TMI Blog1997 (2) TMI 567X X X X Extracts X X X X X X X X Extracts X X X X ..... l charges. The details are as follows :- ₹ 4,000 Professional fees for tax work for the year ended 30-6-1985 ₹ 7,500 Audit fee for the year ended 30-6-1985 ₹ 5,000 Tax Audit fee for the earlier accounting year, i.e., 1983-84. 3. The CIT (Appeals) mentioned that even under the mercantile system of accounting, deduction for a liability can be allowed only when the liability arises. We find in respect of the above items, the services were rendered by the concerned professional and so we have to hold that the liability for making the payment has arisen even if the relevant bills were not received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,000 cannot be deemed to be a speculation loss. It was also claimed that the Board of Directors of the assessee-company passed a resolution at the time of the acquisition of 1,00,000 shares and as per the terms of the said resolution, acquisition of the said shares was only by way of investment and not by way of a trading transaction. This argument did not impress the Revenue authorities. 6. Before us, the learned counsel for the assessee has pleaded that the provisions of the Explanation to section 73 are attracted only when any part of the business of the company consists in the purchase and sale of shares of other companies and not when there is a solitary transaction of purchase and sale, whether by way of investment as claimed or b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erstwhile section 80-CC and pointed out that there is an internal evidence in the I.T. Act itself to hold that there is a difference between the acquisition of the shares and purchase of shares. He has also relied on the decision of the Supreme Court in the case of Morgan Stanley Mutual Fund v. Kartik Das [1994] 4 SCC 225 in support of the proportion that the shares before their allotment were not goods and so, the applicant for the shares or units cannot be regarded as having purchased goods so as to be covered by Consumer Protection Act, 1986. He has also relied upon the decision of the Mumbai High Court in the case of CIT v. Indian Commercial Company (P.) Ltd. [1977] 106 ITR 465 in support of the proposition that a single transaction, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Company (P.) Ltd. (supra) may not be quite apposite because in that decision, the Hon ble Mumbai High Court was considering only the provisions of Explanation to section 28 which are differentially worded. Nonetheless, we have to allow this appeal because in terms of the decision of the Apex Court cited supra, there is only acquisition of shares and not purchase of shares, inasmuch as, the 1,00,000 shares in question were obtained only by way of subscription to a public issue. Further, we are of the view that a single transaction of purchase and sale of shares cannot attract the provisions of the Explanation to section 73, because it is attracted only when a part of the business of an assessee consists of purchase and sale of shares of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18,834 only a sum of ₹ 4,000 related to expenditure on food and beverages. 2. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in ignoring the provisions of Explanation 2 to section 37(2A) and holding that the balance amount of ₹ 14,834 spent on small gifts items given in meetings were not in the nature of entertainment as per section 37(2A). 10. The learned counsel for the assessee has mentioned that the CIT (Appeals) has deleted the addition in question on the basis of an estimate. The Assessing Officer has given a finding that the preliminary scrutiny reveals that the real nature of the expenditure of ₹ 14,834 is of entertainment. He has worked the disallowance as follows :- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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