itxa-1366-2017 IN HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 1366 OF 2017 Commissioner of Income Tax (IT)-4 .. Appellant. v/s. M/s. Siemens Nixdorf Information Systemse GmbH .. Respondent. Mr. Tejveer Singh, for Appellant. Mr. Nitesh Joshi i/b. Mr. A. K. Jasani, for Respondent. CORAM: M.S.SANKLECHA & NITIN JAMDAR, JJ. DATE : 26th AUGUST, 2019. P.C:- This Appeal under Section 260-A of Income Tax Act, 1961 (the Act), challenges order dated 31 st March, 2016 passed by Income Tax Appellate Tribunal (the Tribunal). impugned order dated 31st March, 2016 is in respect of Assessment Year 2002-03 2 Revenue urges only following question of law, for our consideration: Whether on facts and in circumstance of case and in law, Tribunal was justifed in law in holding that loan given to its subsidiary in India, by foreign company constitute capital asset within meaning of section 2(14) of Income Tax Act? 3 Briefly, facts leading to this appeal are as under:- (i) Respondent has subsidiary company by S.R.JOSHI 1 ::: Uploaded on - 03/09/2019 ::: Downloaded on - 04/09/2019 09:16:02 ::: itxa-1366-2017 name Siemens Nixdorf Information Systems Limited (SNISL). Respondent had lent amount of Rs.90 lakhs Euros to SNISL under Agreement dated 21 st September, 2000. SNISL ran into serious fnancial troubles and it was likely to be wound up. In this situation, Respondent sold this debt (Rs. 90 lakhs Euros) to one Siemens AG. This on basis of valuation carried out by M/s. Infrastructure and Leasing Finance Ltd. Respondent claimed diference in amount which was invested/ lent to SNISL and consideration received when sold / assigned to Siemens AG as short term capital loss. However, Assessing Officer while completing assessment on 30 th March, 2005 disallowed short term capital loss. This on basis that amount of Rs. 90 lakhs Euros lent by Appellant to its subsidiary SNISL, was not capital asset under Section 2(14) of Act and also no transfer in terms of Section 2(47) of Act took place on assignment of loss; (ii) Being aggrieved with order dated 30 th March, 2005, Respondent carried issue in appeal to Commissioner of Income Tax (Appeals) [CIT(A)]. By order dated 14th March, 2011, CIT(A) did not accept Respondent s contention that amount of Rs.90 lakhs Euros lent to SNILS was capital asset and upheld order of Assessing Officer. However, held that although assignment of loss was transfer under Section 2(47) of Act, but it is of no avail, as loan S.R.JOSHI 2 ::: Uploaded on - 03/09/2019 ::: Downloaded on - 04/09/2019 09:16:02 ::: itxa-1366-2017 being assigned/ transferred, is not capital asset; (iii) On further appeal, Tribunal by impugned order dated 31st March, 2016 allowed Respondent s appeal. It examined defnition of capital assets under Section 2(14) of Act. It held that it defnes term 'capital asset' as 'property of any kind held by assessee, whether or not connected with his business or profession' ,except those which are specifcally excluded in said section. It further records exclusion is only for stock in trade, consumables or raw materials held for purposes of business. It thereafter examined meaning of word 'property' to conclude that it has wide connotation to include interest of any kind. It places reliance upon decision of this Court in case of CWT v/s. Vidur V. Patel [1995] 215 ITR 30 rendered in context of Wealth Tax Act, 1957 which while considering defnition of asset had occasion to construe meaning of word property . It held word property to include interest of every kind. On aforesaid basis, Tribunal held that in absence of loan being specifcally excluded from defnition of capital assets under Act, loan of Rs.90 lakhs Euros would stand covered by meaning of word capital asset as defned under Section 2(14) of Act. It also held that transfer of loan i.e. capital asset will be covered by Section 2(47) of Act. This as Revenue had not fled any appeal on this issue. Thus, holding that Respondent would be entitled to claim loss on capital S.R.JOSHI 3 ::: Uploaded on - 03/09/2019 ::: Downloaded on - 04/09/2019 09:16:02 ::: itxa-1366-2017 account while assigning/ transferring loan given to M/s. SNISL to one to M/s. Siemens AG. 4 Mr. Tejveer Singh, learned Counsel in support of Appeal submits that impugned order of Tribunal is not sustainable for loan of Rs.90 lakhs Euros was not capital asset in terms of Section 2(14) of Act. It is further submitted that, reliance placed upon decision of this Court in Vidur V. Patel (supra) was not proper for reason it was rendered in context of diferent Act viz.