SUPREME COURT TURNS DOWN I-T DEPT PLEA AGAINST ESCORTS ON TAX EVASION

Search News

THE Supreme Court has dismissed the Income-Tax Department’s petition against Escorts Asset Management Ltd, which had alleged that the assessee had furnished inaccurate particulars to evade tax.

   A bench headed by Justice SH Kapadia turned down the plea of the department that had said that the loss of more than Rs 42 lakh claimed by assessee was speculative loss. It was and not a normal capital loss that arose from sale of shares of other companies as claimed by the assessee to avail tax benefits for the assessment year 2002-03, the department had said.
 
   The apex court upheld the orders of Delhi high court and the Income Tax Appellate Tribunal saying the assessee was not carrying the business of sale of shares of other companies but was having the shares as investments, thus the loss suffered on the sale of investments was therefore be treated as long-term capital loss.

   The department, however, had said that section 73 of the Income Tax Act 1962 specified only ‘shares of the company’ and does not make any distinction between trading of shares held as investment and trading of shares held stock-in-trade.

   According to the petition, EAML, which manages assets of Escorts Mutual Fund, had shown both income received from dividends out of investments in other companies and the sale of shares of other companies in its books of accounts.

   The department’s counsel had said, as the asset management company had shown the shares under the head ‘investment’ in the balance sheet, the loss on sale of shares was required to be treated as speculation loss since there was no distinction between shares held as investment or stock-intrade under the act.

   The assessee had filed its returns declaring a total loss of Rs 18.40 lakh for assessment year 2002-03. The assessing officer, however, had given a showcause notice to the company noting that the latter had claimed longterm capital loss on investment amounting to Rs 42.41 lakh. The tax authorities had rejected Escorts’ contention that the loss under the head ‘Business’ was on account of securities held by it as investments and treated its capital loss as speculative loss.

Find Lawyer / Law Firm

Importance of Immigration Lawyers

As Indians we know India in itself is an amazing nation and even the world agrees with that, however, grass is always greener on the other side and that is why Indians desire to immigrate a More

Legal Consultation - Consult over phone, chat or send questions

Helplinelaw can set up your session with quality and experienced lawyers to discuss and resolve your legal matters. You can avail consultation in form of sending questions, phone call or webchat discussion  More