9911796707
TMI Blog1990 (3) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... . . . Value of 485 Equity Shares as . . . . per last Balance . . . Sheet @ 40 . . 19,400 . Sold as under No. of Shares . . . Shri R.R. Sharma 165 6,500 . . Smt. Sunder Bai 150 6,000 . . Shri R.R. Sharma 85 2,500 . . Shri Raj Sharma 85 2,500 17,500 1,900 . 485 . . . Mathur Papers Foils (P) Ltd. . . Value of 3,840 Equity Shares of Rs. 100 each. 3,84,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsferred on a loss had given rise to business loss only. In support of this contention, the assessee has given the details of the projects investigated and the companies floated. Seven projects were investigated in 1973-74 asst. yr., one project in 1974-75 and seven projects in 1975-76. Eight companies were floated for the first time in 1975-76 and one company in 1976-77. The investments in these projects were claimed to be from business assets in 1979-80 asst. yr. One of the companies' shares were sold at a profit of Rs. 73,750 and this profit had been assessed at tax. The same year three other companies were sold at a loss of Rs. 1,20,230. During 1980-81 shares of two companies were sold which resulted in a loss of Rs. 6,24,890. Going to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omoting the companies and partnerships. Thus, when the company undertook to investigate projects and if feasible float companies, they were carrying out a business. It was submitted for the asst. yr. 1978-79, the Commissioner(A) had noticed that this was the business activity and had allowed as business expenditure Rs. 26,350 incurred on investigation of new projects. Even for this assessment year, the IAC in his order dt. 7th Sept., 1983 and referred to this activity in paragraph 2 of his order and the ITO himself in para 3 of his order accepted that the assessee had many other business activities of promotion of new ventures. Thus, once it is all accepted that the assessee has this activity, it is submitted the assessee would be eligible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make this activity a business activity. So, the only evidence on which to decide the issue is the investigation of certain projects and the consequent floating of the companies. If these, by themselves, would be conclusive then we can accept the assessee's contention. But if these facts can be explained consistent with the Department's case then the assessee would not be eligible for the claim. 9. As stated earlier, the assessee had investigated 15 projects. Out of this, they found feasible only 9 projects. So the other 6 projects were already written off as dead loss. They had floated companies in respect of these 9 projects and had invested more than Rs. 30 lakhs thereon. The company Mathur Paper and Foils Ltd. had an authorised capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh house rent and directors fees which were treated as perquisites by the ITO. These cannot be treated as perquisites in view of the Delhi High Court decision on this point. So, this addition would stand deleted. Thus, the assessee's appeal stands partly allowed. 13. We now take up the departmental appeal. The item is an addition of Rs. 65,535 deleted by the Commissioner (A). This amount is credited to the profit and loss account after writing off the balances in various sundry creditors' accounts. The details of the write off as given to the ITO show numerous small amounts. Many of them incurred as a liability in 1971-72 and still earlier years. On enquiries, we were told that these amounts were received as deposits from customers to who ..... X X X X Extracts X X X X X X X X Extracts X X X X
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