Gujarat High Court Case Information System
Print
TAXAP/1772/2010 3/ 3 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 1772 of 2010
=========================================================
COMMISSIONER
OF INCOME TAX - II - Appellant(s)
Versus
M/S
MEGH MALHAR FINSTOCK (P) LTD - Opponent(s)
=========================================================
Appearance :
MRS
MAUNA M BHATT for
Appellant(s) : 1,
None for Opponent(s) :
1,
=========================================================
CORAM
:
HONOURABLE
MR.JUSTICE AKIL KURESHI
and
HONOURABLE
MS JUSTICE SONIA GOKANI
Date
: 10/10/2011
ORAL
ORDER
(Per
: HONOURABLE MS JUSTICE SONIA GOKANI)
Revenue
has proposed following questions of law for determination of this
Court in the present Tax Appeal which arises out of Order dated
passed by the Income Tax Appellate Tribunal, Ahmedabad Bench
(hereinafter referred to as “the
Tribunal”).
“Whether the
Appellate Tribunal is right in law and on facts in confirming the
order passed by CIT(A) deleting the disallowance of setting off of
dividend income of Rs3,90.015/-against speculative loss ?”
2. The
issue arises from the order of the Income Tax Appellate Tribunal
dated 6th November 2009 where disallowance of setting off
dividend income was made against the speculative loss. This issue
is squarely covered by the judgment of this Court in Tax Appeal No.
2583 of 2009 which is held as under :
7. In case of
Cocanada Radhaswami Bank Ltd.(supra), the assessee company
was carrying on banking business and had held securities as part of
trading assets. During the assessment year under consideration, it
incurred loss under head business and earned certain amount as
interest on securities, still resulting into net loss of
Rs.55,912/-. Assessing Officer refused to set off such such loss
against income under the head of interest on securities. Apex Court
held that the assessee was entitled to set off loss against entire
income including the interest on securities during the succeeding
years. It was observed that though for purpose of computation of
income, interest on securities is separately classified, income by
way of interest from securities does not cease to be part of income
from business if the securities are part of trading assets.
8. Similarly
in case of Western States Trading Co. P. Ltd.(supra), the
assessee was owner of colliery. Assessee entered into agreement to
sale colliery to another person. Pending completion of sale,
assessee carried on business on behalf of the purchasing company.
Since price fixed for sale was less than the book value of the
assets, assessee claimed balancing allowance on the ground that
assessee had carried on business for the later period also. The Apex
Court in said decision observed that if shares are held by an
assessee as part of his trading assets, dividends on those shares
would form part of the income from business of the assessee and the
assessee will therefore, be entitled to claim set off of loss from
its business carried forward from earlier years against dividends of
the current year from the shares held as stock in trade. The Court
referred to and relied upon the decision in case of Cocanada
Radhaswami Bank Ltd.(supra) and reiterated that amount of
dividends would form a part of the income from business of assessee,
if the shares were a part of the assessee’s trading assets and the
assessee would be entitled to a set off as claimed against the loss
from its business incurred during the previous years. It was
observed that there was no dispute that the shares formed part of
the stock-in-trade of the share dealing business of the assessee and
that therefore, there could be no reason for the assessee not being
entitled to the set off claimed.
9. In the
present case also as already reproduced it has been consistently
held from material on record that shares were held by the assessee
as stock-in-trade. CIT(Appeals) as well as tribunal therefore, were
of the opinion that dividend income was incidental to share business
and that therefore, irrespective of provisions contained in Section
56 of the Act and explanation to section 73, loss should be adjusted
against such business income. We do not find any substantial
question of law arising. Similar issue is discussed by the Apex
Court in above-mentioned cases. Tax Appeal is therefore, dismissed.
3. Resultantly,
this Tax Appeal fails, and stands dismissed.
(Akil
Kureshi,J.)
(Ms.
Sonia Goakani,J.)
mary//
Top