COMMISSIONER OF INCOME TAX vs. BALA KAUL

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ITA - 329 / 2009HC Delhi28 May 20091 pages
For Petitioner: PREM LATA BANSAL
AI SummaryDismissed

What did the High Court hold?

The CIT(A) and ITAT concluded that the advance was made on a trading account, treating the entire amount as a business loss. The High Court found no perversity in these concurrent findings.

What were the facts?

The assessee advanced Rs. 10 crore to stockbrokers for share purchases, but the brokers failed to deliver shares and did not return the money. The Assessing Officer disallowed bad debt and treated a portion as capital loss, while allowing the rest as business loss.

What were the issues?

Whether the advance made for share purchases, which became irrecoverable, should be treated as a business loss or a capital loss. Whether the concurrent findings of the CIT(A) and ITAT on the nature of the transaction were perverse.

Which sections of the Income-tax Act were involved?

Section 36(2)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(4)Show list

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IN THE HIGH COURT OF DELHI AT NEW DELHI . ITA No.329/2009 . CIT ..... Appellant through Ms. P.L. Bansal with Mr. Sanjeev Rajpal and Ms.Anshul Sharma, Advs. . versus . SMT. BALA KAUL ..... Respondent through None . CORAM: HON'BLE MR. JUSTICE VIKRAMAJIT SEN HON'BLE MR. JUSTICE RAJIV SHAKDHER . O R D E R 28.05.2009 . A sum of Rupees ten crore was advanced by the Respondent/Assessee to the stock brokers M/s. N.H. Securities for the purchase of shares. The Brokers failed to purchase shares and have also not returned the sum of Rupees ten crores. The Assessing Officer disallowed the claim for bad debts on the strength of Section 36(2) of the Income Tax Act, 1961. The Assessing Officer further held that there was no definitive demarcation in the portfolio with regard to whether the shares were intended as investments or stock-in-trade. Despite this finding the Assessing Officer allowed 100 per cent loss in respect of Infosys shares and 50 per cent loss in respect of shares of Satyam, aggregating Rupees 5,41,25,000/- as a business loss. The remaining Rupees 4,58,68,845/- was treated as Capital Loss. The CIT(A) came to the conclusion that the past practice is not the only decisive factor to determine whether shares were intended to be held as investments or by way of stock-in-trade. On an appreciation of evidence placed before him, the CIT(A) has concluded that it is very clear that the advance was made on trading account. .The disallowance of Rupees 4,58,68,845/- is therefore deleted . The ITAT has concurred with this conclusion. K. Ravindranathan Nair vs- CIT, [2001] 247 ITR 178(SC): 2001(1) SCC 135 lays down that the Tribunal is the final fact finding Authority and its decision is alterable only if it is perverse [See CIT vs- Mukundray K. Shah, [2007] 290 ITR 433(SC)], CIT vs- P. Mohankala, (2007) 6 SCC 21 and T. Ashok Pai vs- CIT, Bangalore, (2007) 7 SCC 162 which precedents prescribe that only palpably perverse conclusions pertaining to the factual matrix should be interfered with by the High Court. The concurrent findings of the CIT(A) as well as the ITAT are not, in our opinion, perverse. Hence, we find no reason to delve further into their correctness. No substantial question of law arises for our consideration. Appeal is dismissed. VIKRAMAJIT SEN,J . . . . . RAJIV SHAKDHER, J May 28, 2009 Tp .

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