2015 (10) TMI 2105

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....scrap when the assessee could not prove its motive i.e. for what purpose the plant and machinery was purchased and in which circumstances the same was sold immediately, after bearing such huge loss. 2. The Commissioner of Income Tax (Appeals), Lucknow has erred in law and on the facts of the case by treating the loss of Rs. 82,97,750/- as loss incidental to trade, ignoring the decision given by the Hon'ble Apex Court in case of Calcutta Co. Ltd., Vs. CIT(1959) 37/TR1 (SC) wherein it has been held that the general commercial principle has to be kept in view while determing real and true profit of a business or profession. 3. The Commissioner of Income Tax (Appeals), Lucknow has erred in law and on the facts of the case in deleting ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ong with plant & machinery was purchased for Rs. 2.70 crores only. Out of above, the plant & machinery was valued at Rs. 1.05 crores by the bank and was sold for a price of Rs. 22,02,250/- and the loss on sale of above asset was claimed at Rs. 82,97,750/-. The Assessing Officer was not convinced with the explanation of the assessee and he observed that the total area of the factory land was 14730 sq. mtrs. was purchased as business project being the assessee engaged in the business of construction and development of building, flats, etc. Therefore, the intention of the assessee is to use only land and building and not the plant & machinery. The assessee has neither purchased plant & machinery with a view to sell it on profit nor to run the ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... or short term capital loss to the assessee. The assessee has in fact purchased factory building along with machinery knowing fully well that the machineries were not of its use, as the assessee was not engaged in any such type of business activities in which such machineries can be used. The machineries are just like a scrap for him, therefore, the loss claimed in sale of machineries cannot be allowed. The short term capital loss could have been allowed, if the assessee has sold the entire factory building at a lesser price. The ld. D.R. further contended that at the most the alleged short term capital loss could be added to the cost of land of the factory building. 7. Having carefully examined the orders of the lower authorities in the....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... to Naveen Gupta and Rs. 10 lakhs to Priti Gupta during the year. Besides loan of Rs. 20 lakhs was also given to Shri. Y.K. Jain and Rs. 6 lakhs to Rahul Jain. Since the assessee had diverted the borrowed funds in interest free loans, the Assessing Officer has disallowed the interest and finance charges amounting to Rs. 13,13,918/-, against which an appeal was filed before the ld. CIT(A) with the submission that the borrowed funds from the bank was utilized in the business activities of the assessee. Therefore, the payment of interest and finance charges to bank be allowed, as it was incidental to the business of the assessee. The assessee had sufficient reserve and surplus, out of which interest free advances were given. Therefore, in the ....