TaxTMI 
TaxTMI 
1986 (4) TMI 79
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....ssessment under s. 143(3)/144B of the Act, the interest account was scrutinised and it was found by the ITO that the assessee received various amounts by way of interest and had also paid interest to various trusts in respect of outstanding liability of the assessee for purchase of certain shares from the various trusts in past. The assessee has given year-wise chronological events for the purpose of appreciation of the facts and issue involved as under: Asst. yr. 1974-75 1. On 25th June, 1973 purchase of shares of K.P.P.L. and Sercon Pvt. Ltd. from various Charity Trusts. 2. 26th June, 1973 sale of Sercon shares to Leena Investments Pvt. Ltd. and in satisfaction of sale consideration received shares of Leena Investments Pvt. Ltd. ....
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.... the context of background regarding reorganisation of companies in Sarabhai Group and realignment of shares within the group, the interest was paid in respect of certain shares which were no longer held by the assessee, (ii) relying upon decision in ITA Nos. 800 and 801/Ahd/76-77 in the case of Sarabhai Sons Pvt. Ltd. the shares acquired subsequently disposed of did not yield any dividend income, (iii) reliance placed by the assessee on in the case of R. Dalmia vs. CIT 1972 CTR (SC) 130 : (1977) 110 ITR 644 (SC) could not be helpful to the assessee because the onus regarding establishment of the nexus was on the assessee, (iv) the purpose of purchasing the shares did not seem apparently to invest money for earning income but the purpose ap....
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....ue involved and the assessee was free to arrange the affairs keeping in mind legal limits while undertaking was planning schemes. Drawing our attention to the details in the interest account it was submitted that against the total receipts of Rs. 1,47,000 approximately there was surplus of Rs. 26,000 approximately and, therefore, there should not be any grievance by the Revenue. 5. The ld. departmental representative strongly supported the order passed by the Commissioner (A) and emphasised the aspect that immediately after acquiring of the shares by the company in past the assessee had incurred bogus loss of Rs. 8 lakhs and, therefore, that much amount was lost and therefore, there was no question of any nexus. This aspect has to be kep....
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....enditure. Now, merely because subsequently the assessee incurred certain losses on sale of shares cannot be a ground for disallowance of such expenditure because it is unwarranted since the purpose of investment is known. Again, the expenditure was incurred to discharge the liability fastened on the assessee at the time of acquiring the original shares and, therefore, the character of expenditure remains the same as was originally. It is also not necessary that the investment must result in either income or ultimate profits. Looking at the composition of the various sources of income the assessee does derive income by way of dividends, interest, etc. It is also not necessary that dividend must be earned by the assessee from the same shares ....