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TMI Blog2016 (3) TMI 742X X X X Extracts X X X X X X X X Extracts X X X X ..... hich was given as security was sold by Shri V. Sivakumar and the sale consideration was adjusted for repayment of the loan by M/s Essorpe Holdings Pvt. Ltd. In those circumstances, this Tribunal is of the considered opinion that since the land was given as security for commercial expediency to sister concern, there was a business loss arising in the course of business. Since no amount was realized and the assessee-company suffered a loss for giving security to the sister concern, the same has to be allowed as business loss while computing the taxable income. In view of the above, this Tribunal is unable to uphold the orders of the lower authorities. Accordingly, the orders of the lower authorities are modified and the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ltors Pvt. Ltd. offering 5.075 acres of land as security for the amounts advanced by M/s Globus Realtors Pvt. Ltd. to M/s Essorpe Holdings Pvt. Ltd, a sister concern of the assessee-company. The assessee has also executed a power of attorney in favour of Shri V. Sivakumar, the Managing Director of M/s Globus Realtors Pvt. Ltd in respect of 5.075 acres of land. The physical possession of the land was also handed over to M/s Globus Realtors Pvt. Ltd. Shri V.Sivakumar, Managing Director of M/s Globus Realtors Pvt. Ltd, sold 5.075 acres of land to M/s Rasi Seeds (P) Ltd and M/s Globus Realtors Pvt. Ltd. on 5.1.2009 and 7.1.2009 while enforcing the security for repayment of loan borrowed by the sister concern M/s Essorpe Holdings Pvt. Ltd. The A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5(2) of the Act. According to the ld. Counsel, in view of this observation of this Tribunal, the property was capital asset till the assessment year 2007-08 and from assessment year 2007-08, the property was converted into stock-in- trade. According to the ld. Counsel, the assessee has not received any consideration on transfer of the land to M/s Rasi Seeds (P) Ltd, therefore, the assessee claimed the same as loss of business. According to the ld. Counsel, while the Assessing Officer accepted the transaction as business transaction, however, refused to assess the loss incurred on account of non-receipt of sale consideration as business loss. The ld. Counsel further submitted that this Tribunal in the case of to M/s Essorpe Holdings Pvt. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al available on record. Admittedly, the assessee-company was demerged by an order dated 15.9.2009. Before demerger, the assessee-company gave the landed property to sister concern as security for the loans advanced by M/s Globus Realtors Pvt. Ltd. The security was given to M/s Globus Realtors Pvt. Ltd for commercial expediency. In the course of its business activity, it appears that the assessee has also executed a power of attorney in favour of Shri V. Sivakumar, Managing Director of M/s Globus Realtors Pvt. Ltd. in respect of 5.075 acres of land. The power of attorney agent sold the property to enforce the security given by the assessee to M/s Rasi Seeds (P) Ltd. The question arises for consideration is whether the profit arising on sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion or treatment shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of the capital asset] . In view of the above provision, the capital gains on transfer of 5.075 acres of land as stock-in-trade has to be assessed as capital gains in the hands of the assessee. 6. Now coming to the contention of the assessee that on sale of the property, the assessee has not received any amount, therefore, it has to be allowed as business loss. It is not in dispute that M/s Essorpe Holdings Pvt. Ltd. is a sister concern of the assessee. The property in question was given as security to M/s Globus Realtors Pvt. Ltd. for advancing loan to the sister concern M/s Essorpe Holdings Pvt. Ltd. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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