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2006 (4) TMI 199 - AT - Income TaxValidity of Order passed by the CIT u/s 263 - erroneous and prejudicial order - interest allowed in the assessment u/s 36(1)(iii) - HELD THAT:- In the present case, it is an unchallenged fact over the past several years that business losses were allowed to be adjusted under s. 72 of the Act, which means that the Department has acted on the footing that the assessee did carryon business activities in the year in which the losses were adjusted. The profits/losses in share dealing were assessed under the head "Business" and the dividend income was taxed as "Income from other sources" because of the specific requirement of the Act, though in fact it was the business income of the company. Considering the past record, it would defeat the rule of consistency if a departure is allowed to be made for the year under consideration. In the case before us, though it is only in the computation of income that the shares of Max India Ltd. are shown as "trading assets" but in the balance sheet they are shown under "investments", still the acceptance of the Department in several years in the past that the shares were held as stock-in-trade, indicated by their conduct in accepting the profits or losses on sale of those shares under the head "Business" is a circumstance strong enough to displace any ambiguity created by the entry in the balance sheet. Thus the case can be brought under the principle laid down by the Supreme Court in Bengal & Assam Investors Ltd. vs. CIT [1965 (11) TMI 31 - SUPREME COURT] by reason of the actual conduct of the assessee supported by its income-tax assessments. That apart, though it may not be necessary to go to that extent, it may be noticed that in CIT vs. Amalgamations (P) Ltd.[1997 (4) TMI 8 - SUPREME COURT] there is an observation of the Supreme Court that the Madras High Court, from whose decision the appeal arose, "has rightly pointed out that the business of the assessee-company is the holding of investments and if with reference to the business of holding investments, any expenditure had been incurred that could have been allowed as a deduction". Thus, we set aside the order of the CIT passed u/s 263 and allow the appeal with no order as to costs.
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