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| The Tax Publishers2019 TaxPub(DT) 1255 (Bom-HC) INCOME TAX ACT, 1961
Section 46
Where loss suffered by assessee on account of diminishing value of shares held as investment, was treated as capital loss, then in terms of section 46(2) there was nothing on record to hold that assessee was not entitled to claim the same as such.
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Capital gains - Distribution of assets in case if liquidation - Claim of capital loss whether allowable -
Assessee-company had made investment in the shares and during the relevant assessment year it had written off investment on account of diminishing of value of shares and claimed the same as a business loss. Matter travelled to Tribunal, wherein assessee's claim that the loss suffered was business loss, was rejected. The assessee raised an alternative contention claiming that such loss could not be denied as a capital loss. Accepting the assessee's contention, Tribunal rejected the revenue's contention that the loss cannot be allowed in view of section 46(2) of the Income Tax Act, 1961. Held: If the loss suffered by assessee was treated as capital loss, then there was nothing on record to hold that assessee was not entitled to claim the same as such. Claim of assessee would also get support from section 46(2) of the Act. Section 46(1) provides that notwithstanding anything contained in section 45, where the assets of a company are distributed to its shareholders on its liquidation, such distribution shall not be regarded as a transfer by the company for the purposes of section 45.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. :
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