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<h1>Tribunal allows horse stock-in-trade claim, rejects revenue appeal.</h1> The Tribunal ruled in favor of the assessee, determining that the horses were stock-in-trade and the decrease in value claimed was allowable. The ... Business Income Issues:1. Whether the assessee's horses are stock-in-trade or not.2. Whether the decrease in value of horses claimed by the assessee is allowable.Analysis:1. The Assessing Officer disallowed the decrease in value of horses claimed by the assessee, treating it as depreciation. The CIT(A) disagreed, stating that the assessee consistently valued the closing stock based on market value or cost, whichever is lower. The CIT(A) found the method of valuation acceptable and deleted the addition made by the Assessing Officer.2. The learned Counsel for the assessee argued that the horses were part of the business of horse breeding and leasing for races, making them stock-in-trade. The revenue contended that the assessee was claiming depreciation under the guise of decrease in value. The Tribunal noted that the income from horses was shown as 'income from other sources' in tax returns, but emphasized that substance prevails over form in taxation matters.3. The Tribunal referred to precedents and legal principles to determine the nature of the assessee's activity. It highlighted that the real character of a transaction matters more than the label given by the parties involved. The Tribunal also cited the definition of 'business' under the Income-tax Act and relevant case law to establish that the assessee's activities with the horses constituted a business with a profit motive.4. Based on the analysis, the Tribunal concluded that the assessee's activities with the horses were part of a systematic business operation carried out with a profit motive. Therefore, the horses were considered stock-in-trade, and the method of valuation adopted by the assessee was deemed appropriate. The Tribunal upheld the CIT(A)'s decision, dismissing the revenue's appeal.Conclusion:The Tribunal ruled in favor of the assessee, determining that the horses were stock-in-trade and the decrease in value claimed was allowable. The consistent method of valuation followed by the assessee was deemed acceptable, and the revenue's appeal was dismissed.
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