| Case ID |
0b9a75b0-f851-40e5-820c-a4a3a635e699 |
| Body |
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| Case Number |
IT APPEAL Nos. 25 & 26 OF 2001 AND 840 OF 2008 |
| Decision Date |
Mar 20, 2015 |
| Hearing Date |
|
| Decision |
The court ruled in favor of the assessee, determining that the amount of Rs. 111 per NCD was rightly allowed as a business loss. The tribunal concluded that the transaction was not a colorable device but rather a genuine commercial transaction, emphasizing the necessity for the assessee to subscribe to the rights issue to avoid reputational harm. The decision underscored that the loss incurred was a direct result of the commercial compulsion faced by the assessee as a promoter of JISCO. |
| Summary |
The case revolves around the interpretation of the Income Tax Act, specifically Section 28(i), in relation to business losses incurred by the assessee, Abhinandan Investment Ltd., during a rights issue of secured redeemable non-convertible debentures (NCDs) by Jindal Iron and Steel Company (JISCO). The court examined the arrangements made with UTI, which facilitated the payment for the debentures, and concluded that the loss of Rs. 111 per NCD was a legitimate business loss. The ruling highlights the importance of commercial expediency in tax law and clarifies that the assessee acted within the bounds of the law while seeking to protect its investment and reputation. This case sets a precedent for similar scenarios where companies face losses due to mandatory participation in capital raising activities. Keywords: Income Tax Act, business loss, JISCO, UTI, rights issue, commercial transaction. |
| Court |
Delhi High Court
|
| Entities Involved |
JISCO,
UTI
|
| Judges |
S. Ravindra Bhat,
R.K. Gauba
|
| Lawyers |
Rohit Madan,
P. Roychaudhuri,
Ruchir Bhatia,
Ajay Vohra, Sr. Advocate,
Ms. Kavita Jha
|
| Petitioners |
Commissioner of INCOME TAX
|
| Respondents |
Abhinandan Investment Ltd
|
| Citations |
2015 SLD 1962,
(2015) 376 ITR 153
|
| Other Citations |
CIT v. Abhinandan Investment Ltd. [2002] 254 ITR 538/121 Taxman 161 (Delhi),
McDowell & Co. Ltd. v. CTO [1985] 154 ITR 148/22 Taxman 11 (SC),
Kedarnath Jute Mfg. Co. Ltd. v. CIT [1971] 82 ITR 363 (SC),
Delhi Stock Exchange Association Ltd. v. CIT [1961] 41 ITR 495 (SC),
First Addl. ITO v. T.M.K. Abdul Kassim [1962] 46 ITR 149 (SC),
CIT v. Nalwa Investment Ltd. [2010] 322 ITR 233/[2009] 179 Taxman 262 (Delhi),
Lazer Syntex Ltd. v. Dy. CIT [IT Appeal No. 781 (Ahd.) of 1996, dated 18-9-1997],
Karamchand Thaper & Bros. v. Dy. CIT [IT Appeal No. 2649 (Cal.) of 1996, dated 12-6-1997],
Dy. CIT v. Jogiya Traders Ltd. [IT Appeal No. 2992 (Mum.) of 1998, dated 30-5-2003],
Dy. CIT v. Kanakadnara Traders (P.) Ltd. [IT Appeal No. 2993 (Mum.) of 1998, dated 3-6-2003],
Asara Sale & Investments (P.) Ltd. v. Dy. CIT [2001] 78 ITD 87 (Pune),
Nowrosjee Wadia & Sons Ltd. v. Asstt. CIT [IT Appeal No. 3848 (Mum.) of 1998, dated 27-2-2007],
Deepak Nitrite Ltd. v. CIT [2008] 307 ITR 289/175 Taxman 230 (Guj.)
|
| Laws Involved |
Income Tax Act, 1961
|
| Sections |
28(i)
|