Commissioner Of Income Tax vs Sahara India Corporation Ltd.
2006 Latest Caselaw 536 Del

ORDER

1. The AO had, for the asst. yr. 1996-97, rejected the assessed's contention that the shares held by it were its stock-in-trade. The AO was of the view that the shares were held as a long-term capital investment. Aggrieved by the said order, the assessed preferred an appeal before the CIT(A) who reversed the view taken by the AO and held that the shares held by the assessed were actually its stock-in-trade and not capital investment as held by the AO. A further appeal filed by the Revenue before the Tribunal has been dismissed aggrieved whereof it is in appeal before us under Section 260A of the IT Act.

2. Mr. Sabharwal, learned Counsel appearing for the Revenue made a solitary submission for us. He urged that the Tribunal had not examined the question whether the shares held by the assessed were by way of stock-in-trade. The Tribunal had, according to the learned Counsel, proceeded on an assumption that the shares were indeed stock-in-trade and all that was required to be examined was whether the change in method of valuation adopted by the assessed of the said stocks was a recognized method adopted consistently and for bona fide reasons. The failure of the Tribunal to address the crucial question whether the stocks held by the assessed were its stock-in-trade, according to Mr. Sabharwal, vitiates the order made by the Tribunal. We regret our inability to accept that submission. The Tribunal has no doubt addressed itself only to the question of method of valuation adopted by the assessed but that is not because it has ignored the issue regarding the nature of the stock held by the assessed. The fact of the matter appears to be that the Revenue had not assailed the finding regarding the shares held by the assessed being stock-in-trade in appeal before the Tribunal. This is evident from a reading of the grounds of appeal raised in the memo of appeal a copy whereof has been filed by the Revenue as Annex. 4 in the paper books. The only three grounds which were urged in the said memo of appeal were as under:

(a) On the facts and in the circumstances of the case, the learned CIT(A) has erred in allowing the loss of Rs. 5,14,762 claimed by the assessed, on account of change in the method of valuation of closing stock of investment.

(b) On the facts and in the circumstances of the case, the learned CIT(A) has erred in allowing depreciation of Rs. 2,52,450 on account of depreciation when no justified reason has been furnished by the assessed for the purchase invoice to be in the name of a non-existent firm.

(c) The order of the AO may be restored and the order of the CIT(A) may be set aside with respect to the abovementioned ground(s).

3. It is evident from the above that the question whether the stocks held by the assessed were its stock-in-trade or capital investment was never raised or argued before the Tribunal. The only question that, therefore, remained before the Tribunal was whether the method of valuation adopted by the assessed was a recognized method adopted consistently and for bona fide reasons. The answer to that question has been given by the Tribunal in the affirmative. No fault can, therefore, be found with the order made by the Tribunal.

4. Even otherwise, the question whether the shares held by assessed were held by way of stock-in-trade is a question of fact. The CIT(A) having found the said question in the affirmative, an Appellate Court hearing an appeal under Section 260A of the Act would be slow in interfering with the said finding unless it is vitiated by any perversity. No such perversity is seen by us in the present case. The appeals accordingly fail and are hereby dismissed.