PATNAIK & CO. LTD. vs THE COMMISSIONER OF INCOME TAX, ORISSA

The Supreme Court held that losses incurred by the assessee on the sale of Government bonds, purchased to enhance business relations and goodwill, qualify as revenue losses under the Income Tax Act. The Court found that the investment was made for commercial expediency and was closely linked to the receipt of Government orders, thus allowing the deduction of the claimed loss. The High Court's classification of the loss as capital was overturned, affirming the Appellate Tribunal's decision that the loss arose in the course of business.