9911796707
TMI Blog2010 (8) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee falls within the provisions of Explanation to Section 73 of the Income Tax Act (hereinafter referred to as 'the Act') and treating the said loss to be speculative in nature, the AO refused to give the adjustment against other business income. The assessee had earned the income in different business activities, which included the consultancy income, lease interest income and other income, as against that, insofar as dealing in shares is concerned, the assessee suffered losses, as mentioned above. Explanation to Section 73 of the Act stipulates that where any part of the business of a company consists in the purchase and sale of shares of other companies, such company shall, for the purposes of this section, be deemed to be carrying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is stated by the Assessing Officer is that even if the company had passed resolution for carrying out business of money lending for loans and advances and got the license Reserve Bank of India, because no subsequent changes were made in the objects of the company, it could not be treated as principal business. Thus, these four reasons are based on the main object of the company as stated in the assessment order. It seems that the AO had perused Memorandum and Article of Association prepared at the time of incorporation of the company and produced before him by the assessee. Fact remains that within four months of its incorporation, the assessee company had amended the Memorandum of Association. This amendment was carried out by passing spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome was accrued/earned from bill discounting charges in the nature of granting loans and advances. The case which was set up by the assessee before the CIT (A) was that all the three incomes, i.e., the interest income, consultancy income as well as income from bill discounting were to come under one head, viz., "income from business of granting of loans and advances" and thus, where these three incomes were taken together it constituted 52% of the total income. It was also submitted that even the lease rentals were in the nature of lending money and the income from this source amounts to 20.99% of the total income of the assessee from which 28.99% income was accrued to the assessee's income. On this basis, the arguments of the leaned counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lutions and started the business of money lending and leasing of assets. Approval was also sought form RBI. The attention of the Bench was also drawn on copy of approval from RBI placed on record. Various clauses of amended objects were also shown by the learned counsel and it was stated that copies of all these are placed on record at page 26 to 78. Reliance was placed on the decision of the Delhi bench f the ITAT in the case of NBI Industrial Finance Co. Ltd. Vs. DCIT (2004) 1 SOT 132 (Del); and on the decision of Special Bench of the ITAT in the case of DCIT Vs. Venkateshwar Investment & finance Pvt. Ltd. 93 ITD 177 (Cal) (SB). It was explained that he lease rent and the interest has to be taken together for establishing the principal bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3;s resolutions, copies of the same are placed at pages 68 to 78. Copy of approval from RBI is placed at pages 6 & 7. Certificate of registration from RBI is placed at page 8. Statement of asset allocation and statement of income under various heads are placed at pages 9 & 10. We note tht out of total capital of Rs.420 lacs the assessee had purchases assets of Rs.98.50 lacs and advanced loans of Rs.86.11 lacs. Thereafter the assessee has shown purchases of shares at Rs.224 lacs. We have seen the allocation of funds in assets and found that during A.Y. 1996-97 the allocation on account of assets on lease and loans advances was 46.53%. During A.Y. 1997-98 the allocation was 52.77% and during A.Y. 1998-99 this allocation was 57%. Similarly, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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