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2018 (12) TMI 47 - MADRAS HIGH COURTDisallowance of investment write off claimed as a deduction in the computation of taxable total income - sustaining the loss incurred in the activity of promoting, establishing, running and supporting state owned electronic industries as a 'capital loss' even though the said activity was the main business activity - whether the Tribunal was right in holding that the shares are stock-in-trade of the assessee company? - Held that:- The Division Bench took note of the Memorandum and Articles of Association which spelt out the main activities of the assessee (TIIC Limited) and held that the assessee was incorporated solely for the purpose of ensuring and facilitating growth and development of industries in the State of Tamilnadu and investments by way of subscription of shares is solely on account of the under writing operations. Further, it held that the investments are in the nature of stock-in-trade and cannot be held otherwise. In our considered opinion the decision in the case of TIIC Limited (2017 (7) TMI 1048 - MADRAS HIGH COURT) would squarely cover the case on hand and the question framed for consideration is required to be answered in favour of the assessee. As pointed out by us earlier, the objects for which the assessee company had been established by the Government of Tamil Nadu is no different from the purpose for which TIIC and TIDCO were established. Therefore, the CIT(A) was fully justified in relying upon the decision in the case of TIDCO. The Tribunal relied on a decision in the case of R.Chidambaranatha Mudaliar (1998 (4) TMI 77 - MADRAS HIGH COURT). We find that the reliance placed on the decision is thoroughly misconceived as in the said case, the loss was under different connotation namely with regard to Section 45 of the Act. Furthermore, in the said case, the head of income was never in dispute. Therefore, the Tribunal erred in relying upon the decision in the case of R.Chidambaranatha Mudaliar. Thus, for all the above reasons, the order passed by the Tribunal reversing the order passed by the CIT(A) is not sustainable. In the result, the appeal filed by the assessee is allowed.
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