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2014 (1) TMI 697 - AT - Income TaxDisallowance of valuation loss on conversion of shares into stock-in-trade – Held that:- The assessee has not done any trading in the immediate past assessment year nor during the year under consideration - This conduct of the assessee of converting Long term investment into stock in trade is not backed by any commercial prudence or justifiable cause - The assessee has not brought any cogent material evidence on record even subsequent to the year under consideration to show that it has done some trading or business in shares - legitimate tax planning is not barred - the conduct of the assessee clearly suggest that his only intention was to create artificial loss by converting investment in stock in trade and setting it off against the bad debts recovered – Thus, the loss on the valuation of stock as on 31.3.2007 is nothing but an artificial loss which deserves to be ignored and the AO has not given any cognizance to this loss - The AO is directed to treat the loss as an artificial loss – Decided against Assessee. Deletion made u/s 14A of the Act r.w. Rule 8D of the Income Tax Rules – Held that:- Rule 8D is prospective and is applicable with effect from A.Y. 2008-09 – Thus, the CIT(A) has rightly held that Rule 8D is not applicable – order of the CIT(A) upheld – Decided against Revenue.
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