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2023 (4) TMI 460 - AT - Income TaxRevision u/s 263 - additions towards disallowance of advances written off and capital loss - As per CIT AO has failed to make a complete verification with respect to loss on investment debited to P & L A/c in right perspective of law, although, the said loss is in the nature of capital loss, which cannot be allowed as deduction while computing profits and gains from business or profession - HELD THAT:- In this case, there is no dispute with regard to the fact that one of the objectives of the assessee’s company is to lend and advance money to its subsidiary, group and associate and sister concerns and in line with its objects, the assessee has made investment in the shares of group companies to augment its business. Thus investment made by the assessee in the group companies is in the nature of loans and advances, although, the said investment has been classified as capital, but the real character of the transaction was those akin to loans in a normal course of the business, and thus, any loss on sale of said investment should be treated as business loss but not capital loss and this view is supported by the decision of Electronic Corporation of Tamil Nadu Ltd.[2018 (12) TMI 47 - MADRAS HIGH COURT] where it has been clearly held that where Revenue authorities held that claim of loss accruing or assigning as a result on sale of shares was a capital loss not eligible for deduction in computation of business income Amount advanced by the assessee to various industries were towards working capital and real character of transaction was those akin to loan and not equity investment, impugned order deserved to be set aside. In this case, as held by us, it is not a case of lack of enquiry, but it can be at best considered as inadequate enquiry and for this purpose, the powers u/s.263 cannot be exercised. Therefore, assessment order passed by the AO is neither erroneous nor prejudicial to the interest of the Revenue and thus, we quashed the order passed by the PCIT u/s.263 - Decided in favour of assessee.
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