9911796707
TMI Blog2017 (3) TMI 1384X X X X Extracts X X X X X X X X Extracts X X X X ..... Satnaliwala, Ld. Authorized Representative appeared on behalf of assessee and Shri Sridhar Bhattacharya, Ld. Departmental Representative represented on behalf of Revenue. 2. Solitary issue raised by assessee in this appeal is that Ld. CIT(A) erred in confirming the order of Assessing Officer by sustaining the disallowance of Rs.3.80 crores on account of forfeiture of shares warrants. 3. The facts in brief are that assessee in the present case is a Limited Company and is also a Non-Banking Financial Company registered with Reserve Bank of India. The assessee acquired 50 lakhs share warrant of Electrosteel Castings Limited (ECL for short) from M/s Diwakar Commercials (P) Ltd. (MDCPL for short) on 24.03.2008 at a price of Rs. 76/- per share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receipt and therefore the same cannot be taxable in the hands of ECL. Moreover, the assessee submitted that the tax treatment of the forfeited amount in the hands of ECL cannot be a deciding factor for the disallowance of loss in the hands of assessee. However, Ld. CIT(A) has disregarded the plea of assessee and confirmed the order of AO by observing as under:- "5. I have considered the submission of the appellant and perused the assessment order. I have also gone through the documents filed by the appellant company. It is observed that M/s Electro Steel Castings Ltd. issued a warrant certificate to M/s Diwakar Commercials Pvt. Ltd. for fifty lakh warrants on 19.01.2008. The said warrants were purchased by the appellant company from M/s D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts by the appellant company. It is not known that if ECL already changed the name in the warrant certificate from Diwakr Commercial Pvt. Ltd., to Axis Steels Ltd. on 24.03.2008, as to why letters dated 19.06.2009 and 21.07.2009 were addressed to the original allottee for payment of balance consideration as well as forfeiture of 10% amount. In view of above, I am of the opinion that the loss of Rs. 3.80 crore claimed by the appellant company did not appear to be a genuine loss. Hence, the action of the appellant company did not appear to be a genuine loss. Hence, the action of the AO making disallowance of loss claimed by the appellant company as well as denying of carry forward of loss is upheld. The Ground no. 1 & 2 are dismissed." Being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above has been disallowed on different reasons. Firstly, the profit amount was not offered to tax by ECL. Secondly, the demand was raised by ECL to the original allottee of share warrant i.e. MDCPL by ECL. Admittedly, the loss incurred by assessee which was admitted by AO but the same was rejected on the ground that ECL has not offered to tax. Here, it is pertinent to note that what will be the tax treatment of the forfeited amount in the hands of ECL is not the concern of the AO whether it is taxable receipt or revenue receipt. The AO has to see the transactions and its effect in the hands of the assessee. Therefore, in our considered view, the tax treatment in the hands of ECL cannot be a deciding factor for the loss incurred and subsequ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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