TaxTMI 
TaxTMI 
2013 (11) TMI 977
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....5 lakh claimed by the assessee as `Bad debts written off'. Briefly stated the facts of this ground are that the assessee wrote off a sum of Rs.15 lakh in its Profit and loss account. On being called upon to substantiate the deduction, the assessee stated that it had advanced a sum of Rs.37.50 lakh to M/s. Zeal Entrepreneurs Pvt. Ltd. (hereinafter called M/s. ZEPL) on 28-02-1995 for purchase of a piece of land. The transaction did not fructify and the said company initially returned a sum of Rs.10 lakh to the assessee and pursuant to the judgment of the Hon'ble Calcutta High Court, there was a settlement dated 20-08-2005 vide which the assessee received a sum of Rs.12.50 lakh in full and final settlement of its claim. The unrecovered sum of ....
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..... Unconvinced with the assessee's submissions, he came to hold that the said amount of Rs.15 lakh was not bad debt as the same was not incidental to the assessee's business. No relief was allowed in the first appeal. 4. We have heard the rival submission and perused the relevant material on record. It is obvious from the fact recorded above, that the assessee advanced a sum of Rs.37.50 lakh to M/s ZEPL on 28-02-1995. On a specific query from the Bench, the ld. AR stated that the litigation started with party in the calendar year 2003 and it was pursuant to settlement with M/s. ZEPL that the entire amount was received except for a sum of Rs.15 lakh which was not recovered. The contention of the ld. DR that this amount is not a bad debt is....
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.... course of business would be wanting. 6. Adverting to the facts of the instant case, we find that the assesssee claimed before the authorities below that the deduction should be granted because such loss was incidental to "business". In order to bring a case within the purview of deductibility, the assessee must demonstrate that it was actually engaged in the `business' of real estate, from which such a loss was incurred. Ordinarily `business' refers to a series of transactions done with the object of earning profit on regular basis. We are also agreeable with the contention of the ld. AR that a single business transaction can be considered as "adventure in the nature of trade". However, it is of utmost importance that the facts must pro....
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.... lakh out of such transaction cannot be characterized as anything but a loss of capital nature. The contention of the ld. AR that the Memorandum of association provided for doing the real estate business is though a relevant factor but not decisive. The Hon'ble Supreme Court in Bengal & Assam Investors Ltd. VS. CIT (1966) 59 ITR 547 (SC) has held that the object clause in M/A is not decisive because question is not what business company professes to carry on but what business it actually carries on. Similar view has been expressed by the Hon'ble jurisdictional High Court in CIT VS. J.K. Eastern Industries (P) Ltd. (1965) 55 ITR 376 (Cal). As such, we do not find any weight in the submission of the ld. AR that since the Memorandum of associa....
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....rd, it is observed that the shares of IGFL were acquired during the financial year 2003-04. Such shares were retained as such only throughout the period before their sale in two lots in the previous year relevant to the assessment year under consideration. It shows that such shares were held by the assessee for a period of more than two years and further no other transactions of purchase and sale of these shares was undertaken by the assessee during such period. Though inadvertently these shares were disclosed as "Stock-in-trade" but these were actually held as "Investment" throughout the period as is evident from the fact that the assessee continued to value such shares at cost price in the respective balance-sheets from the date of purcha....
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.... and perused the relevant material on record. The ld. Counsel argued at the very outset that no disallowance u/s 14A was warranted as the shares were held as `Stock in trade' and not `Investment'. We do not find any force in the submission advanced on behalf of the assessee. The Hon'ble jurisdictional High Court in Dhanuka & Sons VS. CIT (2011) 339 ITR 319 (Cal) has decided this issue in favour of the Revenue, which is apparent from Question (ii) before the Hon'ble High Court as extracted in the beginning of the judgment, which has been answered against the assessee by holding that disallowance u/s 14A is attracted even when the securities fetching exempt income are held as stock in trade. Similar view has been taken by the Hon'ble Kerala H....