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TMI Blog2020 (6) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... not allowed to the assessee as business loss holding that it is in the nature of capital loss. 2. The assessee has raised the following grounds of appeal:- "1. That on the facts and circumstances of the case and in law, the ld CIT(A)-6 has erred by upholding the decision of the ld AO, that the claim for write off of business investment as loss of Rs. 60,00,000/- was not allowable, as the same was in the nature of a Capital Loss and not Business Loss." 3. The brief facts of the case shows that the assessee is a public limited company formed by the Ministry of Science and Technology, Govt. of India and is involved in development, promotion and commercialization of technologies. It filed its e-return of income @ Rs. Nil on 29.09.2011 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred to detailed paper book and drawn our attention to the memorandum of association. According to him, the object of the company covers the investment in certain company. He specifically referred clause No 5 of the memorandum, which authorizes the assessee to acquire and hold shares in any other company, if the acquisition of such shares are likely to promote further or benefit the business or interest of the company. He further referred to page No. 56 which is an investment agreement dated 31.03.2000 between the assessee and Twenty First Century Battery Ltd, where assessee has participated into the equity of the company as co-promoter. The assessee provided the advance financial assistance to that company in the form of subscription of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see to invest in such companies. He also referred to clause 5 of MOA and submitted that it is for investment in like object entity and not to support manufacturing. Hence, the order of the lower authorities was supported. 8. We have carefully considered the rival contentions and perused the orders of the lower authorities. Clearly, the assessee is set up with the object of development and exploitation of various inventions, patents and other processes in the public interest. It is also authorised to enter into the various other forms for development of inventions etc. As per investment agreement, dated 31.03.2000 with Twenty First Century Battery Ltd the assessee co-promoted the above company and provided financial assistance for setting u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there is permanent diminution in the value of investment hence; such investment is written off during the year. Accordingly, in the profit and loss account the assessee has written off the above sum under the head of 'other expenses' in schedule 'O'. It is apparent that the above investment does not qualify in clause 5 of the memorandum of the company. That clause allows investment in any other company, which has a similar object. The Twenty First Century Battery Ltd wanted to set up the facilities for manufacturing of certain batteries for which financial assistance was provided by the assessee. The company went into liquidation, all the assets of the company were sold and the investment made by the assessee in that company was not h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares. The diminution in the value of the assessee was stated to be a business loss is also devoid of any merit because it can only apply to the long-term investment. Only in long-term investment, the provision for permanent diminution is required. The current investment of the above sum would have been always been valued at the end of each year at the lower of cost and fair market value. Looking form the aspects of the accounting as assessee has heavily relied on the accounting policy, as per accounting standard 13 for accounting of investments classified investments in two broad categories, (1) Current investments and (2) Long term investments. Thus, The financial statement of an enterprise presents fixed assets, investments and current ..... X X X X Extracts X X X X X X X X Extracts X X X X
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