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2019 (11) TMI 87 - AT - Income TaxExpenditure on account of forfeiture of shares - allowable business expenditure - HELD THAT:- Transaction would attract the provision of section 2(47) of the Act and the extinguishment of any right therein is a capital loss and cannot be held as a business loss. No merit in the action of the Revenue authorities especially in view of the direction of the Tribunal in the original proceedings while setting aside the issue to the file of the AO. There is no finding by the AO to the direction by the Tribunal that the lower authorities have not adverted to the crucial fact i.e., assessee’s investment in Surya Roshni Ltd., a group company by way of subscription to the convertible debentures being held as stock-in-trade not only in this year, but, in earlier year also. Once the shares are held as stock-in-trade as argued before the Tribunal on the earlier occasion for which the Tribunal had restored the issue to the file of the AO for verification of this crucial fact and since there is no material to controvert the above submission of the assessee before the Tribunal that such shares were held as stock-in-trade, therefore, we are of the considered opinion that the lower authorities in the set aside proceedings have not followed the direction of the Tribunal. We find the CBDT, vide Circular No.6/2016 dated 29th February, 2016 had categorically held that ‘where the assessee itself, irrespective of the period of holding the listed shares and securities, opts to treat them as stock-in-trade, the income arising from transfer of such shares/securities would be treated as its business income. In our opinion, the above Circular being clarificatory in nature is retrospective and cannot be held as prospective as argued by the ld. DR. We further find the coordinate Bench of the Tribunal in the case of Cosmos Industries Ltd. [2019 (1) TMI 268 - ITAT DELHI] while deciding somewhat identical issue has held that the loss incurred on sale of shares of a subsidiary company is a business loss. - Decided in favour of assessee.
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