Bhaskar Bhattacharya, J.

This appeal is at the instance of the Revenue against an order dated 27th July, 2000 passed by the Income-tax Appellate Tribunal, ‘E’ Bench, Calcutta, in ITA No.1759/Cal/1999 for the assessment year 1996-97 thereby partly allowing the appeal. Being dissatisfied, the Revenue has come up with the present appeal. At the time of admission of this appeal, a Division Bench of this Court formulated the following substantial questions of law:

“A. Whether, on the facts and in the circumstances of the case, short term capital loss of Rs.8,59,77,748/- attributable to colourable transaction could be set-off against the long term capital gains of Rs.403,89,154/- and whether such a conclusion arrived at by the Ld. Tribunal is unreasonable and/or perverse?”

“B. Whether, on the facts and in the circumstances of the case, the Ld. Tribunal was justified in law deleting the disallowance of consultancy fees of Rs.8,03,985/- even though, the expenses was in connection with the future business prospects of the assessee?”

The facts giving rise to filing of this appeal may be summed up thus:

a) M/s. Shri Krishna Bottlers (Vijayawada) Pvt. Ltd. (“SKB”) held a license f