2023 (2) TMI 1078

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....tified in disallowing the claim of the appellant on the loss of Investment when the redemption of the Investment was made solely for the purpose of protecting the funds of the trust? ii. Whether the Appellate Tribunal is justified in not appreciating the facts that even if the investments were made out of corpus fund when interest is earned thereon or the capital gain accrues on such transfer, are to be treated as income for purposes of computation Section 11 of the Act? iii. Whether the Appellate Tribunal is justified in disallowing the claim of the appellant-Trust merely relying on the decision of the Hon'ble Calcutta High Court in the case of Hindusthan Welfare Trust v. DIT(E) reported in 201 ITR 564 (Cal) without c....

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....s Appeal. 6. Shri. S. Parthasarathi, for the Assessee submitted that: • assessee had invested in units of mutual fund which is an approved investment under Section 11(5) of the Act, read with Rule 17C of the IT Rules, 1962 and the said investments do not have the character of "speculative transaction"; • the ITAT has failed to appreciate that assessee has not invested even a single rupee of Trust money in speculative transaction and perpetual series of bonds; • all the transactions and investment were delivery based and redemption was with the single purpose of protecting the corpus of the Trust and not for trading on commercial lines; • the Revenue has not furnished any proof to sustai....

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....ot chargeable to income tax. 8. We have carefully considered rival contentions and perused the records. 9. In substance, the assessee's contention is that transactions were delivery based and redemption was undertaken to protect the interest of the assessee-Trust and not for trading on commercial lines. 10. Undisputed facts of the case are, assessee had made investments in mutual funds permitted under Section 11(5) of the Act. The unit of mutual funds in which investments was made was sold in the previous year relevant to A.Y. Due to sale, assessee suffered loss of Rs.1,58,79,259/-. This amount has been claimed as deduction. 11. The ITAT has recorded in para 21 of its Order that the facts of this case are similar to the one in H....

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.... must be arrived at on ordinary commercial principles. The scheme of the IT Act requires the determination of 'real income' on the basis of ordinary commercial principles of accountancy. To determine the 'real income', permissible expenses are required to be set off. In this behalf, we may also usefully refer to the judgment in CIT, Gujarat v. S.C. Kothari (1972) 4 SCC 402 where the following principle was laid down: "6. ...The tax collector cannot be heard to say that he will bring the gross receipts to tax. He can only tax profits of a trade or business. That cannot be done without deducting the losses and the legitimate expenses of the business..." There is, thus, a clear distinction between deductions made for ascertaining real....