BEAUMONT, C.J. - This is a reference made by the Commissioner of Inc ome Tax under S. 66(2) of the Indian Income-Tax Act, XI of 1922. I have considerable difficulty in seeing myself what point of law arises having regard to the findings of fact by which, of course, we are bound.
The assessee lost a substantial sum of money on certain debentures in the Agra Spinning and Weaving Co., Ltd. and he seeks to set that off against his profits and gains. The only possible ground on which he can do that is this that he carries on the business, amongst other business, of money-lending and if he can show that these debentures represent moneys loaned to the Company, as part of his money-lending business, then he would be entitled to deduct the loss from his profits and gains under S. 24 : but the finding of fact of the Income-tax Officer is that although the assessee carries on business as a financier and money-lender, the transaction in question had no connection with any such business. Having looked through the record, it seems to me that it would have been quite impossible for the Income-tax Officer to have arrived at any other conclusion. These debentures were taken in the year 1922 under an agreement made in 1921. The assessee being then a minor, the assessees mother entered into an agreement under which moneys w ere advanced on debentures to the Agra Spinning and Weaving Co., Ltd ., in order to enable them to purchase certain machinery which the assessees mother had herself originally agreed to purchase. There is nothing whatever to show that the debentures were taken as part of money-lending transactions, and in any case, as I have said, we are bound by the finding of fact that they were not taken as part of money-lending transactions. It cannot seriously be contended that if a man has a business of money-lending, then every single transaction which he enters into, which involves the lending of money must be taken as part of the money-lending business. It is plain that a money-lender, like other people, may invest his capital of accumulated profits in forms of investment which are in law loans, e.g., Government or Municipal loans, mortgages and debentures. If he invests his capital in such a manner and suffers a loss on the investment the loss is a loss of capital and cannot be set off against profits or gains.
Having regard to the finding that this transaction was an investment not made in the course of money-lending business, it seems to me th at no point of law arises. The actual question raised by the Commissioner is :- 'Whether under any provision in the Income Tax Act, XI of 1922, the loss of Rs. 8,58,710 suffered by the assessee on account of money invested in debentures issued by the Agra Spinning and Weaving Co., Ltd. and lost when that Company was would up can, for the purposes of S. 24(1) of the Act, be treated as a loss of profits or gains under any of the heads of income is S. 6 of the Act and set off against the income of the assessee under any other head, for the purposes of assessment for the financial year, 1933-34.'
I am not sure whether I correctly understand the question, but on the findings of fact I am clearly of opinion that the assessee is not entitled to set of the loss in question under any provision of the Income Tax Act.
I think, therefore, the question must be answered in the negative. Costs to be paid by the assessee on the Original Side scale.
RANGNEKAR, J. :- I agree.
Question answered in the negative.