Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2019 (7) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (7) TMI 388 - HC - Income TaxDisallowing of loss on shares - method of valuation of shares at cost or market price - whether the stocks which were shown in the investment account as investment only could be taken into consideration for claiming a deduction? - Single and isolated transaction - HELD THAT:- It is seen that the assessee had shown the shares as investment in the books of account and there was no trading activities. Consequently, the Assessing Officer held that it cannot be allowed as deduction for the purpose of computing the profit of the assessee. In the case of Kerala Small Industries Development Corporation Ltd. [2004 (6) TMI 35 - KERALA HIGH COURT] the Court had elaborately considered more or less an identical issue wherein the assessee, made investment in co-operative societies and the question was whether it can be treated as stock-in-trade or a trading asset. After examining the memorandum and articles of association of the assessee-company, the Court took into consideration as to what the word “business” connotes and held that it connotes some real, substantial and systematic or organised course of activity or conduct with a set purpose. Single and isolated transaction can be held to be conceivably capable of falling within the definition of “business” as being an adventure in the nature of trade provided the transaction bears clear indicia of trade. Considering the facts of the said case, it was pointed out that the investment of the assessee in the cooperative societies cannot be treated as a trading activity, there was no purchase or sale involved, no such transaction and that the transaction made by the assessee in the form of shares in co-operative societies are only in the nature of capital investments in furtherance of the objects of the company and not as trading capital or circulating capital of the assessee company. The decision in Kerala Small Industries Development Corporation Ltd. (supra) is a clear answer to the assessee's case to hold that the assessee has not made out any ground to interfere with the order passed by the Tribunal. - Decided against assessee.
|