Carry Forward of Business Loss Allowed; Revenue's Appeal Dismissed Due to Settled Law and Precedent.

The ITAT set aside the AO's and CIT (A)'s orders, directing the AO to allow the carry forward of the business loss to subsequent years. The Court dismissed the revenue's appeal, citing settled law and previous judgments in favor of the assessee, concluding that no substantial question of law required fresh adjudication. All pending miscellaneous applications were disposed of.

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Issues:
Challenge to ITAT order allowing appeal by assessee for assessment year 1993-1994 based on capital loss and exemption under Section 10 (2A) of the Act, 1961.

Analysis:
The revenue challenged the ITAT order allowing the appeal filed by the assessee for the assessment year 1993-1994. The counsel argued that the Tribunal erred in considering the notional net business loss due to a fall in the share price. The assessee claimed capital loss on equity shares and debentures, along with exemption under Section 10 (2A) of the Act, 1961. The Assessing Officer disallowed the claim for carry forward of capital loss, but the CIT (Appeals) allowed part of the claim. The Tribunal held that the income set off under "capital gain" was accessible as income under "income from business or profession," remanding the matter back to the AO.

The AO contended that gain or loss under "income from business or profession" arises only upon actual share transfer, not due to notional loss from share value fall. The case went through various levels of appeal, with the ITAT examining the matter in light of relevant judgments. The ITAT referred to the Supreme Court's ruling in a specific case and a Bombay High Court case, emphasizing that the method of calculating profits remains the same for capital gains and business profits. Based on these precedents, the ITAT set aside the AO's and CIT (A)'s orders, directing the AO to allow the carry forward of the business loss to subsequent years.

The fall in share value was calculated based on market quotations, and the judgments of the Supreme Court and Bombay High Court were followed. The Court cited a previous case where a similar issue was decided in favor of the assessee. As the question of law had already been settled, the Court dismissed the appeal, stating that no substantial question of law required fresh adjudication. All pending miscellaneous applications were also disposed of.

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