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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 ..... e 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 the Sahyadri Dyestuff & Chemical Units at Pune although the said factory building and office building were not transferred in favour of the assessee, and the ownership of the said factory building and office building was not vested with the assessee? RA No. 657/Ahd/98 by the revenue: 1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in upholding the Commissioner Income-Tax (Appeals)'s order a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ork 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 have been allowed for statistical purposes." 4. The aforesaid directions issued by the Tribunal are found to be unacceptable both by the Assessee and the Revenue, as can be seen from the four questions raised by the assessee and the question No.2 raised by Revenue in Reference Application No.657/Ahd/98. All the cross questions involve only one issue and, therefore, are taken up together. The learned Advocate for the assessee Shri J.P. Shah and learned Senior Standing Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see 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 were duly received by them and thus, the shares were sold by actual delivery to Unit Trust of India at the price of Rs.47.875 per debenture. It is relevant to mention here that these debentures were not quoted in the Stock Exchange till 31.3.90 and both the Companies namely DFPCL and M/s. Deepak Nitrite Ltd., are under the same management. The contention put forth by the assessee company has been duly considered. However, the loss declared by the assessee due to sale of investment cannot be accepted for the following reasons: Under the terms and conditions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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 Assessing Officer to be a colourable device with the sole purpose of reducing the taxable income. Therefore, the only controversy between the parties was whether the loss in question is based on a genuine transaction or is a colourable transaction only for the purposes of reducing the taxable income. 7. The Tribunal was therefore expected to record a decision after appreciating the facts and evidence on record as to whether the Assessing Officer was justified in holding that the transaction was not a genuine transaction and the loss was thus disallowable, or whether the Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 Judgment in assessee's own case the question is answered in the affirmative i.e. in favour of the assessee and against the Revenue. 11. That leaves Question No.1 in Reference Application No.657/Ahd/98, at the instance of Revenue. The facts in relation to this claim is that originally the assessee claimed deduction for investment allowance under Section 32A of the Act in the Return of income filed on 29.12.1989. Subsequently a revised Return of income tax filed on 31.12.1990 wherein deduction under Section 32AB of the Act was claimed instead of deduction under Section 32A of the Act. The sta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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