Judgment

S. K. DAS, J. : These two appeals have been brought to this Court on a certificate of fitness granted by the High Court of Punjab under S.66A(2) of the Indian Income-tax Act 1922.

2. The relevant facts are these. Messrs. Chunilal Moonga Ram a firm of Delhi, carried on a speculative business in bullion, mostly in gold and sliver, in Chandni Chowk at Delhi. For the assessment year 1946-47 it was charged to income-tax on its income from the business in the relevant accounting period. Similarly, it was charged to excess profits tax for the chargeable accounting period ending on February 6, 1946. One of the appeals, Civil Appeal. No. 39 of 1960, arises out of the assessment of income-tax and the other appeal, Civil Appeal No. 40 of 1960, arises out of the assessment of excess profits tax. During the relevant accounting periods the firm entered into certain transactions called "hedge" transactions in the bullion market at Bhatinda (then a part of the Patiala State, that is, outside the taxable territories of British India). It claimed that it had incurred losses to non-residents there in the sums of Rs. 6,366/- and Rs. 16,615/- in the said transactions and claimed that these loss