Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (10) TMI 790 - AT - Income TaxLosses written off - ‘business loss’ or ‘capital loss - allowability of sum advanced to Blue Ocean Cruises Lines Pvt. Ltd., for the purpose of getting 30% shareholding in a joint venture to be set up between assessee-company and Mr.Oneil Raina for investing into M/s Blue Ocean Crusies Lines Pvt. Ltd.- HELD THAT:- As in the present case, the facts shows that assessee made investment of ₹ 5 crore by the shares of M/s Blue Ocean Cruises Lines Pvt. Ltd. and written off the claim as loss. The present facts of the assessee’s case shows that the investment was made not for the purpose of expansion of business activity but it was made with a view to creating capital asset in the form of holding shares. As relying on United Breweries Ltd.[2010 (1) TMI 86 - KARNATAKA HIGH COURT] we are of the opinion that the claim of assessee cannot be held as ‘business loss’ rather it is a ‘capital loss’. Accordingly, this ground of the assessee is dismissed. Additional ground with the petition - Disallowing the business loss u/s 37(1) - whether advances made were in the nature of trade and not for earning dividend, and since the same was done in the course of business, it would result in a business loss and the same would be allowable as a Business Loss u/s 37(1) - HELD THAT:- In our opinion, there is a good and sufficient reason in not raising this ground on earlier occasion. Accordingly relying on the judgment of NTPC [1996 (12) TMI 7 - SUPREME COURT], we admit the additional grounds, as there is no question of investigation of fresh facts on this issue. Accordingly additional ground is admitted. Treatment of investment in shares, lee deposits – MDLR airlines and miscellaneous deposits as ‘business loss’ - With regard to investment in shares as ‘business loss’, we have already held in earlier paragraph that it is a ‘capital loss’ and hence there is no question of adjudicating this ground on this issue by way of additional ground. Accordingly, with regard to the treatment of loss of investment is a ‘capital loss’, therefore, additional ground related to this issue is dismissed. MDLR airlines and miscellaneous deposits - Before the lower authorities, the assessee claimed bad debt u/s 36(2) of the Act which was disallowed on the reason it has not satisfied on decisions laid down in sec. 36(2) of the Act. However, before us, the assessee claimed it as deduction u/s 37 of the Act and which was not examined by the lower authorities. Hence, in the interest of justice, we remit the issue to the files of AO for fresh consideration. The assessee has to place necessary evidences viz., name and address of the parties concerned. With these observations, these two issues are remitted to the files of AO for fresh consideration. Addition u/s 41(1) - HELD THAT:- The assessee has shown the above amount as outstanding from 5 parties and no confirmation was filed by the assessee from those 5 parties. Hence, the above amount was considered as cessation of liability u/s 41(1) of the Act. Before us also assessee was not able to produce any evidence to suggest that the said amount was actually outstanding on the date of balance sheet. Hence, lower authorities justified in treating it as a cessational liability by invoking the provisions of sec. 41(1) of the Act.
|