2004 (11) TMI 48

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ent year 1989-90 on account of the borrower-company being declared a sick industry. Even though three questions are raised by the assessee, the only issue to be decided is whether there is a capital loss in respect of debt written off by the assessee that was due from a sick industry under rehabilitation by the orders of the Board for Industrial and Financial Reconstruction. The appellant-assessee had advanced an amount of Rs. 3.5 lakhs to Fort William Company Ltd., Calcutta, and interest received on the deposit was being returned and tax assessed as income from other sources. However, the borrower-company had become sick and it was referred to the Board for Industrial and Financial Reconstruction for rehabilitation. Even though the Board f....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....rder of the Commissioner (Appeals) and the Tribunal allowed the Department-appeal holding that there is no transfer of capital asset on the facts of the case. We heard learned counsel appearing for the assessee, Sri Balachandran and Sri P. K. R. Menon, senior counsel appearing for the Income-tax Department. We find from the order of the Tribunal that the Department has conceded the advance made, i.e., debt due from the sick industry, to the appellant as a capital asset. In view of the concession made by the Department, the Tribunal proceeded on the assumption that the debt due to the assessee from the sick industry was a capital asset. Senior counsel appearing for the respondents contended that the Department committed a mistake in conce....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ustrial and Financial Reconstruction dated November 8, 1989. Counsel also relied on the decision of the Supreme Court in CIT v. Mrs. Grace Collis [2001] 248 ITR 323 wherein the Supreme Court has considered extinguishment of transfer of asset in the form of shares of an amalgamating company when consequent upon amalgamation there is a reduction in value of share and issue of shares of lower value by the amalgamated company. He has drawn our attention to the findings of the Supreme Court wherein they have disapproved their earlier decision in Vania Silk Mills P. Ltd. v. CIT [1991] 191 ITR 647 relied on by the Tribunal. Amalgamation is specifically covered by Chapter IV-E of the Income-tax Act dealing with capital gains and so much so, the fac....