Order, after proper enquiry, allowing loss on sale of debentures not revisable

1.  The assessee-company was engaged in business of purchase and sale of shares, debentures and other securities. The assessee filed its return declaring certain loss on sale of non-convertible debentures. The return was processed under section 143(1)(a).

2.   the Assessing Officer in exercise of powers under section 143(2)/143(1) addressed a questionnaire to assessee. The Assessing Officer after receiving response to questionnaire and on examination of accounts accepted total loss as declared by the assessee.

3.  The Commissioner taking a view that the Assessing Officer did not make detailed enquiries while accepting loss declared by assessee, passed a revisional order setting aside the assessment.

4. The Tribunal, however, held that Assessing Officer had passed assessment order after making proper enquiries. The Tribunal thus set aside impugned revisional order.

5. The High Court on appeal held as under:

There is no scope with any disagreement with the Tribunal that facts of Madras Industrial Investment Corpn. Ltd. case (supra) were distinguishable from facts before CIT Amritsar. In the aforementioned case, company had issued debentures at a discount, on which higher rate was payable on maturity. The Apex Court against said backdrop held that the amount of discount was not a loss out an expenditure incurred by company in order to generate funds for its business activities and that as the discount was payable in the total period of debentures issued, it was to be allowed on pro rata application of period of debentures. In the case before CIT Amritsar, loss had occurred on account of sale of non-convertible debentures.

Tribunal, while dealing with the Appeals against CIT Amritsar orders has made a detailed and comprehensive discussion on all aspects of the matter and reinforced conclusions drawn with the details reference to the case law on the subject. The reasons detailed by Tribunal while allowing Appeals cannot be faulted on any of the grounds urged in the Appeals.

 For the reasons discussed we answer all the substantial questions of law against appellant and in favour of respondents. We accordingly hold that:

(i)   Tribunal (ITAT Amritsar) was right in holding that there were no compelling reasons for interference for the CIT Amritsar under Section 263, Income Tax Act;

(ii)   Tribunal (ITAT) was right in holding that law laid down in Madras Industrial Investment Corpn. Ltd.'s case (supra), as not applicable to the facts of the case;

(iii)   Tribunal (ITAT) did not err while interfering with the order passed by CIT Amritsar;

(iv)   Tribunal (ITAT) was right in holding that CIT Amritsar has not demonstrated as to how Assessing officer has not examined the necessary documents and explanations;

(v)   Tribunal (ITAT) was right in holding that CIT Amritsar has left the enquiries made by Assessing Officer without reaching a firm conclusion.

 Dismissed.