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TAXAP/608/2010 3/ 3 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 608 of 2010
=========================================================
COMMISSIONER
OF INCOME TAX - I - Appellant(s)
Versus
SACHOT
INVESTMENTS LIMITED - Opponent(s)
=========================================================
Appearance
:
MRS
MAUNA M BHATT for
Appellant(s) : 1,
MR VIJAY S RANJAN for Opponent(s) :
1,
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CORAM
:
HONOURABLE
MR.JUSTICE AKIL KURESHI
and
HONOURABLE
MS JUSTICE SONIA GOKANI
Date
: 15/11/2011
ORAL
ORDER
(Per
: HONOURABLE MR.JUSTICE AKIL KURESHI)
Revenue
is in appeal against judgement of the Tribunal dated 9.10.2009.
Following question has been framed :
“Whether
the Appellate Tribunal is right in law and on facts in reversing the
order passed by CIT(A) and thereby setting aside the orders of the
lower authorities and directing the learned Assessing officer to
compute speculative business income of the assessee afresh after
considering the dividend received by the assessee from the shares and
directing Assessing officer to allow set-off of brought forward
business loss against the dividend income which are arising out of
business transaction or business assets of the assessee?
From
the orders on record that we have perused with the assistance of
learned counsel for the parties, we notice that Tribunal in the
impugned order has relied on its earlier decision in case of ACIT,
Ahmedabad v. Sphere Stock Holding Pvt. Ltd .
It
was brought to our notice that said decision of the Tribunal in case
of Sphere Stock Holding Pvt. Ltd .(supra)
was carried further in appeal before this Court in Tax Appeal
No.2583/2009. Decision was upheld in following terms :
6.
Having noticed the facts as emerging and discussion of tribunal and
Revenue Authorities, we find that the tribunal’s reliance on
decision in case of Western States Trading Co. P. Ltd.(supra)
and Cocanada Radhaswami Bank Ltd.(supra) is perfectly valid.
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.”
Since
the issue is covered by the above noted judgement of the High Court,
this Tax Appeal is also dismissed.
(Akil
Kureshi,J.)
(Ms.
Sonia Gokani,J.)
(raghu)
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