2014 (4) TMI 318

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....me under normal provisions as well as under Section 115JB of the Income Tax Act, 1961 at Rs.NIL. During the previous year relevant to the Assessment Year 2002-2003, the Appellant claimed a capital loss of Rs.34,52,77,992/and required the same to be carried forward for set off in subsequent years. The Appellant was to receive amounts of Rs.17,87,31,508/and Rs.17,25,46,484/from M/s Bharat Starch Industries Limited and M/s JCT Limited, respectively. The Appellant received only shares worth of Rs.60,00,000/from M/s Bharat Starch Industries Limited towards dues. The wrote off balance of Rs.34,52,77,992/was claimed as a capital loss. The write off was in the course of schemes of arrangement which were subsequently sanctioned by the Gujarat and Punjab and Haryana High Courts, respectively. The Respondent rejected the claim by holding that in order to be eligible to carry forward of the capital loss, there should be a capital asset as defined in Section 2(14) and the same should be transferred in the manner as defined in Section 2(47) of the Income Tax Act, 1961. Since the deposits or advances given to M/s JCT Limited and M/s Bharat Starch Industries Limited and written off, are not capita....

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.... 5. It was argued before us that the Tribunal committed a grave error in rejecting the claim for capital loss of Rs.21.40 crores. The argument before us is that if the inter-corporate deposits (ICDs) were capital assets in terms of Section 2(14) and there has been transfer of the same in terms of Section 2(47) of the Income Tax Act, 1961, then, the Appellant is entitled to claim a capital loss in the above figure. The Tribunal's conclusions, therefore, are totally contrary to law and should be quashed and set aside. Reliance is placed upon a decision of the Honourable Supreme Court reported in 76 ITR 471 (SC) (Ahmed G.H.Ariff and others v/s Commissioner of Wealth Tax, Calcutta). 6. Mr.Tejveer Singh, learned counsel appearing on behalf of the Respondent/ Revenue, on the other hand, supported the orders passed by the Commissioner of Income Tax (Appeals) and the Tribunal. He submits that the Appeal does not raise any substantial question of law and on a limited issue. 7. We have carefully considered the rival submissions. We have also perused the orders of the Authorities and to the extent relevant for this Appeal. We have also carefully perused the legal provisions and de....

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.... the Assessing Officer and the Commissioner of Income Tax (Appeals). 11. In dealing with the submission that there was inter-corporate deposit (ICD) of Rs.10 lacs given to M/s JCT Limited in the year 19961997 and further amount of interest of Rs.7.25 crores was due on account of interest, so also, the contentions of the Revenue to the contrary, the Tribunal concluded that in the light of materials on record it is clear that the loans were not given in the ordinary course of business. In fact no claim under the head "bad debts" has been made. The claim is that the loan was in the form of ICD which is a case of capital asset and it has been transferred. The Tribunal found that there is no evidence to show that it is a case of an ICD because before the Assessing Officer it was claimed that the loss was on account of writing off of the advances given to M/s Bharat Starch Industries Limited and M/s JCT Limited. Then it was claimed that the advances were written off. There is no material to show that the case of ICD has been made out. The loans, therefore, cannot be termed or construed as capital assets. 12. The judgments relied upon have been, therefore, distinguished and we do no....

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....tation which in the context is required. It signifies every possible interest which a person can clearly hold and enjoy. We are of the opinion that on the basis of the definition noted by us that the Honourable Supreme Court held as above. This judgment, therefore, cannot be of any assistance to the Assessee before us. 15. The judgment of the Honourable Gujarat High Court in the case of Commissioner of Income Tax, GujaratIII v/s Minor Bababhai @ Lavkumar Kantilal reported in 128 ITR 1 (Gujarat), has been rightly distinguished by the Authorities. The question before the Honourable Gujarat High Court was a distinct one. There, a sum of Rs.25,000/was advanced to the Company by the Assessee on a promissory note. The Company suffered financial difficulties and went into liquidation. The scheme of compromise and arrangement was approved by the Court and as per the Scheme, the Assessee realized only Rs.13,323/from the Company. The balance was claimed as capital loss during the relevant Assessment Year. This claim was negatived by the Income Tax Officer, but allowed in Appeal. The argument of the Revenue before the Tribunal was that there must be an element of consideration for extincti....