SANKAR PRASAD MITRA, J.

( 1 ) THIS is a reference under Section 66 (1) of the Indian Income-tax Act, 1922. The assessment year is 1955-56, the relevant accounting year is the year ending on October 26, 1954 (Sambat year 2010 ). The assessee is a private limited company dealing, inter alia, in jute and hessian. For the assessment year under reference, the assessee claimed a loss of Rs. 1,50,217 in its jute and hessian account. The assessee conceded that in this account a profit of Rs. 6,29,396 arose in transactions concluded by payment of differences where no actual delivery of goods was either given or taken. There were, however, transactions in which delivery of the goods was effected by exchange of pucca delivery orders (hereinafter called P. D. Os.); in these transactions the assessee suffered a loss ; and after adjustment of the profit aforesaid there was a net loss of Rs. 1,50,217 in the jute and hessian account which the assessee claimed as its loss from the business in jute and hessian.

( 2 ) BEFORE the Income-tax Officer the assessee contended that the loss was a business loss as the actual delivery of goods was taken and given by the transfer of "p. D. Os. " The Income-t

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