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2016 (10) TMI 589 - ITAT DELHI

2016 (10) TMI 589 - ITAT DELHI - TMI - Applicability of explanation to section 73 - whether the principal business of the assessee is granting of loan and advance? - Losses in speculation business - Held that:- CIT(A) has concluded that the main business of the assessee was of granting of loans and advances. When 99% of assessee’s income was derived from interest on loans and advances, therefore, merely because it was not registered as a NBFC, it could not be concluded that the principal busines .....

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of loans and advances. As the assessee’s case was covered by the second exception to the Explanation to section 73 and consequently the addition made by the AO by treating the loss incurred by the assessee company as speculative loss was deleted. Therefore, do not find any reason to interfere with the finding of ld. CIT(A). - Decided in favour of assessee - Addition u/s 14A - Held that:- As total dividend income received by the assessee was ₹ 38/- and the same had been offered for taxa .....

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ber Appellant by : Shri B. Ramanjaneyulu Sr. DR Respondent by : Shri suresh Kumar Gupta CA ORDER Per S. V. Mehrotra, A. M This is department s appeal against the order dated 29.02.2016, passed by the ld. CIT(A)-7, New Delhi in appeal no. 650/CIT(A)-7/Del/14- 15, relating to A.Y. 2011-12. 2. Brief facts of the case are that during the year under consideration the assessee company was engaged in the business of trading of shares and investment finance. It had filed its return of income, declaring .....

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f appeal: 1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that the principal business of the assessee is granting of loan and advance and therefore explanation to section 73 does not apply, despite the fact that the assessee is admittedly not a NBFC. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of ₹ 57,9191- made by AO in accordance with the provisions of lib-rule 8D r.w.S. 14A of the Incom .....

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and other parties and also in purchase/ sale of shares. It was further submitted that almost 99% of the assessee company s total income comprised of interest income on loans and advances. Thus, it was submitted that primarily the business of the assessee was that of providing loans and advances and earning of interest income and, therefore, the assessee s case fell within the ambit of second exception to section 73 of the Act and, therefore, this could not be treated as loss from speculative bu .....

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tion, no where indicated that the main business of the company was banking or granting of loans and advances. Further, the assessee company was not registered as NBFC and mainly dealt in trading of shares. He, therefore, held that deeming provisions of section 73 were clearly attracted. Accordingly, he treated the loss as speculative business loss and made the addition of ₹ 40,01,814/-. 6. Ld. CIT(A) deleted the addition, inter alia, observing that it is not the requirement of law that com .....

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al issue, which missed the attention of the AO to determine whether the appellant company is mainly engaged in the business of granting of loans and advances was the nature of activities of the appellant as reflected in the Balance sheet and P & L A/c for the year interest income disclosed, amount of loans and advances reported and the capital deployment, as brought in para 3.6 above shows that principal business of the appellant is of granting of loans and advances . 7. He, therefore, held .....

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nces to corporate and other parties. The P & L A/c and Balance sheet of the appellant company discloses major income on account of interest on loans and advances. In the F. Y. 2009-10 loan and advances were to the tune of ₹ 10,71,85,688/- which increased to ₹ 16,12,93,451/- during the year. Similarly, interest income on loans and advances was disclosed at ₹ 66,20,236/- in the last year and at ₹ 64,05,268/- in the current year. Even from the angle of capital deployment .....

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