COMMISSIONER OF INCOME TAX Vs. ASHLEY SERVICES LIMITED

JUDGEMENT

(1.) THE Revenue is on appeal as against the common order dated 28.7.2006 made in I.T.A. Nos. 333, 669 and 1149/Mds/2002 for the assessment years 1997 -98 and 1998 -99. The questions of law that arise for consideration in T.C.(A) Nos. 288 and 289 of 2007 in respect of the assessment year 1998 -99 are as follows:

(2.) EXCEPT for the question on reopening of the assessment for the assessment year 1997 -98, the questions that arise for consideration in T.C.(A) Nos. 288 and 289 of 2007 are common in all the appeals. As is evident from the reading of the main object clause in the Memorandum, the assessee herein is a Company, which carried on the business of investment, to invest the capital and other monies of the Company, to deal in shares, debentures, debenture -stocks, bonds, units, obligations and securities issued by Indian or Foreign Governments, and Companies incorporated or established in India or elsewhere and carry on the business of finance, foreign exchange, investment company, finance and manage industrial enterprises and to promote and finance companies engaged in industrial, trading, finance, investment and/or other business, manage investment pools, unit trusts, mutual funds, canalize the savings of the community for productive purposes, syndicate in shares, stocks, securities, finance, etc., The memorandum also authorised the Company to invest in, buy, purchase, acquire, take on lease or be interested in any immovable property, such as, lands of any tenure, develop secondary markets in bills, discount and rediscount genuine trade bills, procure, obtain short term or long term finance or working capital finance, either alone or jointly with others. Thus, the business of the assessee is finance.

(3.) WE may point out that the re -opening was made by the Assessing Officer in respect of the assessment year 1996 -97 too, where the loss suffered by the assessee was stated to be of a tune of Rs. 49,98,164/ -. The re -assessment made for the assessment year 1996 -97 was also a subject matter of appeal before the Commissioner of Income Tax (Appeals), who dismissed the appeal relating to this year too. Apart from these two years, for the assessment year 1998 -99, in the original assessment made under Section 143(3), the Assessing Officer held that the assessee's principal business was not banking or granting loans and advances. The assessee had diversified from investment activity to project consultancy services and this was evident from the change of name from "Aasia Securities Holding Ltd." to "Ashok Leyland Project Services Limited". The Assessing Officer further held that during the year under consideration there was a considerable reduction as regards its investment activity. Consequently, the loss suffered on the sale of securities was to be treated only as a speculative loss falling under Explanation to Section 73 of the Income Tax Act.