2012 (5) TMI 710

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..... uation of shares. The AO observed that the shares had been purchased during securities scam of 2001 and in years 2001 to 2006, the losses were not found genuine. The AO therefore, disallowed the loss. In appeal CIT(A) observed that the assessee was not carrying on any business activity after scheme of 2001 and therefore, loss resulting from shares purchased earlier could not be considered as business loss. He, accordingly confirmed the disallowance. 2.1 Before us, the ld. AR for the assessee submitted that in assessment year 2001-02, the order of CIT(A) on this point had been set aside by the Tribunal and, therefore, loss should be allowed. The ld. DR on the other hand pointed out that in assessment year 2005-06, the Tribunal had confi .....

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..... had been placed with banks for issue of bank guarantees, with stock exchange in connection with their business. The Tribunal also noted that though SEBI had debarred them from business in 2001, the licence of the assessee had been cancelled on 8.3.2004 and assessee had challenged the said cancellation order before SAT. The Tribunal therefore, following the decision in case of Classic Shares and Stock Broking Services and in case of KNP Securities belonging to the same group held that the business of the assessee during relevant period had only been suspended and not closed. It was therefore, held that interest from FDRs which had been pledged in connection with business had to be treated as business income. The Tribunal accordingly allowed .....

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..... ions raised and held that business had closed and expenses could not be allowed. CIT(A) also held that expenses also included professional fees of ₹ 10,84,000/- and ₹ 7,24,549/- for handling income tax and corporate tax law matters and assessee could not show whether these expenses especially pertained to the year in question. He, therefore, confirmed the entire disallowance aggrieved by which the assessee is in appeal before the Tribunal. 5.1 Before us, the ld. AR submitted that issue was covered by the decision of the Tribunal dated 23.12.2011 in ITA No.6875/M/2008 in which it was held that the business of the assessee had not closed and expenses were allowed. The ld. DR on the other hand placed reliance on the orders of .....

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