TMI Blog2014 (4) TMI 780X X X X Extracts X X X X X X X X Extracts X X X X ..... is from inter corporate deposit or not and did not appreciate the other factors but the fact remains that even to consider an activity as substantial part of its business activity various other factors are to be looked – thus, the matter is remitted back to the CIT(A) to obtain the details of BSPL and analyse as to whether the loan was given in the ordinary course of its business and whether it was a substantial activity or not – Decided in favour of Assessee. - ITA No. 320/Mum/2012 - - - Dated:- 26-3-2014 - Shri D. Manmohan,JJ. For the Appellant : Shri Bhupendra Shah For the Respondent : B. P. K. Panda ORDER Per D. Manmohan, V.P. This appeal by the assessee company is directed against the order passed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the loan was given as an inter corporate loan and thus the amount was advanced in the ordinary course of business. It was also submitted that BSPL was formed to acquire BSE membership card but due to several reasons membership card could not be obtained but the money collected was partly invested in shares and the balance was advanced as short term loans. The BSPL suffered loss in shares but earned interest on inter corporate loan given to Meghavarsha. It was further contended that assessee s case fall under exception (ii) of section 2(22)(e) of the Act since the loan was given in the ordinary course of its business. The AO quoted provisions of section 2(22)(e) as well as exception (ii) thereto to highlight that any loan advanced as a spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ney lending, which is further strengthened by the fact that the investment in share trading is much more than the loan given. Therefore, the assessee cannot take the benefit of the exception to section 2(22)(e) of the Act. Regarding the further contention that the assessee is in the business of giving inter corporate deposits the learned CIT(A) observed that no documentary evidence was put forth to prove that the assessee received the sum in the form of inter corporate deposits which are governed by section 372A of the Companies Act. In other words, to give any inter corporate deposit a resolution of the Board meeting was to be passed with the consent of Directors present in the meeting whereas no such evidence was produced in the instant c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the ordinary course of business and such activity is one of the significant activities of the assessee company. Even upon application of Hon'ble Bombay High Court judgement the assessee has to first show that the assessee was engaged in carrying on the business of giving loans in the form of inter corporate deposits. In order to verify as to what is the business BSPL the Memorandum and Articles of the said company has to be looked into but no evidence was produced even before this Bench to show that one of the objects of the company was giving inter corporate loans. Assessee was substantially interested in share broking and trading in shares. It is not shown as to whether BSPL has advanced loan to any other person other than the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors but the fact remains that even to consider an activity as substantial part of its business activity various other factors are to be looked into as has been explained hereinabove. In the interest of substantial justice I, therefore, set aside the matter to the file of the CIT(A) who is directed to obtain the details of BSPL and analyse as to whether the loan was given in the ordinary course of its business and whether it was a substantial activity or not. Needless to observe that the assessee shall be given a reasonable opportunity of hearing in this matter. With these observations the matter is hereby set aside to the file of the CIT(A). 9. In the result, the appeal filed by the assessee is treated as allowed for statistical purposes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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