C.I.T.AMRITSAR vs. KAPIL BHARANY(INDL)C/O M/SBINDRABAN

ITR/122/1990HC Punjab & HaryanaPHHC01021549199002 May 2007Author: MR. JUSTICE M.M. KUMAR,MR. JUSTICE RAJESH BINDAL3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court, while acknowledging the question of law referred by the Tribunal, noted that the total amount involved in the dispute was a mere Rs. 4,500/-. Due to this insignificant amount, the Court expressed an unwillingness to delve into the merits of the case. Consequently, the Court decided not to answer the referred question of law. The operative direction was to leave the question unanswered, effectively not disturbing the ITAT's order in light of the small sum in dispute. No specific finding on the classification of the loss or the allowability under the 'business' head was made by the High Court.

What were the facts?

The revenue (Commissioner of Income Tax, Amritsar) sought reference of a question of law to the High Court arising from an order dated 31.7.1989, passed by the Income Tax Appellate Tribunal (ITAT), Amritsar Bench, for assessment year 1982-83. The dispute concerned the classification of loss on the sale of shares. The Assessing Officer allowed a short-term capital loss of Rs. 13,500/- on 150 shares of M/s Kashmir Woollen Pvt. Ltd. However, the claim for loss on another 50 shares was declined. The CIT(A) upheld the Assessing Officer's order, viewing the investment as not constituting a capital asset. The ITAT, however, allowed the assessee's appeal, directing the entire loss of Rs. 18,000/- to be treated as business loss, resulting in an adjustment of Rs. 4,500/- against taxable income.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the loss on the sale of 50 shares and 150 shares of M/s Kashmir Woollen Pvt. Ltd. represented business loss and, if so, whether such loss could be allowed under the head 'business'? Assessee's contention: The assessee contended that the loss on the sale of shares should be treated as business loss. The Tribunal's reasoning, as indicated in the judgment, suggests that the assessee had purchased shares with the hope of making profits as a businessman, and the failure in this attempt should be treated as a business loss. The Tribunal reversed the orders of the lower authorities. Revenue's contention: The revenue argued that the loss on the sale of shares was not a business loss and should not be allowed under that head. The Assessing Officer and CIT(A) had initially treated it as a capital loss or declined the claim, viewing the investment as not a capital asset or acquired for capital purposes.

Which sections of the Income-tax Act were involved?

Section 256(1)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
In the High Court of Punjab and Haryana, Chandigarh I.T.R. No. 122 of 1990 Date of Decision: 2.5.2007 The Commissioner of Income Tax, Amritsar …Petitioner Versus Shri Kapil Bharany (Indl.) …Respondent CORAM: HON’BLE MR. JUSTICE M.M. KUMAR HON’BLE MR. JUSTICE RAJESH BINDAL PRESENT: None.

JUDGMENT M.M. KUMAR, J The revenue has claimed that various substantive questions of law under Section 256(1) of the Income Tax Act, 1961, would arise from the order dated 31.7.1989, passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar, in I.T.A. No. 682 (ASR)/1987, in respect of assessment year 1982-83. Accordingly, the Tribunal has referred the following question of law for our determination:- “Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that loss on the sale of 50 shares and 150 shares of Rs. 100/- each purchased on 19.8.1977 and 23.10.1980 respectively of I.T.R. No. 122 of 1990 M/s Kashmir Woollen Pvt. Ltd., Co. represented business loss and if so, could such loss be allowed under the head business?” A perusal of the statement of case would show that the Assessing Officer has allowed short term capital loss of sale of 15

The order continues below.

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