Case Law Details
Brief fact of the case
The assessee filed its return for each assessment year 1997-98, 1998-99 & 1999-2000 separately declaring total income of Rs.105518/-, Rs.59070 & Rs.70120/- respectively after claiming huge loss of Rs.46482500/-, Rs.53623950/- and Rs.61686500/- respectively which was said to have incurred on account of sale and purchase of shares of certain companies and diminution in the value of shares held as stock-in-trade by the assessee. Assessing officer, however, each year disallowed the said loss and assessed the income of the assessee as Rs.87220744/-, Rs.110681611/- and Rs.170495139/- for A.Y. 1997-98, 1998-99 and 1999-2000 respectively. The appeal preferred by the assessee was dismissed by the CIT(A) which was further appealed before the Tribunal. The Tribunal deleted most of the additions made by the AO but in so far as the losses claimed by the assessee, in relation to the shares of the companies, the tribunal remanded the matter to the AO to consider it afresh with a direction to consider the confirmation memos/contract notes, bills, letters confirming registration of shares etc relied upon by the assessee. Pursuant to the direction and order of the tribunal, the AO considered the question with regard to the loss on account of shares claimed by the assessee in various years and disallowed the same. The assessee further filed appeals against the assessment orders framed with respect to the assessment years 1997-98 to 1999-00. The CIT(A) accepted the contract notes and other documents produced by the assessee as evidence of the genuineness of the transactions of sale and purchase of shares as well as reduction in their value at the end of the relevant year and allowed the aforesaid appeals. The Revenue on an appeal before Tribunal urged that the loss claimed by the assessee on account of sale and purchase of shares and diminution in their value could not be set off from business income in view of Section 73 of the Act. The tribunal, after taking into account the material placed on record, was of the view that as the shares were held in stock in trade, the same could be valued at cost or market price, whichever is lower, and a loss on account of diminution in value of the stocks could be set off by the assessee against its other income. The contention of the revenue that loss could not be set off against income by virtue of section 73 was rejected holding that as the said contention had not been urged either before the authorities below or before the Tribunal, in the first round, the Revenue could not be permitted to raise the said contention for the first time in the second round. Hence, Revenue filed the appeal u/s 260A against the order of ITAT.
Question of law
Following substantial question of law arose for consideration in these appeals:-
“Whether the finding of the Income Tax Appellate Tribunal accepting the genuineness of the loss as declared in respect of shares purchased and sold or held as stock-in-trade is perverse?”
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