TaxTMI 
TaxTMI 
TaxTMI 
2005 (8) TMI 50
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....same was not business loss admissible either under section 28 or section 37 of the Act? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in rejecting the alternative claim of the appellant to the effect that the same was allowable as deduction under section 57(iii) of the Act? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in rejecting the second alternative argument of the appellant to the effect that the said amount represented capital loss under section 45 of the Income-tax Act, 1961, and ought to have been given full effect thereto?" The assessment year is 1978-79 and the relevant accounting period is the year ended on September 30, 1977. The assess....
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....instalment being of Rs. 12,48,727.50. Accordingly, the deed of assignment was signed by the three parties on September 22, 1973. It is an admitted fact that the assessee-company received the first three instalments and as on September 30, 1976, a sum of Rs. 62,42,365 was outstanding. In the meantime, ownership of SCPL changed hands and SCPL became a division of M/s. Elscope (P.) Ltd. On June 28, 1977, the assessee wrote to SCPL proposing to convert the outstanding receivable in annual instalments into an amount receivable on demand and for this purpose, a discount of 12 per cent, was offered. On SCPL agreeing to the proposal, the due amount was reduced to Rs. 50,40,483, and the same was placed in a current account with SCPL. The sum of Rs,....
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....lf of the applicant-assessee, submitted that it was in the course of business of the assessee-company that it was required to give discount to SCPL and, hence, the commuted amount of Rs. 12,01,782 was a deductible expenditure, or at least was a business loss, and was deductible before arriving at the figure of profits and gains of business under section 28 of the Act. The Tribunal has found, as a matter of fact, that the commutation by way of discount was relatable to debt which was owed to the assessee-company originally by KPPL and thereafter, by SCPL towards call moneys due from a shareholder. In other words, it was a debt due to the assessee on capital account, and therefore, could not be, regarded as either business loss admissible un....
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.... In fact, the provision requires incurring of an expenditure which is laid out or spent wholly and exclusively for the purpose of making or earning income from other sources. As already noticed, the entire debt is relatable to issuance of share capital and is, thus, on capital account. No expenditure has in fact been incurred for the purposes of earning or making income. Accordingly, the finding of the Tribunal that the assessee was not entitled to deduction under section 57(iii) of the Act does not require any interference. The second alternative contention to grant the claim of the assessee of having incurred capital loss under section 45 of the Act has not been accepted by the Tribunal in the following words: "...The original debt in t....
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....so placed reliance on the decision of the apex court in the case of CIT v. Mrs. Grace Collis [2001] 248 ITR 323, to emphasize as to what would constitute extinguishment of right within the meaning of the definition of the term "transfer" under section 2(47) of the Act. Mr. M.R. Bhatt, learned senior standing counsel appearing on behalf of the Revenue supported the order of the Tribunal by submitting that the charge of capital gains was under section 45 of the Act, which requires transfer of a capital asset before gains or loss could be worked out. He, therefore, urged that there was no reason to disturb the finding of the Tribunal. The facts as recorded hereinbefore make it amply clear that the assessee-company was to receive call money t....