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Commissioner of Income Tax Versus M/s. Savi Commercial Pvt. Ltd.

2015 (4) TMI 554 - CALCUTTA HIGH COURT

Determination of nature of business - where loss resulting out of dealing in shares is more than the income arising out of loans and advances it can be said that the principal business of the assessee is not of granting loans and advances in the light of explanation appended to Section 73 of the Income Tax Act - Held that:- Income and business activity, according to the legislative mandate, are distinguishing factors. Therefore income alone cannot be taken into account in deciding whether the as .....

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advances as would appear from the volume indicated in the chart above for a number of years. Therefore, the view taken by the learned Tribunal appears to be the correct view of the matter. - Decided in favour of assessee. - ITA 132 of 2007 - Dated:- 19-3-2015 - Girish Chandra Gupta And Arindam Sinha JJ. For the Appellant : Md. Nizamuddin, Mr. N.K. Poddar For the Respondent : Mr. N.K. Poddar,Mr. V. Tibrewal, ORDER The Court :- The appeal was admitted on 28th March, 2007 pertaining to the Assessm .....

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ounsel suggested that the question formulated at the time of admission should be reframed. After hearing them the question, to be decided, has been reformulated as follows : Whether in a case where loss resulting out of dealing in shares is more than the income arising out of loans and advances it can be said that the principal business of the assessee is not of granting loans and advances in the light of explanation appended to Section 73 of the Income Tax Act. The fund deployment position has .....

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ness Y.E.31.03.1999 Y.E.31.03.2000 Y.E.31.03.2001 Y.E.31.03.2002 Y.E.31.03.2003 Y.E.31.03.2004 Interest on loans Rs.17,458/ Rs 1,61,115/ Rs.9,27,247/ Rs.19,48,288/ Rs.20,95,789/ Rs.31,73,340/ Commission and brokerage in third party financing Rs.92,596/ Rs.5,05,254/ Rs.4,21,840/ Rs.2,96,010/ Rs.1,75,407/ Rs.2,39,293/ Other commission Rs.11,04,270/- Share trading (-)32,31,303/- (-)13,70,155/- (-)13,62,042/- Rs.12,67,223/- We are concerned with the year ended on 31st March, 2001. It would appear fr .....

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were earned only from the loans and commission and brokerage. There was no profit earned from the dealings in shares. Therefore he submitted that the principal business of the assessee is granting of loans and advances and not dealing in shares. Mr. Poddar, learned Senior Advocate drew our attention to the Explanation appended to Section 73 of the Income Tax Act which reads as follows :- Explanation: Where any part of the business of a company (other than a company whose gross total income cons .....

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