TaxTMI 
TaxTMI 
2017 (1) TMI 622
X X X X Extracts X X X X
X X X X Extracts X X X X
....supported with condonation petition along with an affidavit. In view of the concession given by the ld AR for condonation of delay, we hereby condone the delay and admit the appeal of the revenue for adjudication. 3. The first issue to be decided in the appeal of the revenue is as to whether the ld CITA is justified in treating the loss of Rs. 85,84,968/- as business loss as against the speculation loss treated by the ld AO in the facts and circumstances of the case. 3.1. The brief facts of this issue is that the assessee is a Public Limited Company having income from Satellite TV Channel and Investment Banking. The ld AO observed that assessee company had declared gross loss from trading in shares amounting to Rs. 85,84,968/- which was sought to be treated as deemed speculation loss due to the fact that the income of the assessee mainly consists of the following:- Share trading loss - Rs. 85,84,968/- (Business Loss) Advertisement Receipt - Rs. 26,73,408/- (Business Income) All Time Charges - Rs. 31,14,037/- (Business Income) FTD Receipt - Rs. 50,00,000/- (Business Income) Liability Written Back - Rs. 22,42,700/- (Business Income) Dividend - Rs. 1,25,257/- (Exempt....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the provisions of Explanation to Section 73 of the Act were brought in the statute book only to curb the devices resorted by the assessees to reduce the taxable income by manipulating with the shares of companies under their control. He observed that this was fully explained in the CBDT Circular No.204 dated 24.7.1976 which is binding on the tax authorities. Aggrieved, the revenue is in appeal before us on the following ground:- "1. That on the facts and in the circumstances of the case Ld. CIT(A) has erred in directing to treat the speculation loss of Rs. 85,84,968/- as business loss on the basis of CBDT's Circular No.204 dated 24.07.1976 when the said Circular is not squarely applicable in the present case." 3.3. The ld AR at the outset argued that this appeal of the revenue is to be dismissed due to low tax effect as according to him, the ld AO had merely shifted the loss from trading in shares from business loss to speculation loss without disturbing the figures thereon. He allowed the speculation loss also to be carried forward to subsequent years. Barring this one, the other two additions made by the ld AO does not have tax effect of more than Rs. 10 lacs and hence in vie....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 50% of the capital is invested in shares. He argued that the amendment brought to this effect in Explanation to Section 73 of the Act w.e.f. 1.4.2015 has been held to be retrospective in operation by the following decisions of the co-ordinate benches of various tribunals :- (a) Kolkata Tribunal in the case of DCIT vs Raima Equities Pvt Ltd in ITA No. 1994/Kol/2013 dated 11.8.2016 (b) Ahmedabad Tribunal in the case of ITO vs Union India Ltd in ITA No. 1240/Ahd/2012 dated 22.6.2016 (c) Mumbai Tribunal in the case of Fiduciary Shares & Stock P Ltd vs ACIT in ITA No. 321/Mum/2013 dated 13.5.2016 By placing reliance on the aforesaid decisions, he pleaded that the loss from trading in shares would fall under the exception provided in Explanation to Section 73 of the Act and hence the same need not be treated as Speculation Loss. 3.7. We have heard the rival submissions. We hold that it is not in dispute that the principal business of the assessee is trading in shares. We find that the amendment was brought by Finance Act 2014 w.e.f. 1.4.2015 by insertion of the expression - principal business of which is the business of 'trading in shares' or banking ............ in Expla....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... retrospective, would result in hardship to the assessee in the following manner:- (a) The assessee engaged in trading of shares would be treated as speculation business upto Asst Year 2014-15. That assessee might be having losses eligible to be carried forward under the head 'speculation business'. (b) The provisions of section 73 of the Act provides that the brought forward speculation loss could be set off only against speculation profits. (c) Pursuant to the amendment by Finance Act 2014 supra, the loss derived from the principal business of trading in shares would not be construed as speculative in nature. The logical corollary is profit derived thereon also would be treated only as normal business profits and not speculative profits. (d) In this situation, the brought forward speculation loss could never be eligible to set off against the profits when there is absolutely no change in the business activities of the assessee (i.e trading in shares as its principal business) . That loss would get lapsed for no fault of the assessee thereby creating genuine hardship to the assessee. We feel that the insertion in Explanation to Section 73 of the Act by the Finance Act 2014 sho....