TaxTMI 
TaxTMI 
2017 (4) TMI 813
X X X X Extracts X X X X
X X X X Extracts X X X X
....elating to A.Y. 2003-04, wherein the assessee is contesting the disallowance of loss of Rs. 12.27 lakhs arising out of share transactions. 3. We have heard the parties and perused the record. The assessee is engaged in the business of share broking, share trading and investing in shares. The assessee belongs to Ketan parekh group. This is the second round of proceedings. In the first round, the Tribunal had set aside the issue of disallowance of business loss of Rs. 12,27,248/- arising out of share transactions to the file of the Assessing Officer for fresh adjudication. Accordingly, the Assessing Officer passed the order wherein he again disallowed the claim of Rs. 12,27,248/- on the reasoning that the loss has been incurred on account of....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of shares. The learned AR submitted that the assessee has been following above said method of valuation of stock consistently over the years. He also submitted that the method of valuation of stock followed by the assessee has been accepted by the Assessing Officer in A.Y. 2001-02 and the AO has allowed loss arising on account of diminution in value of stock. The assessee submitted that it has also earned profit on shares invocated by financial institution and accordingly claimed net loss of Rs. 12,27,248/-. He further submitted that the claim of the assessee is supported by the decision rendered by Hon'ble Bombay High Court in the case of CIT Vs. Bank of Baroda (262 ITR 334) and by Hon'ble Supreme Court in the case of Uco Bank (240 IT....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bal Trust Bank Ltd., the assessee has attached stock exchange market quotation as on 31.3.2003 and we noticed that the assessee has valued the stock at the market rate prevailed on that date. 8. We noticed that the only objection of the Revenue in allowing the claim of the assessee was that the impugned shares form part of Securities Scam and hence loss claimed by the assessee cannot be considered to be a genuine loss. However, we notice that the loss claimed by the assessee was not of trading transaction, but on account of valuation of stock as per the method of valuation consistently followed by the assessee. The assessee has also established that it has valued the shares of Global Trust bank Ltd as per the closing rate traded in the sto....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lowable as deduction. One more reason given by the AO in this year is that the assessee did not carry on the business during the year under consideration, since the license has been cancelled by SEBI. It was brought to our notice that the assessee had challenged the cancellation in SAT and thereafter before Hon'ble Supreme Court. The Ld A.R submitted that the order of Hon'ble Supreme Court was received much later to the year under consideration. He further submitted that an identical issue was considered by the co-ordinate bench in AY 2007-08 (ITA No.5244/Mum/2011 dated 26-09- 2012) and held that the assessee should be considered to be carrying on business. In this regard, the co-ordinate bench has followed the decision rendered by the Trib....
X X X X Extracts X X X X
X X X X Extracts X X X X
....laim of the assessee that the same should be assessed under the head Income from Business. The Ld CIT(A) has noted in paragraph 8 of his order that the above said interest has been earned out of fixed deposits lying with BSE, NSE and CSE as security deposit for base minimum capital and for other requirements of the Exchanges. We notice that an identical issue was considered by the co-ordinate benches in assessee's own case in AY 2002-03, 2003-04 and 2007-08 (referred supra). Since the assessee was held to be continuing its business activities and since these deposits have been made in connection trading activities of the assessee, the co-ordinate benches have held that the interest income should be treated to incidental business income and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the extent of relevant income assessed during the year under consideration and the remaining amount of TDS should be allowed credit in the respective years of assessment. The deduction of prior period expenses may also be considered in the respective years. We order accordingly. The order of Ld CIT(A) is modified accordingly. 14. The next issue relates to the disallowance of expenses of Rs. 8,24,409/- made by Ld CIT(A). The first appellate authority disallowed the expenditure claim on the reasoning that the assessee did not carry on any business activities. In the earlier paragraphs, by following the orders passed by coordinate benches, we have held that the assessee should be considered as carrying on business activities. Hence the expend....