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Classic Shares and Stock Broking Services Ltd. Versus ACIT CC-40, Mumbai

Disallowance of loss arising out of share transactions - Held that:- There is no dispute with regard to the fact that the impugned shares form part of the stock in trade of the assessee. Even if the shares under consideration formed part of shares acquired during the stock scam period, yet the fact remains that the loss claimed by the assessee relates to valuation of closing stock and the loss has arisen on account of diminution in the value of stock only. Since the valuation of stock in trade h .....

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ome from Other sources OR Income from Business - Held that:- Since the assessee was held 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 .....

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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, 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 allowe .....

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matter may be set aside to the file of the AO for examining the applicability of Explanation 73 to the assessee during the instant year. Hence the above said provisions would apply to the assessee as the assessee did not have income from other sources. However, if the assessee is able to demonstrate before the AO to his satisfaction that the provisions would not apply to the assessee, the AO may decide the issue in accordance with the law. - I.T.A. No. 1617/Mum/2017, I.T.A. No. 6876/Mum/2008 - .....

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l first take up the appeal relating to A.Y. 2003-04, wherein the assessee is contesting the disallowance of loss of ₹ 12.27 lakhs arising out of share transactions. 3. We have heard the parties and perused the record. The assessee is engaged in the business of share broking, share trading and investing in shares. The assessee belongs to Ketan parekh group. This is the second round of proceedings. In the first round, the Tribunal had set aside the issue of disallowance of business loss of & .....

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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 .....

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02-03. During the year ended on 31.3.2003, i.e. the year under consideration, the market value of the shares of Global Trust Bank Ltd. went down further and accordingly the assessee valued shares at ₹ 13,70,000/- as on 31.3.2003 and claimed loss of ₹ 12,65,000/- towards diminution in the value of shares. The learned AR submitted that the assessee has been following above said method of valuation of stock consistently over the years. He also submitted that the method of valuation of s .....

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and by Hon ble Supreme Court in the case of Uco Bank (240 ITR 355) (SC). Accordingly he submitted that the impugned loss has been claimed by the assessee in accordance with the method of accounting/method of valuation regularly followed by the assessee. The Learned AR also submitted that the loss of ₹ 36,65 lakhs claimed by the assessee in A.Y. 2002-03 was disallowed by the Assessing Officer in that year, but the same was allowed by the learned CIT(A) in the order passed by him on 13.1.201 .....

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unt of valuation of securities cannot be considered as genuine loss. Accordingly he submitted that the learned CIT(A) was justified in confirming the disallowance of loss. 7. We have heard the rival contentions and perused the record. We noticed that the 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 .....

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ce 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 the assessee. Even if the shares under consideration f .....

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are of the view that the impugned loss should be allowed while computing the income of the assessee. Accordingly, we set aside the order passed by the learned CIT(A) and direct the Assessing Officer to allow the loss of ₹ 12,27,248/- claimed by the assessee. 9. We shall now take up the appeal filed by the assessee for A.Y. 2005-06. The first issue urged therein relates to disallowance of ₹ 13.70 lakhs arising out of valuation of shares of Global Trust Bank Ltd, which was held by the .....

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ancelled by SEBI. It was brought to our notice that the assessee had challenged the cancellation in SAT and thereafter before Hon ble Supreme Court. The Ld A.R submitted that the order of Hon ble Supreme Court was received much later to the year under consideration. He further submitted that an identical issue was considered by the co-ordinate bench in AY 2007-08 (ITA No.5244/Mum/2011 dated 26-09- 2012) and held that the assessee should be considered to be carrying on business. In this regard, t .....

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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 wa .....

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377; 10.32 lahs under the head Income from Other sources as against the claim of the assessee that the same should be assessed under the head Income from Business. The Ld CIT(A) has noted in paragraph 8 of his order that the above said interest has been earned out of fixed deposits lying with BSE, NSE and CSE as security deposit for base minimum capital and for other requirements of the Exchanges. We notice that an identical issue was considered by the co-ordinate benches in assessee s own case .....

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ed in the case of Vellore Electrical Corporation Ltd (243 ITR 529). By following the decision rendered by the co-ordinate benches in the assessee s own case, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to assess the interest income as business income of the assessee. 12. The next issue contested by the assessee relates to assessment of Prior period income. We notice that the assessee did not get the interest accrued details on the deposits held by it from banks and .....

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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 deduc .....

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