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the Act for want of relevant interest certificate from the bank to justify the payment made by the assessee. Before the ld CITA, the assessee reiterated the submissions and furnished the same evidences and argued that if the ld AO had any apprehension or doubt about the documents submitted before him, he ought to have made necessary enquiries directly from the bank u/s 133(6) or 131 of the Act and assessee cannot be denied the benefit of deduction when the interest component has been duly paid to the bank. The ld CITA convinced with the arguments of the assessee deleted the disallowance made thereon u/s 43B of the Act. Aggrieved, the revenue is in appeal before us on the following ground:- "2. That on the facts and in the circumstances of the case Ld. CIT(A) has erred in deleting the addition of Rs. 7,25,444/- u/s. 43B when assessee failed to prove that the amount was actually paid within the time allowed u/s. 139(1)." 4.2. The ld DR stated that whether the assessee had indeed made payment to Syndicate Bank may kindly be directed to be verified by the ld AO in order to arrive at the correct picture. The ld AR fairly agreed for the same. 4.3. We have heard the rival submissi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the case Ld. CIT(A) has erred in deleting the addition of Rs. 14,05,745/- being interest on borrowed capital which was utilized for interest free loans and advances to different parties including relatable parties when assessee did not discharge its onus to show that interest bearing loans were utilized for purposes other than giving interest free loans and advances." 5.2. The ld DR argued that the assessee did not prove the business expediency of advancing interest free funds to three companies and hence vehemently relied on the order of the ld AO. In response to this, the ld AR argued that the advances made to three companies were purely related to the business of the assessee as they were also involved in the same line of business in which assessee was engaged and hence the business nexus / expediency has been proved beyond doubt. From the perusal of the balance sheet, it could be seen that the assessee had got sufficient own funds at its kitty which is much less than the borrowed funds and hence there is no question of disallowing the interest. He also placed reliance on the decision of the Hon'ble Jurisdictional High Court in the case of CIT vs Britannia Industries Ltd re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s. 1,28,23,581/- on account of business profit in the facts and circumstances of the case. 8.1. The brief facts of this issue is that the ld AO observed that during the previous year relevant to assessment year 2004-05 the assessee had transferred the tangible and intangible assets and liabilities of the business in the name of "Ahimsaa Channel" to its subsidiary company in the name of M/s. Ahimsaa Global Media Ltd. in terms of the agreement dated 20.03.2004 at a consideration of Rs. 195 lakh and the consideration was received by the assessee in the form of 39,00,000/- fully paid shares of the said subsidiary company @ Rs. 5/- per share. The Ahimsaa Channel had been launched by the assessee in the FY. 2003- 04 and the same was disposed off by the assessee in the financial year 2003-04 to the said subsidiary company. The following assets belonging to Ahimsaa Channel run by the assessee were transferred to its subsidiary company M/s Ahimsaa Global Media Ltd :- Computers 74,450 Media Equipments 52,18,510 Office Equipments 65,080 Vehicles 6,98,379 Preoperative Expenses Capitalised 1,28,23,581 Preliminary Expenses 6,20,000 ------------------ 1,95,00,000 Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....argued that the total movable fixed assets worth Rs. 60,56,419/- were not debited to profit and loss account by the assessee but were capitalized in the books of accounts. Similarly the preoperative expenses of Rs. 1,28,23,581/- incurred by the assessee for various expenses in respect of launching Ahimsaa Channel till the date of launch and preliminary expenses of Rs. 6,20,000/- were capital in nature and were added to the cost of channel along with other fixed assets. It was reiterated that since the fixed assets were purchased during the financial year and also transferred during the same year, it did not appear in the block of assets and no depreciation was claimed on said fixed assets by the assessee. The depreciation of Rs. 37,46,228/- claimed were only in respect of assets and other equipments acquired for its other channel ATN WORD which is clearly reflected in the depreciation schedule itself. It was further stated that the assessee did not receive any income as the cost of equipments on which no depreciation was charged and expenses incurred with channel were received by way of allotment of equity shares and no surplus whatsoever was earned by the assessee. The ld CITA del....