TMI Blog2018 (12) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... ies of the assessee (TIIC Limited) and held that the assessee was incorporated solely for the purpose of ensuring and facilitating growth and development of industries in the State of Tamilnadu and investments by way of subscription of shares is solely on account of the under writing operations. Further, it held that the investments are in the nature of stock-in-trade and cannot be held otherwise. In our considered opinion the decision in the case of TIIC Limited (2017 (7) TMI 1048 - MADRAS HIGH COURT) would squarely cover the case on hand and the question framed for consideration is required to be answered in favour of the assessee. As pointed out by us earlier, the objects for which the assessee company had been established by the Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 008 on the following substantial questions of law:- i) Whether the Appellate Tribunal is correct in law in sustaining the disallowance of investment write off claimed as a deduction in the computation of taxable total income in the assessment year under consideration, consequent to the admitted position of their diminution in value? ii) Whether the Tribunal is correct in law in sustaining the loss incurred in the activity of promoting, establishing, running and supporting state owned electronic industries as a 'capital loss' even though the said activity was the main business activity? 3. The assessment for the year under consideration was framed on 29.10.2003 and the Assessing Officer held that the claim of loss accruing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d is not involved in the business of purchase and sale of shares. Therefore, it held that the investments made under acquiring shares cannot be equated as a revenue expenditure on any account. 8. To examine as to whether the Assessing Officer was right in his observation, we had perused the Memorandum and Articles of Association of the assessee. We find therein that the main objects of the assessee was to promote, establish and run State Public Sector Enterprises for Electronic items; manage, supervise, finance, advise, assist, aid or collaborate with any association, firm, company, enterprise, undertaking, institution or scheme for the advancement and development of all branches of electronics and of industries and business concerns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the consent of the assessee cannot be made. 11. On this issue, it would be beneficial to refer to a decision of the Hon'ble Supreme Court in the case of Investments Ltd. vs. Commissioner of Income Tax (1970) 77 ITR 0533 , wherein, the Court considered as to whether the shares and securities held by the assessee therein has to be treated as stock-in-trade and while considering the said question, it was held as follows:- 8. In the balance sheet, it is true, the securities and shares are valued at cost, but no firm conclusion can be drawn from the method of keeping accounts. A taxpayer is free to employ, for the purpose of his trade, his own method of keeping accounts, and for that purpose to value his stock-in-trade either at cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting growth and development of industries in the State of Tamilnadu and investments by way of subscription of shares is solely on account of the under writing operations. Further, it held that the investments are in the nature of stock-in-trade and cannot be held otherwise. In our considered opinion the decision in the case of TIIC Limited (cited supra) would squarely cover the case on hand and the question framed for consideration is required to be answered in favour of the assessee. 13. The Revenue placed reliance on the decision of the Hon'ble Supreme Court in the case of Berger Paints India Ltd., vs. Commissioner of Income-Tax, Delhi-V [2017] 393 ITR 113 . We have perused the said decision and we find that the said decision ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision in the case of R.Chidambaranatha Mudaliar (cited supra). We find that the reliance placed on the decision is thoroughly misconceived as in the said case, the loss was under different connotation namely with regard to Section 45 of the Act. Furthermore, in the said case, the head of income was never in dispute. Therefore, the Tribunal erred in relying upon the decision in the case of R.Chidambaranatha Mudaliar. Thus, for all the above reasons, the order passed by the Tribunal reversing the order passed by the CIT(A) is not sustainable. 15. In the result, the appeal filed by the assessee is allowed. The order passed by the Tribunal dated 11.01.2008 is set aside and the order passed by the CIT(A) dated 09.01.2006 is restored. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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