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2015 (5) TMI 551 - CALCUTTA HIGH COURT

2015 (5) TMI 551 - CALCUTTA HIGH COURT - TMI - Preferential Equity Warrants - whether investment and not stock-in-trade and was not for business purpose? - Tribunal held that the loss on the forfeiture of application money for Preferential Equity Warrants was a capital loss and not a revenue loss - Held that:- ITAT have unanimously held that the loss was capital loss and not a revenue loss. It is this order which is under challenge. Thus it cannot be said by any stretch of imagination that the a .....

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he profit would have been a capital gain. We are also supported in the aforesaid view by the judgment in the case of Madan Gopal Radhey Lal (1968 (9) TMI 14 - SUPREME Court ). Therefore, the loss suffered by the assessee is a capital loss as rightly held by the assessing officer, CIT (Appeal) and the learned Income Tax Appellate Tribunal. - Decided against the assessee. - ITA 270 OF 2004 - Dated:- 23-3-2015 - GIRISH CHANDRA GUPTA AND ARINDAM SINHA, JJ. For The Appellant : Mr.B.K.Murarka,Advocate .....

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ment and not stock-in-trade and was not for business purpose was perverse and contrary to the materials on record ? ii) Whether on the facts and in the circumstances of the case the Appellate Tribunal was justified in law in holding that the loss of ₹ 15 lakhs on the forfeiture of application money for Preferential Equity Warrants was a capital loss and not a revenue loss ? The facts, briefly stated, are as follows. The assessee is an investor. He does not deal in shares; he is a mere inve .....

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e call money with respect to each equity warrant at the rate of ₹ 90/-. The assessee, therefore, in his books of accounts treated the sum of ₹ 15 lakhs as advance recoverable in cash or kind under the head current assets . The fact that the investement made by the assessee was not an advance nor was the same recoverable has not been disputed by Mr.Murarka before us. Therefore, the treatment given by him to the aforesaid investment was obviously to salvage the damage so that the loss .....

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d in the negative and against the assessee. So far as the second question is concerned, Mr.Murarka has drawn our attention to a judgement in the case of CIT v. Madan Gopal Radhey Lal reported in (1969) 73 ITR 652 wherein the following opinion was expressed : Held, (i) that, at the relevant time, under the Income-tax Act, 1922, issue of bonus shares by capitalisation of the accumulated profits was not treated as distribution of dividend; and it was well settled that bonus shares given by a compan .....

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l asset. Mr.Murarka has also relied on a judgement in the case of CIT v. Associated Industrial Dvelopment Co.(P)Ltd. reported in (1971) 82 ITR 586. Mr.Murarka drawn our attention to the following views expressed by the Apex Court : Whether a particular holding of shares is by way of investment or forms part of the stock-in-trade is a matter which is within the knowledge of the assessee who holds the shares and it should, in normal circumstances, be in a position to produce evidence from its reco .....

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