TMI Blog2017 (4) TMI 813X X X X Extracts X X X X X X X X Extracts X X X X ..... to be continuing its business activities and since these deposits have been made in connection trading activities of the assessee, the co-ordinate benches in assessee's own case for previous AYs have held that the interest income should be treated to incidental business income and accordingly directed the AO to assess the same as business income of the assessee. Assessment of Prior period income - Held that:- The interest income should be in the respective years only, as the AO is not entitled to assess an item of income which does not belong to that year. Accordingly we direct the AO to exclude the income of other years and they may be assessed in the respective years in accordance with law. The TDS credit should also be restricted to the extent of relevant income assessed during the year under consideration and the remaining amount of TDS should be allowed credit in the respective years of assessment. The deduction of prior period expenses may also be considered in the respective years. We order accordingly. The order of Ld CIT(A) is modified accordingly. Disallowance of expenses - assessee did not carry on any business activities - Held that:- As in the earlier paragraphs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein he again disallowed the claim of ₹ 12,27,248/- on the reasoning that the loss has been incurred on account of invocation of shares and lower market rate relating to the shares, which were involved in Securities Scam, 2001. The Assessing Officer has further stated that the assessee has not taken any steps to prove that the loss claimed by the assessee was genuine in nature. 4. In the first appellate proceedings, the learned CIT(A) confirmed the disallowance of loss on the reasoning that the assessee has failed to furnish the relevant details. Aggrieved, the assessee has filed this appeal before us. 5. Learned AR submitted that the loss claimed by the assessee mainly consisted of loss on valuation of shares of Global Trust Bank Ltd. He submitted that the assessee had purchased 1 lakh shares of Global Trust Bank Ltd., during the year ended on 31.3.2001 at ₹ 63 lakhs. The assessee has treated the same as its stock in trade. The assessee has been following the method of valuation of stock as Cost or market price whichever is lower . During the year ended on 31.3.2002, the price of shares of Global trust back fell down and accordingly the assessee valued the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee is following method of valuation of stock at Cost or Market value whichever is less. There appears to be no dispute with regard to the fact that the above said system of valuation of stock has been followed by the assessee consistently over the years. With regard to the valuation of shares of Global Trust Bank Ltd., the assessee has attached stock exchange market quotation as on 31.3.2003 and we noticed that the assessee has valued the stock at the market rate prevailed on that date. 8. We noticed that the only objection of the Revenue in allowing the claim of the assessee was that the impugned shares form part of Securities Scam and hence loss claimed by the assessee cannot be considered to be a genuine loss. However, we notice that the loss claimed by the assessee was not of trading transaction, but on account of valuation of stock as per the method of valuation consistently followed by the assessee. The assessee has also established that it has valued the shares of Global Trust bank Ltd as per the closing rate traded in the stock exchange as at the year end. There is no dispute with regard to the fact that the impugned shares form part of the stock in trade of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase in AY 2002-03 and 2003-04 (ITA No.191/Mum/2008 and ITA No.1135/Mum/2008 dated 19-11-2010). In AY 2002-03 and 2003-04, it has been noted down by the Tribunal that the order of Hon ble Supreme Court has been received in subsequent years and hence it was held that the business of the assessee was not closed in those years. 10. We notice that the Ld CIT(A) has discussed the matters relating to cancellation of registration in paragraph 31 of his order. It is recorded by Ld CIT(A) that the SEBI has passed the order cancelling the certificate of registration granted to the assessee on 16-05-2002. The appeal preferred by the assessee before SAT was dismissed by SAT on 04-05-2007, i.e. after the end of the financial year relating to AY 2005-06. Hence, consistent with the view taken by the co-ordinate benches in the assessee s own cases and group cases referred above, we hold that the loss claimed by the assessee should be allowed. Accordingly we set aside the order passed by Ld CIT(A) on this issue and direct the AO to allow the impugned loss. 11. The next issue contested by the assessee relates to the assessment of interest income of ₹ 10.32 lahs under the head Income from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed credit in the respective years of assessment. The deduction of prior period expenses may also be considered in the respective years. We order accordingly. The order of Ld CIT(A) is modified accordingly. 14. The next issue relates to the disallowance of expenses of ₹ 8,24,409/- made by Ld CIT(A). The first appellate authority disallowed the expenditure claim on the reasoning that the assessee did not carry on any business activities. In the earlier paragraphs, by following the orders passed by coordinate benches, we have held that the assessee should be considered as carrying on business activities. Hence the expenditure claimed by the assessee should be allowed. Accordingly we set aside the order passed by Ld CIT(A) on this issue. 15. The last issue contested by the assessee relates to the applicability of Explanation 73 to the assessee. In AY 2002-03 2003-04 (supra), the coordinate bench of Tribunal has held that the provisions of Explanation 73 would apply to the assessee in that year, since the interest income was directed to assessed as business income. In the instant year also, we have held that the interest income should be assessed as business income. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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