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2014 (4) TMI 318 - HC - Income TaxRejection of claim Disallowance of capital loss - Inter-corporate Deposit - Whether the claim is qualified as capital asset u/s 2(14) of the act and transferred as per section 2(47) of the Act Held that - The Authorities found that the Assessee has written off the advances of the sum and claimed the same as a capital loss to be carried forward for set off for subsequent years - The details have been noted and equally the relevant legal provisions the Tribunal found that there is no evidence to show that it is a case of an ICD because before the AO it was claimed that the loss was on account of writing off of the advances given to M/s Bharat Starch Industries Limited and M/s JCT Limited - Then it was claimed that the advances were written off - There is no material to show that the case of ICD has been made out - The loans cannot be termed or construed as capital assets - the findings of fact rendered in the peculiar factual backdrop do no give rise to any substantial question of law for consideration Decided against Assessee.
Issues:
Challenge to order of Income Tax Appellate Tribunal regarding capital loss claimed for Assessment Year 2002-2003. Analysis: The case involved an Appeal challenging the order of the Income Tax Appellate Tribunal regarding the claim of a capital loss for the Assessment Year 2002-2003. The Appellant, a company engaged in manufacturing and engineering, had claimed a capital loss of Rs.34,52,77,992/, which was to be carried forward for set off in subsequent years. The dispute arose from the rejection of this claim by the Respondent, citing that the advances written off were not considered capital assets and did not involve any transfer as per the Income Tax Act, 1961. The Assessing Officer disallowed the claim, leading to an Appeal before the Commissioner of Income Tax (Appeals) and subsequently to the Tribunal. The Appellant argued that the advances written off should be considered as Inter-corporate Deposits (ICDs), which are capital assets under Section 2(14) of the Income Tax Act, 1961. They contended that if these ICDs were transferred as per Section 2(47) of the Act, the capital loss claim should be allowed. However, the Tribunal rejected this argument, stating that there was no evidence to support the claim that the loans were ICDs, emphasizing that the loans were not given in the ordinary course of business and were not to be construed as capital assets. The judgment cited various legal provisions and previous cases to support the decision. The Appellant referred to a Supreme Court case related to the definition of "capital asset" under the Wealth Tax Act, but the Court found it inapplicable to the current scenario. Another judgment of the Gujarat High Court was distinguished as it dealt with a different situation where the loss was related to the transfer of a capital asset, unlike the current case where the claim was based on ICDs. The Court concluded that the Appeal did not raise any substantial question of law and dismissed it without costs. In summary, the dispute revolved around the classification of advances as capital assets and the eligibility to claim a capital loss based on the transfer of these assets. The Court analyzed the legal provisions, previous judgments, and arguments presented by both parties to arrive at the decision to dismiss the Appeal.
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