TaxTMI 
TaxTMI 
2009 (7) TMI 108
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....als and/or are otherwise arbitrary, unreasonable and perverse ? 2) Whether the Tribunal misdirected itself in law in holding that the assessee was not carrying on money lending business in a general manner for earning interest or that it granted accommodation loans to sister concerns only or that the loans to sister concerns were granted not in the ordinary course of money lending business, but only to help them and in disallowing the claim for bad debts of Rs.22,75,000/- and its purported findings in this behalf are based on any material and/or have been arrived at by ignoring the relevant materials and/or by taking into consideration irrelevant and extraneous materials and/or are otherwise arbitrary, unreasonable and perverse ? 3) Whether and in any event the Tribunal should have allowed the assessee's claim in respect of the sum of Rs.22,75,000/- as a business/trading loss ? The facts of the case briefly are as follows : The appeal was admitted in respect of an order passed by the Tribunal on 30^th of March, 2001. The issue is involved in this matter that the assessee/appellant has claimed a loan as hedging loans in dealing with the shares relating to a loss of Rs.2,....
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....larified as to what led it to hold that there would be a probable loss in its holdings of shares of M/s. Hindusthan Aluminium Company Ltd. through the price fluctuations and came to the conclusion that the assessee has failed to explain as to whether and in what circumstances the purchases and sales were made and thus came to the conclusion and held that the assessee failed to substantiate its claim about the transactions coming within the ambit of clause (b) to the proviso of Section 43(5) and thereby concluded by upholding both the lower authorities have acted correctly in holding the loss under consideration as a "speculative loss" and not of the nature of "hedging loss" as claimed by the assessee. In these circumstances, we have examined the facts and we must accept that the three authorities came to the same conclusion on concurrent findings and we do not have any hesitation to hold that in the case of Commissioner of Income Tax, Kerala (supra), the appellant has failed to discharge his liability to prove the said fact in his favour and thereby we do not have any hesitation to hold that all the lower authorities including the Tribunal in the facts and circumstances of this ....
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....s, the C.I.T. (Appeal) allowed the claim towards bad debts. The learned Tribunal after analyzing the facts found that the main evidence of carrying on a money lending business would be that the assessee was giving loans to different parties at different points of time solely for the purpose of earning interest thereon. But in the instant case, it is admitted that the assessee had granted accommodation of loans to its sister concerns only save and except such accommodation. There is no evidence anywhere that the assessee was carrying on money lending business in a general manner. Therefore, on this evidence the learned Tribunal found out that the two loans under consideration had been granted by the assessee to the sister concerns who were already in bad financial share and the purpose of granting to such loans only to re-establish those business financially and it is not for earning interest. It further submitted that the assessee did not make any attempt at any point of time to recover any portion of these loans. Therefore, it would be evident from these facts that the sole intention of the assessee was to help other companies. Another fact was also considered by the Tribunal that....
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....ng or it is perverse". ii) In Commissioner of Income Tax Vs. Gillanders Arbuthnot and Co. Ltd. reported in Vol. 195 I.T.R. page 332, where the Court held as follows : "That because of certain difficulties, the assessee could not directly advance the loan to the company managed by it. It advanced the sum to its 100 per cent subsidiary which, in turn, loaned the money to such managed company. The financing was really done by the assessee and such financing was incidental to its business of managing agency. Hence, the loss incurred by the assessee in financing its subsidiary must be allowed as a business loss". iii) Vol. 138 page 763 (Commissioner of Income Tax Vs. Gillanders Arbuthnot & Co. Ltd.), wherein the Court held as follows : "Since we have held that the assessee was engaged in the business as a holding company of financing its subsidiaries, the other arguments of the departmental representative that the assessee's claim cannot be allowed against the dividend income if at all, loses its significance. Even if the amount cannot be treated as a bad debt in the sense that it was not an advance in the course of money-lending business, it can certainly be allowed as a tr....
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....naged company and there was no justification for the High Court to disregard the finding of the Tribunal on this aspect of the case. Reference has also been made to sub-clause (19) of clause 13 of the memorandum of association which clearly indicates that the moneys advanced by the appellant-company and the guarantee given by it in respect of the loans advanced to the managed company by the bank were all I the course of the managing agency business. We consider that the High Court has exceeded its jurisdiction in traversing into the findings of fact reached by the Appellate Tribunal in the present case. As regards the question actually referred to it, the High Court should have held that there was proper material in support of the finding of the Tribunal that the loans advanced by the appellant-company to the managed-company and the payment made by it under the terms of the guarantee given to the bank were in the course of the appellant-company's business and the claim for allowance of the loss sustained by the appellant-company was therefore admissible under section 10(2)(xi) of the Income Tax Act". vii) Vol. 288 page 2 in the case of S.A. Builders Ltd. Vs. Commissioner of Inco....
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....facts are concurrent and all the authorities decided the questions on the same facts and came to the same conclusion. Therefore, he submitted that in respect of question Nos. 1 and 2, there is no point of law is involved since it is nothing but question of facts are the basis to deal with these questions. So far as the question No. 3 is concerned he drew our attention to the judgment delivered by the learned Tribunal and pointed out that the claim of bad debts as claimed by the appellant and treating the same as business loss, cannot be accepted in view of the fact that the assessee had granted accommodation to its sister concern only. It is also a fact that interest at ordinary rates should have been charged on those accommodation of loans but it would be evident from the facts that the intention of the assessee only to nurture its sister concerns who are in bad financial shape adapted such process through intra-group financing. There is no evidence which can support the case of the assessee that the assessee was carrying on money lending business in a general manner and to all parties whether intra-group concerns or outsider. The facts also would show that the assessee did ....