Judgment

P. N. BHAGWATI, J. :- These appeals by special leave are directed against a judgment of the Calcutta High Court answering the first question referred to it by the Tribunal in favour of the Revenue and against the assessee. There were in all five questions referred by the Tribunal but questions Nos. 2 to 5 no longer survive and these appeals are limited only to question No. 1. That question is in the following terms :

"Whether on the facts and in the circumstances of the case, the assessees claim for the exchange loss of Rs. 11 lakhs for the assessment year 1957-58 and Rs. 5,50,000/- for the assessment year 1959-60 in respect of remittances of profit from Pakistan was not allowable as a deduction?

Since there are two assessment years in regard to which the question arises, there are two appeals, one in respect of each assessment year, but the question is the same. We will briefly state the facts as that is necessary for the purpose of answering the question.

2. The assessee is a limited company having its head office in Calcutta. It has inter alia a cotton mill situate in West Pakistan where it carries on business of manufacturing and selling cotton fabrics. This textile mill w