1978 (11) TMI 57

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.... C.J.--The assessee is a private limited company. It carries on business of manufacture and sale of sugar. For the assessment year 1965-66, it claimed a deduction of Rs. 16,181 and for the assessment year 1966-67 a sum of Rs. 3,017 on the ground that these sums represented loss suffered by the assessee in selling some of its securities. The ITO disallowed the claim on the finding that the securiti....

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....case set up by the assessee was that it was utilising these securities for pledging them with the bank against the assessee's overdraft account. They constituted trading assets. This plea did not find favour with the revenue authorities. They repelled it. It was not the assessee's case that it purchased these securities with the sole object of utilising them as its trading assets. The circumstance....

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....d only for pledging with the bank against its overdraft account and constituted the trading assets. It was a clear case of investment. The investment was of a capital nature. The loss arising out of the sale would clearly be a capital loss. The question referred to us is, hence, answered in the affirmative, in favour of the department and against the assessee. The Tribunal had also referred two....