TaxTMI 
TaxTMI 
TaxTMI 
2018 (4) TMI 744
X X X X Extracts X X X X
X X X X Extracts X X X X
....of income for the A.Y 2012-13 on 21.09.2012 declaring total loss of Rs. 45,71,884. During the assessment proceedings u/s 143(3) of the Act, the AO accepted the loss returned by the assessee. Thereafter, the CIT perused the assessment records by invoking the provisions of section 263 of the Act and observed that the assessee has claimed an amount of Rs. 8,00,750 as revenue expenditure in the P&L A/c and that the same was allowed by the AO, though it is not allowable because it is capital expenditure. 3. CIT considered this as an error causing prejudice to the interest of revenue. Therefore, a show cause notice u/s 263 was issued to the assessee on 21.12.2016 requiring the assessee to file the details. The assessee filed written submissions ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at the assessee was in the business of granting of loans and advances and in the course of its business, had purchased 1,00,000 preferential warrants of M/s. Sankhya Infotech Ltd to be converted into shares @ Rs. 32.03 per share and had paid 25% of the amount and since the share price of M/s. Sankhya Infotech Ltd came down to Rs. 24.02 per share subsequently, and in order to avoid further losses, the assessee company had not converted the warrants into shares and Rs. 8,00,750 already paid to M/s. Sankhya Infotech Ltd was forfeited and the assessee has claimed it as revenue expenditure. He submitted that all these details were examined by the AO during the assessment proceedings and therefore, there cannot be a case of non- application of mi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....derstanding the law, such an assessment order is erroneous and amenable to revision u/s 263 of the Act. 8. Having regard to the rival contentions and the material on record, we find that the basic objection of the assessee to the order u/s 263 of the Act is that the AO has called for various details and has considered the material on record during the assessment proceedings before accepting the expenditure on forfeiture of shares as revenue expenditure. Therefore, according to him, AO has considered/examined the issue and has adopted one of the possible views and therefore, the assessment order is not erroneous and therefore it could not have been revised. The learned DR has relied upon the above judgment for the proposition that the loss ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....The same is reproduced herein below : "What is termed 'allotment is generally neither more nor less than the acceptance by the company of the offer to take shares. To take the common case, the offer is to take a certain number of shares or such a less number as may be allotted. That offer is accepted by the allotment either of the total number mentioned in the offer or a less number, to be taken by the person who made the offer, This constitutes a binding contract to take that number according to the offer and acceptance. To my mind, there is no magic whatever in the term 'allotment' as used in these circumstances. It is said that the allotment is an appropriation of a specific number of shares. An allotment is an appropriati....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or incorporeal. 11. In the case on hand consequent to the assessee's default in not paying the balance of money on allotment, its right in the shares stood extinguished on its forfeiture by the investee company. The loss suffered by the assessee, i.e., non-recovery of share application money is consequent to the forfeiture of its right in the shares and the same is to be understood to be within the scope and ambit of transfer. In this view of the matter, the Tribunal was justified in holding that it would amount to short-term capital loss to the assessee. No other point was urged before us". 9. The learned DR also has relied on the judgment of the Apex Court in the case of CIT vs. Amitabh Bachchan (Supra) that even if the AO made c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e said authority felt that the matter needed further investigation, a view with which we wholly agree. Making a claim which would prima facie disclose that the expenses in respect of which deduction has been claimed has been incurred and thereafter abandoning/withdrawing the same gives rise to the necessity of further enquiry in the interest of the Revenue. The notice issued under Section 69-C of the Act could not have been simply dropped on the ground that the claim has been withdrawn. We, therefore, are of the opinion that the learned C.I.T. was perfectly justified in coming to his conclusions insofar as the issue No.(iii) is concerned and in passing the impugned order on that basis. The learned Tribunal as well as the High Court, therefo....