ORDER SHEET ITA NO.118 OF 2003 IN HIGH COURT AT CALCUTTA Special Jurisdiction(Income Tax) ORIGINAL SIDE UNITED CREDIT LTD. Versus C.I.T. - II KOLKATA BEFORE: Hon'ble JUSTICE GIRISH CHANDRA GUPTA Hon'ble JUSTICE ARINDAM SINHA Date : 17th April, 2015. MR.R.K.MURARKA, MS.SUTAPA ROYCHOWDHURY, ADVOCATES FOR APPELLANT MD.NIZAMUDDIN,ADVOCATE FOR RESPONDENT Court: subject matter of challenge in this appeal is judgment and order dated 31st January, 2003 passed by learned Income Tax Appellate Tribunal pertaining to assessment year 1996-1997. assessee has come up in appeal. At time when appeal was admitted following questions were formulated. 1 ) Whether on facts and circumstances of case Tribunal was justified in holding that for purpose of business of advancing money and cash was capital asset and not stock-in- trade of said business? 2) Whether on facts and circumstances of case finding of Tribunal that assesse was not engaged in business of advancing loans and that money and cash was not its stock-in-trade was perverse and contrary to materials on record and based on irrelevant materials and considerations? 3) If Question No.2 is answered in affirmative, whether on facts and in circumstances of case Tribunal was justified in holding that expense incurred by assessee in procuring cash by way of issue of share capital was not deductible business and revenue expenditure? 4)If Question No.2 is answered in affirmative, but Question No.3 is answered in negative, whether on facts and in circumstances of case finding of Tribunal that cash procured by issue of share capital could not be held to be conversion of Capital into stock-in-trade was justified in law and not perverse ? Mr. Murarka, learned advocate, appearing in support of appeal submitted that question nos. 3 and 4 as questions themselves would suggest are dependent upon favourable answer to question no.2. Therefore, question no.2, according to him, is most important question, which this Court has to decide. question no.2, according to Mr. Murarka, is relatable to following finding recorded by learned Tribunal. perusal of balance sheet for year ended March, 1996 also reveals that assessee had investment in fixed assets, stock in shares, stock on hire, loans and advances. It is further observed from annual report for year 1993-94 that subsidiary company of assessee, namely, UCL Housing Ltd. had taken necessary action for finalisation of plans of both residential apartments projects, Queens Park Building for higher income group and Thakurpukur project at Joka crossing for lower and middle income groups. report projected confidence that company would make reasonably good profits in aforesaid building projects. In light of these facts on record, contention advanced on behalf of assessee that it is mainly engaged in business of advancing loans and cash generated by way of enhancement of share capital is its stock-in-trade does not deserve serious consideration. Mr.Murarka contended that learned Tribunal appears to have been influenced by fact that subsidiary of assessee was engaged in business of real estate. He submitted that assessee is separate entity and assessee can have no connection in law with subsidiary. He may be right in law in saying that subsidiary is separate entity. In deciding question as regards nature of business pursued by assesse business of subsidiary of assessee may not be relevant consideration. But learned Tribunal does not appear to suggest that assessee itself is engaged in real estate business. assessee was interested in contending that it is engaged in business of borrowing and lending money. Therefore, money was its stock-in-trade. learned Tribunal has repelled contention that money was its stock-in-trade. Mr. Murarka submits that aforesaid finding is perverse. We are unable to accept his submission. Mr. Murarka has made over to us copy of 23rd Annual Report consisting of statement of accounts of financial year 1993- 1994 from which it appears that available funds of company/assessee was about Rs.11,23,00,000/- consisting of sum of Rs.5.56 crores on account of capital and reserve and balance sum of Rs.5.67 crores consisting of loans both secured and unsecured. Out of aforesaid sum about Rs.2.55 crores were invested in fixed assets comprising of furniture and fixture, office equipment, motor car, equipments given on lease, heavy vehicles given on lease, bottles given on lease and scooter, about Rs.52 lakhs were invested in shares and debentures, about Rs.3.67 crores is invested in inventories consisting of investment in shares and hire purchase transactions; about sum of Rs.1.46 crores is receivable on account of lease, hire purchase and others, and sum of Rs.5.45 crores were invested in loans and advances both secured and unsecured, part of which has also been lent to subsidiary referred in judgment of learned Tribunal. From aforesaid application of funds it cannot be said that principal business of assessee is borrowing and lending money. Therefore, view taken by learned Tribunal is possible view and by no means is perverse. Therefore, question no.2 is answered in negative. question no.1 need not be answered. question nos. 3 and 4 are dependent upon affirmative answer to question no.2. Therefore, they need not be answered. appeal is dismissed. (GIRISH CHANDRA GUPTA, J.) (ARINDAM SINHA, J.) sb. United Credit Ltd. v. C.I.T. - II Kolkata