TMI Blog2020 (6) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... nvestment must be considered he carrying amount of the long-term investment is typically the cost of such an investment. However, if there is a permanent reduction in the value of the long-term investment, the carrying amount of such an investment is also reduced. Such a reduction is charged to P L statement. Such a reduction in the carrying amount is reversed when there is an increase in the value of such an investment or the reasons that lead to a reduction in its carrying amount do not exist anymore. Apparently as per accounting policy and Notes to Accounts also the investments in the above company are long-term investments. No infirmity in the orders of the lower authorities and confirmed their action. - Decided against assessee. - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [ The ld AO] at a total taxable income of ₹ 11699849/- on 07.03.2014. The ld AO disallowed a sum of ₹ 60 lacs, which is only dispute in this appeal. 4. The assessee has written off ₹ 6179031/- and debited the same to the profit and loss account. Out of the above sum, assessee has written off an amount of ₹ 60 lacs in respect of its equity investments in Twenty First Century Battery Ltd. The above sum was related to the investment made in the earlier years as equity capital in the said company. Said company was to engage in the manufacturing of Ion Lithium Automobile batteries. It was also shown as an investment in its balance sheet. The assessee claimed that the investment was made by the assessee and was written ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e No. 99 of the paper book, which is part of the annual accounts of the assessee for FY 2010-11 wherein, in the note to the account it is mentioned that the assessee invested ₹ 60 lacs as equity participation in the above company. It is also mentioned that above company s assets have been sold under the SARFASI Act. Thus in the financial statements, there is a permanent diminution value of investment and hence it has been written off during the year. The claim of the assessee is that write off the business investment is allowable as business loss and not a capital loss. He further relied upon the decision of the coordinate bench in DCIT Vs. Gujarat Small Industries Corporation [. 4 SOT 239], decision of the Hon ble Bombay High Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttery at Chandigarh. The assessee agreed to advance financial assistance in the form of subscription of 5 lakhs equity shares of that company at the face value of ₹ 10 each. By that agreement, the assessee acquired the voting rights in the above company as equity shareholders in accordance with the Companies Act, 1956. In the event of disinvestment by the assessee, the first option was available with the promoters of that company. The assessee had also right of off appointment of nominee director. The assessee said that the above investment is in terms of Clause 5 of its memorandum. Clause 5 of the memorandum speaks as under:- 5. To take or otherwise acquire and hold shares in any other company having objects, altogether or in pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld it as capital loss. We also of the view that in the above facts and circumstances the loss booked by the company is merely an accounting loss. Further, the loss is as investment , which was invested by the assessee as a capital asset. It was also disclosed in the balance sheet as an investment. Further, to qualify as a business loss it is necessary that such loss should have been incurred during the year. The unit was sold and closed since long back as mentioned in the annual accounts; the loss also does not qualify even otherwise as allowable business loss during the year as assessee did not prove that such loss has been incurred during the year. The reliance on the decision of DCIT Vs. Gujarat Small Industries Corporation [supra] does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... classified into long-term investments and current investments. A current investment refers to an investment that is readily realizable and is held for not more than one year from the date on which such an investment is made. Long-term investment refers to an investment other than the current investment even though such investments are readily marketable. To determine the carrying amount for current investments to be stated in the balance sheet, the lower of cost or fair value of such an investment must be considered. he carrying amount of the long-term investment is typically the cost of such an investment. However, if there is a permanent reduction in the value of the long-term investment, the carrying amount of such an investment is also ..... X X X X Extracts X X X X X X X X Extracts X X X X
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