M/S MAGO TOOLS CORPORATION,LUDHIANA vs. ITO, LUDHIANA

Per Sanjay Garg, Judicial Member:

The present appeal has been preferred by the assessee against the order dated 14.07.2016 of the Commissioner of Income Tax(A)-2, Ludhiana [hereinafter referred to as ‘CIT(A)’].

gain or business loss. The Ld. counsel has invited our attention to the

ITA No. 122/Chd/2017- M/s Mago Tools Corporation, Ludhiana

3 will be treated as such, irrespective of the volume of the transaction

in subsequent years also.

lower authorities and has submitted that thought the assessee had

treated the loss from the transaction in securities as capital loss in

its books of account, however, at the time of filing of the return, the

assessee claimed it as business loss.

assessee has been able to show that though there was some

discrepancies in the account due to some inadvertent mistake on the

part of the auditor, however, it was clear from the notes of the

account of the auditor wherein it has been specifically mentioned that

the aforesaid securities purchased by the assessee were intended to

be treated as ‘stock-in-trade’. Further, the fact that it is not an

intentional departure from its earlier stand in the balance sheet, the

aforesaid securities have neither been shown as investment nor as

stock-in-trade, rather, the same has been shown under the head

‘security loan & advances’. In view of this, we are of the view that it

is not a case of intentional departure of earlier stance of the assessee

of treating the securities as capital assets rather the assessee has

been able to demonstrate that from the very beginning, the assessee

was treating the securities as its stock-in-trade.

In view of this, the order of the lower authorities on this issue

is set aside and the Assessing officer is directed to treat the loss from

the trading in securities as business loss.