Dilip S. Dahanukar v. Assistant Commissioner Of Income

(-1-) MGN IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.63 OF 2004 Dilip S. Dahanukar ..Appellant Vs. Assistant Commissioner of Income Tax & Anr. ..Respondents Mr. S.J. Mehta for Appellant. Mr. P.S. Sahadevan, for Respondent. CORAM: F.I. R.S.MOHITE, JJ. DATED: 9th February, 2009 P.C.: P.C.: . We find that this Court by order dated 10th January, 2005 had framed seven questions for consideration. After considering the said questions, we find that Question Nos. 2, 3, 4, 6 and 7 would not arise as they would not amount to substantial questions of law. Question Nos.1 and 5 are related and consequently we reframe for the purpose of this Appeal the following question:- "Whether on the facts and circumstances of the case the loss of Rs.66.00 lakhs is allowable as business loss to the Appellant?" 2. From the record we find that the appellant is the Proprietor of Bio-Basix Industrial (-2-) Undertaking, Daman. In the balance sheet as on 31st March, 1995 he has shown Rs.4.36,,350 shares of Rs.10/- each of Good Value Marketing Co. Ltd. The value in the ledger as opening balance is shown said sum of Rs.2,18,17,500/-. 3. The learned A.O. after considering the contentions of the assessee was pleased to hold that the Appellant assesse herein, was allotted 2995 shares by way of right shares on 19th February, and the same were sold on 28th December, 1995. He then held that the balance sheet of Bio-Basix Industrial Undertaking does not show any assets as stock in trade and further held that the assessee’s business is not that of share trading. These shares were held by the assessee as investment as shown in the balance sheet as on 31st March, 1995. The A.O. further proceeded to observe that there is no evidence on record to suggest that the assessee has converted the shares held by him as investment into stock in trade. 4. In the Appeal preferred by the assessee the learned C.I.T. (A) was pleased to hold that the appellant assessee had not furnished any evidence that he had converted the shares of M/s.Good Value Marketing Co., into stock in trade and on the contrary the shares were held as investment and (-3-) shown as such in the balance sheet for the year ended 31st March, 1995. On this count the Appeal was rejected. 5. In the further Appeal before the ITAT the learned Tribunal in para.5 again proceeded on the footing that the assessee had not filed any evidence for substantiating his claim and failed to prove that the shares held by the assessee are investment and converted into stock in trade. In para.6 it further observed that there is no evidence on record to suggest that the assessee has converted the shares held by him as investment in stock in trade. 6. On behalf of the assessee the learned Counsel drew our attention to the judgment of the Supreme Court in Karam Chand Thapar & Bros. P. Karam Chand Thapar & Bros. P.Ltd. vs. Commissioner of Income-tax (Central)Calcutta, 82 ITR 899 wherein the Supreme Court in Ltd. vs. Commissioner of Income-tax (Central) Calcutta, 82 ITR 899 the matter of entries in the books as well as the balance sheet observed that the entries in the books and balance sheet can be considered, however, at the same time, however, observed that these circumstances by itself is not a conclusive circumstance. . In answering the issue, therefore, what the Court and the Authorities have to decide was whether (-4-) the assessee was carrying on the business of dealing in shares if that has to be considered as stock in trade. Though the A.O. recorded a finding this finding has neither been confirmed by the C.I.T. Ltd. vs. Commissioner of Income-tax (Central) Calcutta, 82 ITR 899 the matter of entries in the books as well as the balance sheet observed that the entries in the books and balance sheet can be considered, however, at the same time, however, observed that these circumstances by itself is not a conclusive circumstance. . In answering the issue, therefore, what the Court and the Authorities have to decide was whether (-4-) the assessee was carrying on the business of dealing in shares if that has to be considered as stock in trade. Though the A.O. recorded a finding this finding has neither been confirmed by the C.I.T. (A) or I.T.A.T. Both C.I.T.(A) and I.T.A.T. have proceeded on the footing that the record maintained by the assessee shows the shares were shown as investments and not as stock in trade. This is directly contrary to the entries in the balance sheet now shown to us. In our opinion, therefore, as there is no concurrent finding of fact as to whether the appellant was in the business of dealing in shares, the impugned orders of the I.T.A.T. and C.I.T. (A) in so far as the question which has been framed is set aside and the matter is remanded back to the A.O. for reconsideration and to record a finding afresh according to law. Appeal disposed of accordingly. (R.S.MOHITE, J.) (F.I.REBELLO,J.) (R.S.MOHITE, J.) (F.I.REBELLO,J.)