assessee's main business was in jute. The question whether the loss arose from share dealing or investment was treated as a mixed question of law and fact, and a reference court will not interfere where the Tribunal has applied the correct principles and considered all relevant circumstances.

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Issues: Whether the loss arising from sale of shares constituted a trading loss deductible as business loss, or a capital loss arising from investment.

Analysis: The Tribunal had examined the manner of purchase and sale of the shares, the assessee's own treatment of the shares in its accounts, the absence of any organised or regular share-dealing activity, and the fact that the assessee's main business was in jute. On those relevant factors, it concluded that the shares were held as investments and that the loss was not a revenue loss from business. The question whether a loss is one of share dealing or investment was treated as a mixed question of law and fact, and where the Tribunal applies the correct principles and considers all relevant circumstances, the reference court does not interfere with such a finding.

Conclusion: The loss was a capital loss and not a trading loss; the disallowance was upheld in favour of the revenue.

Ratio Decidendi: In a reference, a finding that shares were held as investments and that the resulting loss was capital loss will not be interfered with when the Tribunal has applied the correct legal principles and evaluated all relevant facts.

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