> v. Income Tax Appeallate Tribunal Smc-1, Delhi Bench & Ors

$~58 * IN THE HIGH COURT OF DELHI AT NEW DELHI+ ITA 425/2023 RESORTS CONSORTIUM INDIA LIMITED .....Appellant Through: Ms. Rachna Agrawal, Adv .....Appellant versus INCOME TAX APPEALLATE TRIBUNAL SMC-1, DELHI BENCH & ORS. .....Respondents Through: Mr. Aseem Chawla, SSC with Ms. Pratishtha Chaudhary, Adv. CORAM:HON'BLE MR. JUSTICE YASHWANT VARMAHON'BLE MR. JUSTICE RAVINDER DUDEJAO R D E R % 13.08.2024 1.This appeal is directed against the order dated 21 June 2016 passed by the Income Tax Appellate Authority [“Tribunal”] and posits the following questions of law for our consideration:- “i. Whether the Appellant is entitled to hold the shares acquired as stock-in-trade? ii. Whether the AO is empowered to interfere with the commercial decisions of an assessee relating to the treatment of shares acquired particularly the one approved by the Board of Directors, duly audited by the Auditors and approved in the Annual General Meeting by the General Body of shareholders? iii. Whether the AO was required to first reject the books of accounts under Section 145 before treating the shares held as “stock-in-trade” by the Appellant to be treated as “investment”? and iv. If the AO failed to do so, its impact on the addition made during the course of assessment? v. Whether the Appellant was entitled to the allowance of loss on valuation as claimed? vi. Whether Respondent was entitled to withhold the refunds for various subsequent years in view of pending litigations? or Whether the Respondent unlawfully withheld the refunds for the subsequent years?” 2.We note that the Tribunal has found that the appellant had purchased 1,80,000/- unquoted shares of M/s Shiv Shakti Extrusions Ltd with a face value of INR 10/- each. The return further established that the shares at the end of the concerned year were valued at INR 16,20,000/- and the remainder amount of INR 1,80,000/- was claimed as deductions towards depreciation in the value of shares. It appears to have been contended before the Tribunal that the shares were purchased out of the surplus funds which were available with the appellant assessee. The said decision of the Tribunal is also stated to have been prompted consequent to the appellant assessee having come to know of an impending public issue. 3.The solitary issue thereafter which appears to have survived for examination was whether the appellant assessee was correct in asserting that the shareholding was liable to be treated as “stock-in-trade” as opposed to “investments”. 4.While dealing with this question, the Tribunal has held as follows: “3. I have heard the rival submissions and perused the relevantmaterial available on record. It is evident from the assessee’s replytendered before the AO that the company invested its surplus fundsin purchase of unquoted shares. It can be seen that the assessee hadnever dealt with or traded in shares either in the past or in thefuture. Under these circumstances, it is difficult to accept theassessee’s contention of having held these shares as “stock-in-trade’. Once it is held that the shares were purchased as investment,there cannot be any deduction on account of decline in the value of“investment’ as at the year end. I, therefore, approve the viewtaken by the authorities below.” 5.Bearing in mind the aforesaid position on facts as found by the Tribunal, we find that no substantial question of law arises. The appeal fails and shall stand dismissed. YASHWANT VARMA, J AUGUST 13, 2024/sk RAVINDER DUDEJA, J