9911796707
TMI Blog2016 (12) TMI 673X X X X Extracts X X X X X X X X Extracts X X X X ..... year 2005-06 have been raised: 1. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the assessee was entitled to account for only the additional finance charges on a cash basis, while it was otherwise following the mercantile the system of accounting and also accounting for the very same transaction on a mercantile basis under the Company Law? 2. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the assessee could be permitted to follow the mercantile system of accounting for the purpose of Company Law and a Hybrid system for the purposes of Income Tax? 3. Whether on the facts and in the circumstanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Nos.1, 2 and 3 are covered by a decision of this Court, in T.C.A.No.1422 of 2010, of even date, in favour of the assessee and Question No.5, in favour of the Revenue and against the assessee. Adverting to question No.4, the brief facts are as follows:- The assessee / respondent is a Non Banking Financial Company engaged in the business of hire purchase, financing, leasing and investments. By virtue of guidelines issued by the Reserve Bank of India, Non Banking Financial Companies (NBFC) were required to concentrate on core financing business and exit from manufacturing and other activities. The assessee consequently wished to divest its shareholding in Shriram Auto Components (Madras) Limited (name changed to Rambal Limited) and Shripe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31.03.04, it had incurred a huge loss of Rs. 1,14,59,899/-. Due to loans, there has been erosion in share capital. We had acquired 683600 shares in this company for Rs. 68,36,000/- during the year ended 30.06.96 and we had not received any return from this investment. Further due to the guidelines of Reserve Bank of India, we, a Non Banking Financial Company had to concentrate on our core financing business and had to exit from manufacturing activities. Though the equity shares of the company have been listed in the Madras and Ahmedabad Stock Exchanges, there were no transactions in the stock exchanges since April 2002. Hence there was no market for the shares. In these circumstances, we had to sell the shares @ Re.1 per share and exit from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as in order. The Tribunal particularly notes that though a suspicion had been raised by the Assessing Officer regarding the valuation of the shares, nothing was placed on record to substantiate such suspicion or provide a more acceptable alternative. It is, in this background, that the Revenue is now before this Court. 8. We are of the view that the Assessee had provided an acceptable justification for both transactions of sale of shares including the aspect of valuation of the shares. The Assessing Authority, while accepting the genuineness of the transactions, merely raises a vague suspicion relating to the valuation adopted by the assessee. This, by itself, is insufficient to reject the claim of capital loss. While the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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