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2013 (6) TMI 247 - AT - Income TaxDiminution in the value of the shares - disallowance of the expenditure - Held that - It is not in dispute that the assessee has made investments in another company i.e. M/s. Flexcel International Pvt. Ltd and has invested a sum of Rs. 54,28,500/-. Plea of the assessee that due to sharp decline in the value of its investments, the value of shares have diminished substantially, therefore the same should be allowed as business expenditure cannot be accepted because it is not supported by any precedence. Undisputedly, the assessee has made investments and it is only the value of its investments that have fallen down which is nothing but a notional capital loss. That being the fact of the matter it cannot be allowed as Revenue expenditure. Against assessee. Addition on the basis of TDS certificate - Held that - The whole dispute revolves around whether the assessee has shown the impugned sale in its earlier years return. It is the say of the lower authorities that the assessee has not filed necessary details whereas it is the contention of the assessee that the Revenue authorities did not appreciate the facts of the case properly. In the interest of justice and fair play, this issue needs further verification in the light of the documents submitted by the assessee before us. The assessee is directed to substantiate its claim by filing necessary documentary evidences before the AO. In favour of assessee for statistical purposes. Liability for Fringe Benefit tax - Held that - In the light of the legislative intent for bringing FBT in statute, the expenditure incurred by the assessee cannot be termed as expenditure on staff welfare inviting the deeming provision of FBT. The expenditure incurred by the assessee is a one-time affair and is not in the nature of recurring expenditure and therefore cannot be said to be out of consideration for employment. Therefore, no merit in levying FBT on such expenditure. In favour of assessee.
Issues:
1. Disallowance of expenditure claimed on diminution in the value of shares. 2. Addition based on TDS certificate discrepancy. 3. Assessment of amount as liable for Fringe Benefit tax. Issue 1: Disallowance of Expenditure on Diminution in Value of Shares: - The assessee claimed Rs. 30,34,000 as expenditure on diminution in the value of shares of a company. - The Assessing Officer disallowed the claim, stating that investments are capital in nature and cannot be treated as stock-in-trade. - The CIT(A) upheld the disallowance, considering the loss as notional capital and not allowable as revenue expenditure. - The Tribunal confirmed the CIT(A)'s decision, stating that the diminution in value of investments is a notional capital loss and cannot be allowed as revenue expenditure. - The Tribunal dismissed the appeal related to this issue. Issue 2: Addition based on TDS Certificate Discrepancy: - The AO added Rs. 9,31,890 to the total income based on a discrepancy in sales figures between the TDS certificate and the details of sales filed by the assessee. - The CIT(A) upheld the addition due to lack of documentary evidence supporting the assessee's claim. - The Tribunal found the issue needing further verification and directed the AO to re-examine the claim with necessary documentary evidence. - The Tribunal allowed the appeal for statistical purposes, restoring the issue to the AO for fresh examination. Issue 3: Assessment of Amount Liable for Fringe Benefit Tax: - The AO assessed Rs. 14,07,375 as liable for Fringe Benefit Tax based on flood relief expenses. - The CIT(A) upheld the assessment, considering the expenses as incurred for employees' welfare. - The Tribunal disagreed, stating that the expenditure was a one-time affair and not in the nature of recurring employment consideration, thus vacating the lower authorities' findings and directing not to levy FBT on the expenditure. - The Tribunal allowed the appeal against the assessment of FBT. In conclusion, the Tribunal partially allowed the appeal related to the disallowance of the expenditure on diminution in the value of shares and the assessment of FBT, while restoring the issue of TDS certificate discrepancy for further verification.
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