2016 (10) TMI 589

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....t had filed its return of income, declaring loss of Rs. 20,53,019/-. The assessment was completed at a total income of Rs. 20,06,714/- after making following two additions: (i) Treating the business loss claimed by assessee as speculative loss as per Explanation to section 73 Rs. 40,01,814 (ii) Disallowance u/s 14A Rs. 57,990/- 3. Ld. CIT(A) while partly allowing the asessee's appeal, deleted the aforementioned disallowances. Being aggrieved, the department is in appeal before the Tribunal and has taken following grounds of appeal: 1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that the principal business of the assessee is granting of loan and advance and therefore explanat....

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....013) (Allahabad High Court) 33 Taxman.Com.432 - Vashulinga Finance Pvt. Ltd. Vs. Department of Income tax (ITA no. 3537/Del/2012 dated 28.06.2013) 5. The AO pointed out that as per copy of memorandum of association, filed by the assessee vide letter dated 15.7.2013, the main object to be pursued by the assessee on its incorporation, no where indicated that the main business of the company was banking or granting of loans and advances. Further, the assessee company was not registered as NBFC and mainly dealt in trading of shares. He, therefore, held that deeming provisions of section 73 were clearly attracted. Accordingly, he treated the loss as speculative business loss and made the addition of Rs. 40,01,814/-. 6. Ld. CIT(A) ....

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...."3.6. In the case of the appellant, it is apparent that the principal business is of granting loans and advances to corporate and other parties. The P & L A/c and Balance sheet of the appellant company discloses major income on account of interest on loans and advances. In the F. Y. 2009-10 loan and advances were to the tune of Rs. 10,71,85,688/- which increased to Rs. 16,12,93,451/- during the year. Similarly, interest income on loans and advances was disclosed at Rs. 66,20,236/- in the last year and at Rs. 64,05,268/- in the current year. Even from the angle of capital deployment, it is observed from the Balance sheet highest funds are deployed in the business of granting of loans and advances". 8.1. On the basis of aforementioned fact....