- Wealth Tax Act, 1957. Thus, it can have no application while dealing with Act. It is also his submission that reliance upon decision of Gujarat High Court in CIT v/s. Minor Bababhai 128 ITR 1 is inappropriate, as in that case, Revenue has accepted that amount due from un-secured creditor were in nature of capital assets. Thus, there was no dispute on issue of 'capital asset' as in this case. Therefore, this appeal deserves admission. 5 We fnd that Section 2(14) of Act has defned word capital asset very widely to mean property of any kind. However, it specifcally excludes certain properties from defnition of 'capital asset'. Revenue has not been able to point out any of exclusion clauses being applicable to advancement of loan. It is also relevant to note that it is not case of Revenue before us that this amount of Rs.90 lakhs Euros was loan/ advance income of its trading activity. 6 impugned order of Tribunal has considered meaning of word property as given in context of S.R.JOSHI 4 ::: Uploaded on - 03/09/2019 ::: Downloaded on - 04/09/2019 09:16:02 ::: itxa-1366-2017 defnition of asset in Wealth Tax Act to hold property to include every interest which person can enjoy. This was extended by Tribunal to understand meaning of word property as found in context of capital asset under Section 2(14) of Act. Revenue has not been able to point out any reasons to understand meaning of word property as given in Section 2(14) of Act diferently from meaning given to it under Section 2(e) of Wealth Tax Act, 1957. This Court in case of Vidur Patel (supra) has observed as under:- So far as meaning of 'property' is concerned, it is well settled that it is term of widest import and subject to any limitation which context may require, it signifes every possible interest which person can hold or enjoy. As observed by Supreme Court in Commissioner, Hindu Religious Endowments vs. Shri Lakshmirudra Tirtha Swami of Sri Shirur Mutt (1954) SCR 1005, there is no reason why this word should not be given liberal or wide connotation and should not be extended to those well-recognized types of interests which have insignia or characteristic of property right.: only objection of Revenue to above decision being relied upon is that it is rendered under diferent Act. We are unable to understand this distinction when both Acts are cognate. However, this submission need not detain us, as this Court had occasion to consider meaning of word capital asset as defned in Section 2(14) of Act in Bafna Charitable Trust v/s. CIT 230 ITR 846. In above case, this Court observed as under:- Capital asset has been defned in clause (14) of section 2 to mean property of any kind held by S.R.JOSHI 5 ::: Uploaded on - 03/09/2019 ::: Downloaded on - 04/09/2019 09:16:02 ::: itxa-1366-2017 assessee,whether or not connected with his business or profession, except those specifcally excluded. exclusions are stock-in-trade, consumable stores or raw materials held for business or profession, personal efects, agricultural land and certain bonds. It is clear from above defnition that for purposes of this clause, property is word of widest import and signifes every possible interest which person can hold or enjoy except those specifcally excluded. Revenue has not been able to point out why above decision of this Court rendered in context of capital assets as defned in Section 2(14) of Act, is inapplicable to present facts. Nor, why loan given to M/s. SNISL would not, in present facts, be covered by meaning of capital asset as given under Section 2(14) of Act. 7 In above view, as issue raised herein stands concluded by decision of this Court in M/s. Bafna Charitable Trust (supra) and also by self evident position as found in Section 2(14) of Act, question as framed does not give rise to any substantial question of law. Thus, not entertained. 8 Accordingly, Appeal dismissed. (NITIN JAMDAR,J.) (M.S.SANKLECHA,J.) S.R.JOSHI 6 ::: Uploaded on - 03/09/2019 ::: Downloaded on - 04/09/2019 09:16:02 ::: Commissioner of Income-tax (IT)-4 v. Siemens Nixdorf Information Systemse GmbH