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TMI Blog2011 (7) TMI 544X X X X Extracts X X X X X X X X Extracts X X X X ..... r securities is allowable as a business loss" - Decided in favour of assessee. - 754 and 755 of 2004 - - - Dated:- 6-7-2011 - Mrs.JUSTICE CHITRA VENKATARAMAN, Mr.JUSTICE M.JAICHANDREN, JJ. For Appellant : Mr.T.Ravikumar For Respondent: Mr.C.V.Rajan C O M M O N J U D G M E N T M.JAICHANDREN, J. These appeals have been preferred by the Revenue as against the order of the Income Tax Appellate Tribunal, Chennai, dated 17.2.2004. The substantial question of law raised for the consideration of this Court is as follows: "Whether in the facts and circumstances of the case, the Tribunal was right in holding that the loss suffered on sale of shares is to be treated as a business loss and not capital loss?" 2. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) 67,493 equity shares of Malladi Drugs and Pharmaceuticals Ltd. Rs.6,75,000/- 5. The capital loss on the sale of shares was Rs.11,66,436/-. Since, the said point had not been discussed in the original assessment order, and as the said order was found to be erroneous and prejudicial to the interests of the revenue, a show cause notice, under Section 263 of the Income Tax Act, 1961, had been issued to the assessee Company to file its objections, if any, against the decision of the Department, either to modify, redo, set aside, enhance or cancel the said assessment order. 6. The representative of the assessee Company had stated, inter alia, that the assessee Company is in the field of developing and supplying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acter of investment. The fact was that the assessee had purchased the shares, as they appear in the balance sheet of the assessee company, under the head 'Investments'. Hence, the Commissioner of Income Tax, Chennai, had held that, when the shares were sold, subsequently, the profit and loss arising on account of such sales is to be assessed only under the head "capital gains". 9. He had also held that the sale of shares cannot be treated as speculation loss, either under Section 73 of the Act, or as per the explanation found thereunder. The Commissioner of Income Tax, Chennai, had held that the order passed by the Assessing Officer was erroneous and hence, prejudicial to the interest of the revenue. In such circumstances, the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and there were differences of opinion amongst the promoters of the Company. The Tribunal had pointed out that the investments had been made on account of commercial expediency to improve its own business of transfer of technology, and therefore, the loss in such a situation would have to be considered only as business loss. Accordingly, the order of the Commissioner of Income Tax, dated 24.8.1993, had been vacated. Consequently, the order passed by the Assessing Officer, pursuant to the revision order of the Commissioner of Income Tax, had been held to be infructuous. Thus, both the appeals filed by the assessee had been allowed. Challenging the said order passed by the Tribunal, the present appeals had been filed by the Revenue. 12. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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