TaxTMI 
TaxTMI 
2015 (10) TMI 391
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....eof had given rise to a loss, had been held as stock in trade of the appellant and hence the loss of Rs. 1,04,37,529/- on that account had to be treated as a business loss." 3. Ground No. 1 of the assessee's appeal is general in nature, hence not discussed. Ground No. 2(a), 2(b) and 2(c) are withdrawn by the assessee. Ground No. 3(a), 3(b), 3(c) and 3(e) are incorporated in Ground No. 3(d) to the extent of Rs. 1,04,37,525/-, as the assessee has withdrawn the amount of Rs. 18,95,714/- which is classified as investment and does not fall into category of stock in trade. Ground No. 4(a) and 4(b) are also withdrawn by the assessee. 4. The assessee company is Non-banking Finance Company engaged in the business of leasing, hire purchase and Finance of Vehicles. During the year, total receipts were Rs. 29.05 crore as against Rs. 70.03 crores in preceding year. As per profit and loss account, there was a loss of Rs. 6.79 crores as against loss of Rs. 37.37 crore in preceding year. 5. As regards to Ground No. 1 of the Revenue's appeal, the factual matrix are that the assessee has claimed deduction of Rs. 1,70,83,682/- in respect of losses on re-possessed stock which were given on hire pu....
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....he similar ground was decided in favour of assessee's own case by the CIT(A) XV for the A. Ys 1992-93, 1993-94, 1994-95, 1995-96 1997-98, 1998-99. The AR further submitted that the repossessed assets are normally disposed off at the prevailing market price which is decided on the basis of remaining life and condition of the assets. The loss on sale of repossessed asset occurs when the asset recovered from sale, falls short of the value of the repossessed assets. The loss on sale of repossessed stock was incidental and inherent part of the business of hire purchase. The loss incurred on disposal of repossessed hire purchase assets represents the installments, which could not be recovered from parties to whom the goods were sold on hire purchase basis less the sale proceeds recovered. Therefore, the amount written off and claimed by the company in any case was allowable as revenue expenses under the Income Tax Act. For the said submissions. The AR furnished the assessment orders of the assessee company for the Assessment Years 1995-96 & 1999-2000 wherein the claim of the assessee was allowed by the Tribunal. He also furnished the copy of Hon'ble Delhi High Court's order in case of Co....
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....ppeal is dismissed. 11. In respect of second issue that is Ground 3 (d) of the assessee's appeal, the facts in brief are that the assessee company is also engaged in bills discounting activity, dealing in all kinds of securities including shares, the debentures, commercial papers, Government Securities. Vide Clause III (B) (3) of the Memorandum of Association of the company the object of the company is to undertake the activity relating to dealing of shares and securities. The assessing officer observed that in the profit and loss account of the assessee, loss on sale of investment amounting to Rs. 1,23,33,239/- has been claimed by the assessee. The assessee's investment constitute capital asset, therefore, any loss on account of sale of capital asset cannot be claimed as a deduction in the profit and loss account of the assessee. The assessee has submitted the details of the loss on sale of investment which includes Rs. 18,95,714/- as investment loss and raised as loss on securities and other investment shown as stock-intrade in the books of the assessee. The assessee has relied upon the decision of Hon'ble Supreme Court in the case of Investment Ltd. Vs. CIT 77 ITR 533, it has b....
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....s. 52,935/- was claimed as being depreciation in the value of securities. The Hon'ble High Court held that the securities held by the assessee really constitute stock-in-trade and their price will fluctuate just like the price of all other commodities which may be subject of trade. Bank of Cochin Vs. CIT 94 ITR 93 (Ker.) In this case the Kerala High Court held that these investments are made in accordance with the requirements of Banking Companies Act. These provisions in the Act were intended to legalise the sound banking practice, namely, that the bank may keep a reserve of cash and liquid assets to meet its demand liability. As per these provisions an amount equal to 20% of its "time and demand liabilities" must be invested in these securities. No doubt the stock -in-trade can easily be converted into cash to meet any probable demand by the depositors. But they are not equal to cash. To get cash they will have to be sold. The sale may be easy. The sale price will not generally be equal to the face value of the securities. The price will fluctuate just like the price of all other commodities which may be the subject of trade. So, the Government securities held by the assessee....