TMI Blog1984 (4) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... said to have been incurred by the purchase and sale of National Defence Remittance Certificates (for short "N.D.R. Certificates"). The ITO, however, took the view that as per s. 2(42A) of the I.T. Act, a certificate issued by an authorised dealer as defined in cl. (ai) of s. 2 of the Foreign Exchange Regulation Act as evidence of remittance of foreign currency or other foreign exchange is not to be treated as short-term capital loss, the loss in this case arising out of the sale of N. D. R. Certificates should be treated as having arisen out of the transfer of long-term capital assets. He, therefore, determined the income as under : Rs. Loss returned 39,392 Loss : Loss in N.D.R. Certificates 45,514 --------------- 6,122 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing held that the loss in question is a business loss, it did not go into the question as to whether the loss could be taken as a loss arising out of the sale of short-term capital assets as alleged by the assessee or as long-term capital assets as alleged by the Revenue. Aggrieved by the decision of the Tribunal, the Revenue has come before us by way of this reference. The form of the question referred to us is very much restricted and the question for our consideration is whether the loss arising out of the sale of the N.D.R. Certificates is a business loss. Admittedly, the assessee is carrying on business as importers and exporters as also money-lending business. The partnership deed under which the firm was constituted provides th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticular day and they were sold also to different parties in November, 1966. Though the transactions are not of a casual nature as has been found by the Tribunal, still the question is whether the purchase and sale of the N.D.R. Certificates are in the course of carrying on the assessee's business in import and export. The fact that the assessee has purchased the certificates from different parties and sold them later to other parties cannot establish that it is a line of business that has been carried on by the assessee apart from its usual business in exports and imports. Even assuming that the partnership deed authorises the partners to carry on any other business as decided by the partners of the partnership, the purchase and sale of N.D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held by the assessee for not more than twenty-four months immediately preceding the date of its transfer." It cannot be disputed that the N.D.R. Certificates are being issued normally by the Reserve Bank of India or by an authorised dealer as defined in s. 2(ai). Thus s. 2(42A) considers the certificates such as N.D.R. Certificates as a long-term capital asset though such certificates have been held by the assessee for more than twelve months which was the period relevant for this case. Therefore, the loss arising out of the transfer of the N.D.R. Certificates should be taken to be a loss arising out of the sale of a long-term capital asset, in which case it cannot be taken to be a business loss as has been held by the Tribunal. It cann ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
