Case Law Details
DCIT Vs. Colgate Palmolive India Limited (ITAT Mumbai)- Camelot was a 100% subsidiary of the appellant and the appellant had deep business interest in Camelot. The main reason for setting up Camelot was to manufacture toothbrushes exclusively for the appellant. The appellant was relying upon Camelot for manufacturing of toothbrushes to be traded by the appellant. The entire investment in Camelot was made by the appellant only as a measure of commercial expediency to further its business objectives and were primarily related to the business operations of the appellant. At no poi nt of time, the investments in Camelot was made or held with an intention to realize any enhancement in value thereof over a period of time or to earn dividend income. Rather the investments were made only to separately house an integral part of the business activity of the appellant, which essentially operated as a single unified business.
Thus, relying on the principles laid down by Hon’ble Supreme Court in the case of Patnaik & Co Ltd (supra) and SA Builders vs CIT (supra), since the investment in Camelot was made by the appellant from a commercial perspective only in the course of business. Keeping in view the commercial expediency of the transaction, I hold that the loss of Rs 5.50 crores , incurred upon sale of shares in Camelot, should be allowed as a business loss in the hands of the appellant, and the action of the Assessing Officer denying the deduction as business loss stands reversed.
INCOME TAX APPELLATE TRIBUNAL, MUMBAI
ITA No.: 5485/Mum/2009 Assessment year: 2003- 04
Deputy Commissioner of Income Tax
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