TaxTMI 
TaxTMI 
2026 (10) TMI 658
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....15.10.2025 passed by NFAC is contrary to the principles of natural justice and proper appellate adjudication to the extent it upholds the disallowance made by the Ld AO in the Assessment Order without fully and independently appreciating the contractual documents, the Settlement Agreement and the appellant's business profile which were placed on record. 3) Without Prejudice to above ground, the action of NFAC in confirming the order of Ld AO wherein the Ld AO had treated loss of Rs. 2,13,83,994/- on relinquishment of loan to M/S Dansons Lifestyle Solution Pvt Ltd as capital in nature and not allowable while computing income under the head "Profits and gains of business or profession" is unwarranted, untenable and bad in law and in doing so Rs. 64,15,198/- a) The authorities below failed to appreciate that the amount was advanced in the ordinary course of business and as such is deductible u/s 28(1) of the Income-tax Act, 1961. b) The authorities below have erred in law in holding that the loss arising from waiver of the loan to M/S Dansons Lifestyle Solution Pvt Ltd is not deductible in computing business income, despite the admitted position that the amou....
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.... net loss of Rs.1,47,07,591/-. Thereafter, the case of the assessee was selected for limited scrutiny assessment under the e-assessment scheme, 2019 on the following issues:- i. Depreciation claimed ii. Business loss iii. Unsecured loans Accordingly, the statutory notices were issued to the assessee on the issue "large business loss set off against other heads of income". During the course of assessment proceeding, the assessee had provided the details of business losses and submitted that the assessee had made the investment in diversified business activities and one such company was Dansons Lifestyle Solutions (P) Ltd. in which the assessee had advanced Rs.3 Crores on 03.02.2014 in the normal course of her business activity where the assessee was a share-holder. The shareholder agreement provided that the assessee would lend funds to Dansons Lifestyle Solutions (P) Ltd. as and when the company required the same and the assessee would be entitled to withdraw the same when there was a surplus of funds with the company. Since the company incurred consistent losses, the assessee had to forego her claim of Rs.2,13,83,994/- by entering into a settlement ag....
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.... rightly observed that the loss which was occurred from a shareholder's investment not from business activities and thus AO's treatment is aligned with the recent Supreme Court's decision as above and accordingly confirmed the addition made by the AO. 6. Again, aggrieved by the order of ld. CIT(A)/NFAC dated 15.10.2025, the assessee has filed the present appeal before this Tribunal. The assessee has also filed a paper book comprising 58 pages containing therein copy of written submission filed before the ld. CIT(A)/NFAC, Dansons Lifestyle Solutions (P) Ltd. shareholder's agreement, Dansons Lifestyle Solutions (P) Ltd. settlement agreement, audited financial statement for AY 2018-19, summary of interest received along with the case laws relied upon by the assessee. 7. Before us, the ld. A.R. of the assessee vehemently submitted that as can be seen from the books of accounts, the assessee has diverse business interest wherein she has joined either as a partner or as a shareholder/financier. Further, it is submitted that the fact that Dansons Lifestyle Solutions (P) Ltd. is a corporate entity will not alter the fact that the financial participation by the assessee in the entity ....
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....annot be claimed as business loss since the assessee is holding 46% of shares in the company and the investment made by the assessee is a capital in nature and cannot be claimed as revenue loss. 9.1 On perusal of the Balance sheet of the assessee as on 31.03.2018 along with its annexure-2 (placed at pages 31-33 of PB), we take note of the fact that the assessee out of the total capital of Rs.2,31,64,429/- had majorly invested in various firms & shares amounting to Rs.2,00,22,249/- as detailed below: - Investments INVESTMENTS IN FIRMS (as per Annexure -2) 1-Apr-2017 to 31-Mar-2018 Particulars Amounts B Kuruvanthappa & Sons 77,647 Jayalakshmi Developers Cap A/c 87,80,621 Sree Jayalaxmi textiles Cap A/C 5,00,000 Sree Jayalaxmi textiles Current A/C 14,64,782 Sree Vijaya Enterprises capital A/c 1,17,500 Sree Vijaya Enterprises Current A/c (1,35,669) Sri Jayalakshmi Complex Cap A/c 43,400 Sri Jayalakshmi Complex Current A/c 7,17,080 Srinivasa Industries 5,06,645 Sumukha Enterprises Cap A/c 11,97,788 Vijayalakshmi Cotton Enterprises 3,62,286 Vijayalakshmi Enterprises 18,87,500 Suraksha Enterpri....