2010 (1) TMI 115 - SC - Income Tax

Business Loss - Deduction of NCD - deduction of the losses at ₹ 111/- per NCD as a business loss - market value of the shares at the time of issue of NCD held that matter remanded to high court - We expect the High Court to answer the question in accordance with law

Summary

Issues: High Court's disposal of Income Tax Appeals under Section 260-A of the Income Tax Act, 1961.

Analysis:
The Supreme Court, comprising Mr. S.H. Kapadia and Mr. H.L. Dattu JJ., granted leave in the special leave petition and expressed dissatisfaction with the High Court's handling of Income Tax Appeals filed by the Department under Section 260-A of the Income Tax Act, 1961. The Court decided to remit the cases back to the High Court for a fresh consideration in accordance with the law. The main question framed for consideration was whether the Tribunal was correct in directing the Assessing Officer to allow deduction of losses at Rs. 111 per NCD as a business loss. The High Court was directed to also examine the impact of the assessee(s) retaining the detachable warrant and determine if there would be a trading loss if that aspect is considered. The Court highlighted the Department's argument that the High Court overlooked the market value of shares at the time of issuing NCDs, a point disputed by the assessee(s). The Supreme Court refrained from expressing any opinion on the case's merits and instructed the High Court to address the framed question in accordance with the law. Ultimately, the civil appeals were disposed of with no order as to costs.