1. Sale of shares by an entity dealing in shares — Dispute over classification of loss as trading loss or capital loss. (Para 1 )
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1971 Supreme(SC) 338
SUPREME COURT OF INDIA
A.N.Grover : K.S.Hegde
Commissioner Of Income Tax, Bihar And Orissa, Patna
Versus
Dalmia Jain And Company Limited
Case No. : 1813 , 1848 , 1849 of 1967
Date of Decision : 7/23/71
The determination of whether a loss incurred from the sale of shares is a trading loss or a capital loss is primarily a question of fact. Appellate courts should not interfere with concurrent findings of lower authorities unless they are perverse or based on irrelevant considerations.
Headnote:(A) Income Tax - Trading loss vs. Capital loss - Determination of whether a particular loss incurred in the sale of shares is a trading loss or a capital loss is primarily a question of fact - Where the tribunal and the High Court have concurrently concluded that the loss is a trading loss, and there is no evidence that the tribunal considered irrelevant factors or ignored relevant ones, there is no room for interference by the appellate court. (Para 1)
Facts of the case:
The assessee was engaged in dealing in shares and incurred a loss upon the sale of certain shares. In previous years, similar losses had been allowed as deductions while computing the total income. Both the tribunal and the High Court concurrently held that the loss in question was a trading loss.
Findings of Court:
The court found that the determination of whether a loss is trading or capital is a question of fact. Since the tribunal's decision was based on relevant considerations and did not overlook any pertinent facts, the concurrent findings of the lower authorities were upheld.
Issues: Whether the loss incurred in the sale of shares held by the assessee should be classified as a trading loss or a capital loss.
Ratio Decidendi: The classification of a loss as trading or capital is primarily a question of fact; therefore, if the lower tribunal has arrived at a conclusion without ignoring relevant considerations or including irrelevant ones, the higher court should not interfere.
Result: Appeals dismissed.
Legal Category Hierarchy
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tax law
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income tax
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classification of losses
- trading loss vs capital loss (Para 1)
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classification of losses
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income tax
Table of Contents
2. Whether the loss incurred on the sale of shares should be categorized as a trading loss or a capital loss. (Para 1 )
3. The determination of whether a loss is trading or capital is primarily a question of fact, and the tribunal's findings were based on relevant considerations. (Para 1 )
4. The classification of a loss as either a trading loss or a capital loss is primarily a question of fact. (Para 1 )
5. Appeals dismissed. (Para 1 )
6. Is the classification of a loss as a trading loss or a capital loss a question of law or fact?
The court held that the question of whether a particular loss is a trading loss or a capital loss is primarily a question of fact. (Para 1 )
7. Under what circumstances will a court interfere with a tribunal's factual finding on the nature of a loss?
A court will not interfere if the tribunal has not taken into consideration any irrelevant consideration or failed to take into consideration any relevant consideration in arriving at its decision. (Para 1 )
K.S.Hegde, J.
(1) ALL these appeals by certificate are by the Commissioner of Income Tax, Bihar and orissa, against the same assessee, namely, Dalmia Jain & Co. Ltd. The point that arises for decision in these appeals is whether the loss incurred by the assessee in the sale of some shares held by it is a trading loss or a capital loss. There is no dispute that the assessee did incur loss by the sale of those shares. It is established that the assessee was dealing in shares. It is also established that in the previous years, such losses were given deduction too while computing the total income of the assessee. The tribunal as well as the High court have concurrently come. to the conclusion that the loss in question is trading loss. The question whether, a particular loss is a trading loss or a capital loss is primarily a question of fact. It is not the case of the department that in arriving at its decision, the tribunal has taken into consideration any irrelevant consideration or failed to take into consideration any relevant consideration. Hence, there is no room for interference by this court. In the result, these appeals are dismissed. No costs.
