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2016 (3) TMI 413 - ITAT AHMEDABAD

2016 (3) TMI 413 - ITAT AHMEDABAD - TMI - Addition made on account of accrued interest on OFCPNs/DDBs - Held that:- CIT(A) in his order observed that this issue is squarely covered in favour of the assessee by the decision of Co-ordinate Bench of this Tribunal in the case of Kisan Discretionary Family Trust[2007 (11) TMI 622 - ITAT AHMEDABAD ] - Decided in favour of assessee

Disallowance of loss on sale of Optionally Fully Convertible Promissory Notes - Held that:- The assessee conver .....

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le in the year when sale was made and loss from the date of conversion to the date of sale was to be treated as business loss, which assessee claimed. The valuation on date of conversion into stock in trade was taken on the basis of report of Chartered Accountant. There was no contrary sale price available on the date of conversion. When the purchase & sales are genuine and purchases & sale prices are accepted, the parties are independent and not related to the assessee u/s.40A(2)(b) of the Act .....

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rightly deleted the disallowance in question, because the dividend income, agricultural income and other incomes of the assessee having found no nexus with the expenses incurred by the assesseecompany. The assessee-company is a member of Association of Persons (AOP) and AOP is a separate legal entity. The assesseecompany received share of profit from AOP. The expenses incurred by the assessee-company have no direct or indirect nexus for receipt of share of profit from AOP and the profit on sale .....

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ssessee - ITA Nos. 54 & 55/Ahd/2009 - Dated:- 1-2-2016 - SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER For The Revenue : Shri R.I. Patel, CIT-DR, Shri A.K. Panday, Sr-DR For The Assessee : Shri S.N. Soparkar, AR ORDER PER SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER: These two appeals have been filed by the assessee against the separate order of the Commissioner of Income-Tax (Appeals)-II, Ahmedabad dated 16.10.2008 and 17.10.2008 for Assessment Years 2004-05 .....

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A)-XI, Ahmedabad has erred in law and on facts in deleting the addition made on account of disallowance of loss on sale of OFCPNs of Ideal Petro Products and Shree Rama Polysynth Pvt Ltd of ₹ 13,05,16,000/- 3. The Ld. Commissioner of Income-tax (A)-XI, Ahmedabad has erred in law and on facts in deleting the addition made on account of disallowance of interest expenditure u/s 14A of the Act of ₹ 3,64,050/-. 4. On the facts and in the circumstances of the case, the Ld. Commissioner of .....

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nt of accrued interest on OFCPNs/DDBs of ₹ 6,98,276/-. The Assessing Officer made the additions of ₹ 3,49,138/- each on the investment of OFCPNs of Adesh Finstock Pvt Ltd & Akshat Finstock Pvt Ltd as accrued interest. The CIT(A) in his order observed that this issue is squarely covered in favour of the assessee by the decision of Co-ordinate Bench of this Tribunal in the case of Kisan Discretionary Family Trust in appeal No.1850/Ahd/2007 for AY 2003-04. Agreeing to the contention .....

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Ltd. of ₹ 13,05,16,000/-. The assessee made investments in OFCPNs of following three companies:- i) Ideal Petroproducts Pvt Ltd ii) East West Polyart Pvt Ltd iii) Shree Rama Polysynth Pvt Ltd The investments were treated as stock in trade as on 01.04.2003. The conversion was made aggregating to ₹ 47,88,26,000/- as per the following details:- 4.1 The assessee-company sold part of these assets on 24.03.2004 and the details of sales and closing stock of these assets are as under:- The .....

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asset into, or its treatment by him as stock-in-trade of a business carried on by him shall be chargeable to income-tax as his income of the previous year in which such stock-in-trade is sold or otherwise transferred by him and, for the purposes of section 48, the fair market value of the asset on the date of such conversion or treatment shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of the capital asset." 4.3 The assessee claimed .....

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the First Appellate Authority, wherein various contentions were raised on behalf of the assessee and having considered the same, CIT(A) allowed the claim of the assessee, which has been opposed on behalf of the Revenue, inter alia, submitting that the CIT(A) erred in law and on facts in deleting the addition made on account of disallowance of loss on sale of OFCPNs of Ideal Petro Products and Shree Rama Polysynth Pvt Ltd of ₹ 13,05,16,000/-. On the other hand, ld. Authorized Representative .....

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e sale claimed to be genuine. The sale was made to independent parties and there is nothing on record to suggest that they were related to the assessee as prescribed u/s 40A(2)(b) of the Act. On these purchases and sale, the assessee suffered loss as indicated above. There was no evidence on record to suggest that the sale was made at lower price than the market rate and the balance amount was received back by the assessee. The assessee converted the investment into stock in trade and conversion .....

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ate of conversion to the date of sale was to be treated as business loss, which assessee claimed. The valuation on date of conversion into stock in trade was taken on the basis of report of Chartered Accountant. There was no contrary sale price available on the date of conversion. When the purchase & sales are genuine and purchases & sale prices are accepted, the parties are independent and not related to the assessee u/s.40A(2)(b) of the Act and there was no evidence that suppressed sal .....

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ide discussion at paragraph 7 and 7.1 of the assessment order disallowed ₹ 3,64,050/- u/s.14A of Income-tax Act. The Assessing Officer considered that the following are the expenses which are incurred for earning all types of income, whether taxable or exempt:- Accounting charges Rs.16,00,000 Rates & Taxes ₹ 4,068 Payment to Auditors ₹ 2,68,000 Consultation expenses ₹ 4,320 Other expenses ₹ 80,398 Arrangement fees ₹ 1,38,400 Other expenses ₹ 1,80,279 .....

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income on the basis of following formula: Rs.3,31,93,935/26,85,56,550 x 2945363 = ₹ 3,64,050; and disallowed ₹ 3,64,050/- u/s. 14A of the Income-tax Act. 5.2 Matter was carried before the First Appellate Authority, wherein various contentions were raised on behalf of the assessee and having considered the same, the CIT(A) observed that there was no direct expenses relatable to earning of dividend income, agricultural income and other incomes and therefore, the disallowance u/s 14A wa .....

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