Judgment

HEGDE, J.: This is an assessee s appeal. The assessee is a public limited company and the appeal relates to the assessment for the assessment year 1949-1950, corresponding to the accounting year which is the calendar year ending on December 31, 1948. The assessee company was incorporated in 1942. At the beginning it owned a distillery at Unnao. It acquired a refinery in 1943. With effect from June 1, l945, the assessee company obtained on lease the New Sawan Sugar and Gur Refining Co. During the period from January 29, 1946 to April 23, 1946, the assessee company purchased 41,300 shares of the said company for Rs. 12,17,006/-. On April 30, 1947 the entire block of shares was sold to produce Exchange Corporation Ltd. for Rs. 8,46,750/-. The transaction resulted in a loss of Rs. 3,70,356/-. This loss was treated by the assessee as a trading loss for the assessment year 1948-49. After setting off this loss against the other income of the assessee company, a loss of Rupees 2,27,085/- was carried forward under S. 24 (2) of the Income-tax Act, 1922 (to be hereinafter referred to as the Act) to the year 1949-50 and later years. The assessee claimed to set off this unabsorbed loss pertaining to the share business against its profits in the sugar business for the assessment year 1949-1950. The Income-tax Officer did not permit this set off. The Appellant Assistant Commissioner confirmed the order of the Income-tax Officer. In a further appeal, the Appellate Tribunal agreed with the conclusion reached by the Income-tax Officer. Thereafter at the instance of the High Court, the Appellate Tribunal stated a case under S. 66 (2) of the Act on the following question of law:

"Was there any evidence before the Tribunal on which it could hold that the business in dealing with shares was distinct and separate from the business of sugar manufacturing and distillery?"

2. By its judgment dated April 23, 1963* the High Court answered the question in the affirmative and against the assessee. This appeal has been brought against the decision of the High Court after obtaining a certificate under S. 66-A (2) of the Act.

* (Sic) (D/- July 23, 1963 ?) See the case reported in 68 Cal WN 752

3. The appeal came up for hearing before this Court on February 6, 1969. After hearing the Counsel for the parties this Court observed:

"In the present case however it is not possible for us to satisfactorily dispose of this appeal because the statement of the case submitted by the Tribunal is incomplete and has omitted to state material facts bearing upon the question referred. For instance, it is not clear as to whether the assessee adduced any evidence as to why it started purchasing the shares of the lessor company about six months after the commencement of the lease. It is also not stated by the Tribunal whether there is any evidence of interrelation between the purchase of shares and the manufacture of sugar."

4. In view of that conclusion this Court directed the Tribunal to submit a supplementary statement of case on some of the points formulated in the order.

5. The Tribunal accordingly submitted a supplementary statement of case. Even after considering that supplementary statement, this Court* found itself unable to record its opinion on the question referred to. This Court was also of the opinion that the question which the Tribunal was directed to and did refer was defective and restricted the scope of the enquiry. It accordingly reframed the question as follows:

* See the case reported in AIR 1970 SC 1379 - Ed.

"Whether the business of the company of dealing in shares and the business of manufacturing sugar and other commodities constitute the same business within the meaning of S. 24 (2) of the Indian Income-tax Act, 1922, in force in the year of assessment?"

6. It further directed the attention of the Tribunal to the decision of this Court in Commr. of Income-tax Madras v. Prithvi Insurance Co. Ltd. 63 ITR 632 in order to assist the Tribunal to find out the