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TMI Blog2008 (5) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... the circumstances of the case, the Tribunal was justified in law in holding that the detachable warrants which authorised the holders to obtain the equity shares of the investee company after a period of four years from the date of allotment, had a monetary value? 2. Whether, on the facts and in the circumstances of the case, the Tribunal has any materials on record to hold that the detachable warrants had a monetary value? 3. Whether, on the facts and in the circumstances of the case, the Tribunal took into account irrelevant and extraneous material into consideration to come to a finding that the detachable warrants had a monetary value? 4. Whether the Tribunal was justified in law in restoring the question of quantification of loss on the sale of non-convertible portion Part-C of the debentures of Rs.50/- each to the Assessing Officer with a direction to take the cost thereof as reduced by the cost of detachable warrants? RA No. 656/Ahd/98 by the revenue: Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in allowing the assessee's claim for depreciation on the factory building and office building of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to these claims after recording the facts and contentions by issuing following directions: "Accordingly we will restore the question of quantification of loss on the sale of investment to the file of the Assessing Officer for fresh adjudication in accordance with law directing him to take the cost price of the non convertible portion Part C of the debentures at Rs.50/- minus the cost of detachable warrants which was not transferred to the Unit Trust of India and then work out the capital gain/loss on the transaction of sale of Part C non-convertible portion of debentures by the assessee to U.T.I. We may point out that in case the cost of detachable warrant determined by the Assessing Officer is more than Rs.2,175/- then the same is to be restricted to Rs. 2,175/- and the capital gain/loss on this transaction may be determined at NIL because the assessee cannot be worse of having filed appeal against the order of the Assessing Officer and the Tribunal do not have any power of enhancement as held by the Supreme Court in the case of State of Kerala vs. Vijaya Stores (1979) 116 ITR 15 . In the result this issue is set aside to the file of the Assessing Officer and is deemed to ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee company made the payment of Rs.11,50,00,000/- to M/s. Deepak Fertilizers and Petrochemicals Corpn. Ltd., as under: (Rs.) 06.01.89 2,87,50,000 On application @ Rs.25/- for 11,50,000 debentures 27.03.89 1,87,50,000 Balance @ Rs.75/- for 250,000 debentures 28.03.89 2,62,50,000 Balance @ 75/- for 2,00,000 debentures 29.03.89 2,62,50,000 Balance @ 75/- for 3,50,000 debentures 11,50,00,000 During the course of assessment, the assessee company has furnished copies of letters sent by M/s. DFPCL to the assessee company, Deepak Nitrite Ltd., wherein it has been stated that the allotment letters were actually delivered to the assessee company, M/s. Deepak Nitrite Ltd. The assessee company has also furnished the copy of the share transfer from dated 29.3.89, wherein it has been mentioned that the assessee company M/s. Deepak Nitrite Ltd., has sold the non-convertible portion of Part "C" of the debenture to the Unit Trust of India. In view of it, it was the contention of the representative of the assessee company that the delivery of these shares/debentures ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which carries some value. The assessee company has detained the detachable warrant with themselves and the same has not been sold. Thus, the loss as claimed by the assessee in this transaction is attributable because they have not transferred the detachable warrant to the seller, i.e. Unit Trust of India. From the above discussion, it is clear that the whole transaction is colourable. It is hardly believable that a person can get the debenture on the same day and sell it through a broker on the same day. It is thus clear that it is a contrived and manipulated loss which has got no nexus with the free transaction of the market. The loss claimed to be incurred on such manipulated transaction are not allowable under the provisions of the Income-tax Act. Thus, the assessee's claim of loss on the sale of investment amounting to Rs.24,43,750/- is not acceptable and the same is ignored in the computation of income. 6. The Commissioner (Appeals) has merely held that the loss in question is an allowable loss. The ground of Appeal raised by Revenue which is reproduced hereinbefore also assails the order of Commissioner (Appeals) allowing the claim of loss which was held by the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Order of Commissioner (Appeals) as no ground could be taken by either side in absence of any findings by the Commissioner (Appeals). 8. In the aforesaid set of facts and circumstances of the case all the four questions raised on behalf of the assessee and question No.2 raised on behalf of Revenue in Reference Application No.657/Ahd/98 are required to be left unanswered leaving it open to the Tribunal to decide the ground of Appeal raised by the Revenue and determine, in the first instance, whether the loss in question was a genuine transaction or not. 9. In so far as the solitary question raised in Reference Application No.656/Ahd/98 at the instance of Revenue is concerned, it is in agreed position between the parties that the Tribunal has followed its own decision in assessee's own case for earlier years. That the said earlier order of the Tribunal was brought before this Court by way of Reference and the issue stands concluded by the Judgment in the case of Commissioner of Income-tax v. Deepak Nitrite Ltd., reported in (2000) 243 ITR 825. 10. Hence, it is not necessary to set out the facts and contentions in detail. For the reasons recorded in the earlier Ju ..... X X X X Extracts X X X X X X X X Extracts X X X X
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