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2018 (4) TMI 744

incurred by the assessee, on not subscribing to the full value of the shares. - The assessee has filed the copies of the balance sheets along with the relevant schedules to prove that the assessee has been trading in shares and has been treating the shares as current assets all along. Even before the AO, the assessee had stated to be a trader in shares and therefore, the treatment of the loss on forfeiture of shares is correctly accepted by the AO as revenue loss. Thus, the AO has accepted one of the possible views and there is no erroneous application of law, making the assessment order erroneous and prejudicial to the interest of revenue. We find that the CIT has not considered this issue. We accordingly set aside the order of CIT u/s 263 and restore the order of the AO dated 30.03.2015. - ITA No.893/Hyd/2017 - Dated:- 13-4-2018 - Smt. P. Madhavi Devi, Judicial Member And Shri B. Ramakotaiah, Accountant Member For The Assessee : Shri Sunil Kumar Jain For The Revenue : Shri K. Srinivas Reddy DR ORDER Per Smt. P. Madhavi Devi, J.M. This is assessee s appeal for the A.Y 2012-13 against the order of the learned Pr. CIT-2, Hyderabad, dated, 22.02.2017 passed u/s 263 of the Act. 2 .....

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thorities below, submitted that the assessee was in the business of granting of loans and advances and in the course of its business, had purchased 1,00,000 preferential warrants of M/s. Sankhya Infotech Ltd to be converted into shares @ ₹ 32.03 per share and had paid 25% of the amount and since the share price of M/s. Sankhya Infotech Ltd came down to ₹ 24.02 per share subsequently, and in order to avoid further losses, the assessee company had not converted the warrants into shares and ₹ 8,00,750 already paid to M/s. Sankhya Infotech Ltd was forfeited and the assessee has claimed it as revenue expenditure. He submitted that all these details were examined by the AO during the assessment proceedings and therefore, there cannot be a case of non- application of mind by the AO. Therefore, according to him, the assessment order is not erroneous and therefore, cannot be revised u/s 263 of the Act. According to him, both the conditions of the assessment, being erroneous and also prejudicial to the interests of the Revenue, have to be satisfied for invoking the provisions of section 263 of the Act. Further, even on merits of the issue, the learned Counsel for the assess .....

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failed to deposit the balance amount of ₹ 83,46,000. In this view of the matter, the amount of ₹ 32,50,000 deposited towards share application money is forfeited. 7. To decide the question of law as formulated herein above, it is necessary to look into the definition of transfer as appearing in section 2(47) of the Act, relevant portion thereof is reproduced herein below: 2.(47) 'transfer, in relation to a capital asset, includes,- (i) the sale, 'exchange' or relinquishment of the asset; or (ii) the extinguishment of any rights therein; or (iii) the compulsory acquisition thereof under any law; or (iv) in a case where the asset is converted by the owner thereof into, or is treated by him as, stock-in-trade of a business carried on by him, such conversion or treatment; 8. The Tribunal has considered the meaning of the word allotment , as appeared in the Guide to the Companies Act, 1956. The same is reproduced herein below : What is termed 'allotment is generally neither more nor less than the acceptance by the company of the offer to take shares. To take the common case, the offer is to take a certain number of shares or such a less number as may be allot .....

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this view of the matter, the Tribunal was justified in holding that it would amount to short-term capital loss to the assessee. No other point was urged before us . 9. The learned DR also has relied on the judgment of the Apex Court in the case of CIT vs. Amitabh Bachchan (Supra) that even if the AO made certain enquiries, but if he makes erroneous assumptions and do not carry out the enquiries which are required, the assessment order becomes erroneous. The relevant portion of the judgment is reproduced hereunder: 20. An argument has been made on behalf of the assessee that notice under Section 69-C was issued by the Assessing Officer and thereafter on withdrawal of the claim by the assessee the Assessing Officer thought that the matter ought not to be investigated any further. This, according to the learned counsel for the assessee, is a possible view and when two views are possible on an issue, exercise of revisional power under Section 263 would not be justified. Reliance in this regard has been placed on a judgment of this Court in Malabar Industrial Co. Ltd. vs. CIT[3] which has been approved in Commissioner of Income-tax vs. Max India Ltd. [4] 21. There can be no doubt that .....

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