Loss on Sale of Shares of Subsidiary Company is a Business Loss

Cosmos Industries Ltd. Vs DCIT (ITAT Delhi)

Conclusion: Loss on sale of shares held as investment in subsidiary companies is a revenue loss as when holding company invests amounts for business of its subsidiary, it must be held for business expediency.

FACTS –

Assessee, a company, is engaged in manufacturing and trading of sugar. Assessee had made investment in shares of two subsidiary. Assessee undertook the entire investment in the said companies only as a measure of commercial expediency and to further its business objective and were related to the business operation of the company.

The project undertaken by both the subsidiary company didn’t worked out and hence the assessee had to sell of its shares at loss. Assessee incurred loss of INR 71,69,290 against the said sale of shares and claimed as business loss in the return.

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