ELECTRONIC CORPORATION OF TAMILNADU LIMITED (ELCOT) Vs. THE DEPUTY COMMISSIONER OF INCOME TAX COMPANY, CIRCLE II(1)

JUDGEMENT

(1.) This appeal by the assessee, a wholly owned Government of Tamil Nadu undertaking has been filed under Sec. 260-A of the Income Tax Act, 1961 (hereinafter referred to as the "Act), challenging the order passed by the Income Tax Appellate Tribunal "A" Bench, in I.T.A.No.1112/MDS/2006 for the assessment year 2001-02.

(2.) The appeal has been admitted on 14/10/2008 on the following substantial questions of law:-

(3.) The assessment for the year under consideration was framed on 29/10/2003 and the Assessing Officer held that the claim of loss accruing or arising as a result of sale of shares was a capital loss and not eligible for deduction in computation of business income. The assessee filed appeal before the Commissioner of Income Tax (Appeals) - XI (hereinafter referred to as CIT (A)). The appeal filed by the assessee was allowed by order dtd. 9/1/2006, wherein the CIT(A) held that the amounts written off by the assessee were basically advanced towards working capital of the ventures to whom these advances were made and the real character of the transaction was akin to those applicable to loans and not to equity investments per Sec. .