TaxTMI 
TaxTMI 
2016 (4) TMI 384
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....arned Commissioner (Appeals) ought to have appreciated that the loan was a capital asset and that the assignment thereof had resulted into short term capital loss. 5. The learned Commissioner (Appeals) erred in stating that the short term capital loss has been claimed by the appellant company without any logic or reasonable basis. Observations in the order 6. The learned Commissioner (Appeals) erred in making the following factually incorrect observations: (a) "Accordingly, an agreement dated 28.03.2002 was signed between the appellant company and M/s Siemens AG wherein the latter company accepted the assignment of loan for total consideration of Euro 0.731 million, although the loan amount was Euro 9 million." (Page 4, Para 2.2) (Erroneous observation highlighted in Italics) (b) "Further the Assessing Officer has discussed the definition of transfer at page 13 of his order." (Page 7, Para 2.3) (Erroneous observation highlighted in Italics) Grounds not decided 7. The learned Commissioner (Appeals) erred in not deciding the following grounds in the appeal: "4. The learned Deputy Director erred in holding that to the extent of diminution in value, there was no debt....
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....horized Representative of the appellant company that amount of loan given by SNISL, Germany to SNISL, India constitute a capital asset. On the contrary, the Assessing Officer has rightly held that such loan can only be current asset and diminution in value of debt does not result in short term capital loss. The finding of the Assessing Officer is correct and the same is upheld. The appellant company had not filed any return of income in India and for the first time, return of income for the Assessment year 2002-03 has been filed claiming only short term capital loss of Rs. 34,68,84,558/- because of assignment of loan. The appellant company has not been able to show that it had P.E. in India and it had earned any business income in India. The return of income has also been filed which does not show that in which country Germany or India its business income is taxable. The short term capital loss has been claimed by the appellant company without any logic or reasonable basis, therefore, the Assessing Officer was correct in rejecting the claim of the appellant company. I do not find any infirmity in the order of the Assessing Officer and therefore, his order is confirmed on this issue....
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.... connected with his business or profession" except as specifically excluded in the said section. So far as business assets are concerned, the exclusion is only for "(i) any stock- in- trade, consumable stores or raw materials held for the purposes of his business or profession", and it is not, nor can it be, anybody's case is that an advance is covered by the exclusion clause. The question, therefore, arises as to what are the connotations of the expression "property". Hon'ble Bombay High Court, in the case of CWT Vs Vidur V Patel [(1995) 215 ITR 30 (Bom)] had an occasion to consider this question in the context of wealth tax, and this is what Their Lordships had to say: .........So far as the meaning of "property" is concerned, it is wellsettled that it is a term of widest import and subject to any limitation which the context may require, it signifies every possible interest which a person can hold or enjoy. As observed by the Supreme Court in Commissioner, Hindu Religious Endowments vs. Shri Lakshmirudra Tirtha Swami of Sri Shirur Mutt (1954) SCR 1005, there is no reason why this word should not be given a liberal or wide connotation and should not be extended to those wellreco....
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....ally required to be treated as in India, and, as is the mandate of Section 9(1)(i) any income, inter alia, "through the capital asset situated in India" is deemed to accrue or arise in India. As a corollary to this taxability of income, the loss through the capital asset situated in India is also required to be taken into account. The authorities below were, in determining whether or not the amount recoverable from an Indian entity was a capital asset under section (14), swayed by the considerations which were not germane in this context. In view of these discussions, in our considered view, the advance, debt or recoverable amount, in whichever way one describes it, was a capital asset under section 2(14). 9. The next thing that we need to decide is whether or not there was a transfer under section 2(47) or not. Section 2 (47)(i) provides that "transfer, in relation to a capital asset, includes (i) the sale, exchange or relinquishment of the asset". There is no dispute that the rights to recover the money from the Indian entity, which is what the capital asset is in this case, was sold to Siemens for a consideration of Euro 7,31,000. All these rights, under the arrangements with S....