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The Asstt. Commissioner of Income-tax Company Circle II (3) Chennai Versus M/s Integrated Enterprises Ltd

Valuation of the stock - Held that:- Admittedly, the assessee valued the closing stock in the earlier assessment years at the cost price. During the year under consideration the assessee valued the same at market price. Due to change of the method, the Assessing Officer disallowed the diminution in the value of shares to the extent of ₹ 75.90 lakhs. This Tribunal is of the considered opinion that as rightly submitted by the assessee, the assessee has option to value the shares either at co .....

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ments (P) Ltd. (2001 (1)240 - ITAT PUNE ) by majority view found that an asset cannot be acquired first as non-capital asset at one point of time and again as a capital asset at a different point of time. The Tribunal found that there can be one acquisition of asset for the first time irrespective of the character at that point of time. Therefore, by majority opinion it was found that what is relevant for the purpose of capital is the cost of acquisition and not the date at which it became the c .....

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ent year under consideration. Therefore, the expenditure for earning the exempted income has to be estimated on a reasonable basis. The CIT(A), after taking into consideration all the circumstances and facts available on record, estimated the expenditure at 2% of the dividend income. In those circumstances, this Tribunal do not find any reason to interfere with the order of the CIT(A). Accordingly the same is confirmed. - Disallowance of advertisement expenses - Held that:- The entire cost o .....

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on, there was hike in the income of the assessee from ₹ 5,52,66,000/- to ₹ 12,18,65,000/- during the year under consideration. Therefore, as rightly found by the CIT(A), there was a nexus between the payment of advertisement charges and the business of the assessee. Hence, this Tribunal do not find any reason to interfere with the order of the CIT(A). Accordingly, the same is confirmed. - I.T.A.Nos.1837 & 1841/Mds/2011 - Dated:- 9-12-2015 - SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SH .....

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valuation of the stock. 3. The Assessing Officer found that the assessee has deviated the method of valuation of the closing stock and provided ₹ 75.90 lakhs towards diminution in value of the closing stock. The assessee explained before the Assessing Officer that the closing stock has to be valued at the cost or market price whichever is less. During the year under consideration there was considerable depreciation on the market value of many shares due to scam in the market. The Assessing .....

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in the market, the value of the shares was considerably depreciated, therefore, the assessee thought it fit to value the closing stock at market price than the cost price. Since there was no trading account, the diminution in value was provided in the Profit & Loss Account. According to the ld. Counsel, the assessee has the option to value the closing stock either at market price or at the cost price whichever is lower. Therefore, merely because the assessee has valued the shares at market p .....

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the cost price. During the year under consideration the assessee valued the same at market price. Due to change of the method, the Assessing Officer disallowed the diminution in the value of shares to the extent of ₹ 75.90 lakhs. This Tribunal is of the considered opinion that as rightly submitted by the ld. Counsel for the assessee, the assessee has option to value the shares either at cost price or at market price, therefore, the assessee opted to value the shares at market price. Since .....

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in-trade upto 31.3.1999. Subsequently, it was converted into investment to the extent of 20 lakhs shares in the year ended 31.3.2000. The assessee has offered the profit on conversion to the extent of ₹ 9,82,499/- as income for the assessment year 2000- 01. Subsequently, the assessee has sold 3,00,000 shares of City Union Bank during the year under consideration. The assessee computed the cost inflation index by taking the assessment year 1998- 99. However, the Assessing Officer adopted th .....

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he shares from stock-in-trade to investment, according to the ld. DR, the price in the year in which the conversion was made has to be taken into consideration and not the initial year of purchase. 8. On the contrary, Shri S. Sridhar, ld. Counsel for the assessee submitted that the dispute before this Tribunal is not the cost of acquisition of the shares. The dispute is with regard to cost of inflation index. Therefore, the cost of inflation index of the year in which the assessee initially acqu .....

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et at a different point of time. According to the ld. Counsel, there will be one acquisition of the asset when the assessee initially acquires it irrespective of its character at the point of time. Therefore, merely because the assessee changed the character of the asset from stock-in-trade to investment, it does not matter when it comes to cost of inflation index. Therefore, the CIT(A), by following the decision of the Pune Bench of this Tribunal has rightly allowed the claim of the assessee. 9 .....

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tal asset at a different point of time. The Tribunal found that there can be one acquisition of asset for the first time irrespective of the character at that point of time. Therefore, by majority opinion it was found that what is relevant for the purpose of capital is the cost of acquisition and not the date at which it became the capital asset. The Tribunal has considered the provisions of sec. 55 of the Act and also the judgment of the Apex Court in CIT vs Bai Shrinbai K Kooka, 46 ITR 86. Sin .....

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hat the first issue arises for consideration is disallowance of 2% of the dividend income earned by the assessee. 12. The ld. DR submitted that the assessment year under consideration is 2007-08, therefore, Rule 8D is not applicable. However, a reasonable estimate has to be made since the assessee has incurred expenditure for earning the income which does not form part of the total income. 13. We heard Shri S Sridhar, ld. Counsel for the assessee also. According to the ld. Counsel, admittedly Ru .....

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s not applicable for the assessment year under consideration. Therefore, the expenditure for earning the exempted income has to be estimated on a reasonable basis. The CIT(A), after taking into consideration all the circumstances and facts available on record, estimated the expenditure at 2% of the dividend income. In those circumstances, this Tribunal do not find any reason to interfere with the order of the CIT(A). Accordingly the same is confirmed. 15. The next issue arises for consideration .....

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icer called for explanation for marked increase in the expenses, the assessee could not explain properly. However, the Assessing Officer found that M/s Alpha Systems Ltd. is a group concern of the assessee. The magazine said to be published by M/s Alpha Systems Ltd was to be exclusively for the use of the assessee, therefore, there is no question of any payment for publicity of the magazine. According to the ld. DR, the assessee is engaged in facilitating Tax Index Number(TIN) which does not req .....

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isement, the assessee has to necessarily pay to M/s Alpha Systems Ltd. After the publication, the income of the assessee was increased to ₹ 12,18,65,000/-. In earlier assessment year the income was at ₹ 5,52,66,000/-. Therefore, according to the ld. Counsel, there was an immediate nexus between the payment of advertisement expenses to M/s Alpha Systems Ltd and the business of the assessee. According to the ld. Counsel, the CIT(A) has rightly allowed the claim of the assessee u/s 37 o .....

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