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2012 (12) TMI 82 - HC - Income TaxBroken period interest - classification of the securities as permanent or current - allowability of interest of securities held as investments and stock in trade - held that:- in view of decision in T.C.(A).No. 455 of 2008 dated 30.10.2012, decided against the assessee. Set off of carried forward losses of earlier years - held that:- there is no consideration of the said question by the Tribunal - matter remanded back to AO. Valuation of securities in respect of stock-in-trade - matter remand to the Assessing Officer for his consideration on the issue in terms of the decision of the Apex Court in the case of UCO Bank Vs. CIT [1999 (9) TMI 4 - SUPREME COURT] Disallowance of Interest - Assessee submitted that when the consistent case of the assessee is that they had not expended anything in making investment for the tax free securities, the Tribunal committed serious error in upholding the order of the authorities below restricting 2% of the income earned towards the estimated expenditure. Learned counsel for the assessee pointed out that when the assessee had not expended anything on the investment in securities, there is no question of proving any such expenditure in earning income from tax free securities. It is seen from the order of the assessment that the assessee earned income from investment on tax free securities as specified in Section 10(15) of the Income Tax Act. When the assessee was specifically asked as to the expenditure incurred thereon, the assessee submitted that there was no expenditure incurred or expended for earning such interest income. The Officer held that in the absence of any evidence, the claim could not be considered. We agree with the assessee's contention that there could be no evidence that could be let in, to prove the non-existent expenditure; the assessee could nevertheless have substantiated the nature of the securities in which it had invested and the source from which it had invested. Since no details are available on this - restore the assessment back to the Assessing Officer for the purpose of enabling the assessee to let in evidence, particularly, as to the source to which it made investments. Depending on the materials available, it is open to the Officer to pass orders thereon - Tax Case (Appeal) is dismissed. No costs.
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