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TMI Blog2018 (12) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... late Tribunal "A" Bench, in I.T.A.No.1112/MDS/2006 for the assessment year 2001-02. 2. The appeal has been admitted on 14.10.2008 on the following substantial questions of law:- i) Whether the Appellate Tribunal is correct in law in sustaining the disallowance of investment write off claimed as a deduction in the computation of taxable total income in the assessment year under consideration, consequent to the admitted position of their diminution in value? ii) Whether the Tribunal is correct in law in sustaining the loss incurred in the activity of promoting, establishing, running and supporting state owned electronic industries as a 'capital loss' even though the said activity was the main business activity? 3. The assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ively for the purpose of business and the assessee is not doing the business of manufacturing electronic goods and is not involved in the business of purchase and sale of shares. Therefore, it held that the investments made under acquiring shares cannot be equated as a revenue expenditure on any account. 8. To examine as to whether the Assessing Officer was right in his observation, we had perused the Memorandum and Articles of Association of the assessee. We find therein that the main objects of the assessee was to promote, establish and run State Public Sector Enterprises for Electronic items; manage, supervise, finance, advise, assist, aid or collaborate with any association, firm, company, enterprise, undertaking, institution or schem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omoters will have to keep minimum interest in the companies' assets and transfer of shares without the consent of the assessee cannot be made. 11. On this issue, it would be beneficial to refer to a decision of the Hon'ble Supreme Court in the case of Investments Ltd. vs. Commissioner of Income Tax (1970) 77 ITR 0533, wherein, the Court considered as to whether the shares and securities held by the assessee therein has to be treated as stock-in-trade and while considering the said question, it was held as follows:- 8. In the balance sheet, it is true, the securities and shares are valued at cost, but no firm conclusion can be drawn from the method of keeping accounts. A taxpayer is free to employ, for the purpose of his trade, hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and held that the assessee was incorporated solely for the purpose of ensuring and facilitating growth and development of industries in the State of Tamilnadu and investments by way of subscription of shares is solely on account of the under writing operations. Further, it held that the investments are in the nature of stock-in-trade and cannot be held otherwise. In our considered opinion the decision in the case of TIIC Limited (cited supra) would squarely cover the case on hand and the question framed for consideration is required to be answered in favour of the assessee. 13. The Revenue placed reliance on the decision of the Hon'ble Supreme Court in the case of Berger Paints India Ltd., vs. Commissioner of Income-Tax, Delhi-V [2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in relying upon the decision in the case of TIDCO. The Tribunal relied on a decision in the case of R.Chidambaranatha Mudaliar (cited supra). We find that the reliance placed on the decision is thoroughly misconceived as in the said case, the loss was under different connotation namely with regard to Section 45 of the Act. Furthermore, in the said case, the head of income was never in dispute. Therefore, the Tribunal erred in relying upon the decision in the case of R.Chidambaranatha Mudaliar. Thus, for all the above reasons, the order passed by the Tribunal reversing the order passed by the CIT(A) is not sustainable. 15. In the result, the appeal filed by the assessee is allowed. The order passed by the Tribunal dated 11.01.2008 is set ..... X X X X Extracts X X X X X X X X Extracts X X X X
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