1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1086 OF 2009 The Commissioner of Income Tax ..Appellant. V/s. M/s. Enpee Credit & Capital (I) Ltd. ..Respondent. Mr. Suresh Kumar for appellant. Mr. Sameer G. Dalal for respondent. CORAM : V.C.DAGA AND J.P.DEVADHAR, JJ. DATED : 31ST JULY, 2009. P.C. :- 1. Heard learned counsel for the rival parties. The appeal is admitted on the following substantial questions of law:- 1. Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in directing the assessing officer to consider a sum of Rs.14,60,000/- on account of advance given to M/s. Ambica investments either as business loss or bad debt ? 2. Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in directing the assessing officer to consider a sum of Rs.14,60,000/- as bad debt on account of advance given to M/s. Ambica Investments, even though the assessee has not fulfilled the condition laid down in accordance with section 36(1)(vii) r.w. 36 (2) of the I.T. Act ? 3. Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in admitting assessee's alternative claim 2 to consider a sum of Rs.14,60,000/- as business loss though the assessee failed to prove that advance given to M/s. Ambica Investment is in the normal course of business ? 4. Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the assessee was entitled to deduction on account of diminution in the value of stock in trade amounting to Rs.35,85,322/- ? 5. Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the assessee was entitled to deduction as business loss on account of diminution in the value of stock in trade even though the assessee has not traded those investments in subsequent years ? 2. By consent of the parties, the appeal is taken up for final hearing. 3. So far as the question Nos.2 & 3 are concerned, there are different shades of the first question. So far as the first question is concerned, the Tribunal has remanded the case to the A.O. to consider and decide whether the subject amount is indeed a bad debt or a business loss. In this view of the remand, keeping all questions open, it is not possible to hold the appeal involves substantial question of law so far as the first question coupled with other two questions are concerned. 4. So far as question Nos.4 & 5 are concerned, the Tribunal has recorded findings of fact based on appreciation of evidence, which reads as under:- " The shares were converted into stock-in-trade as on December, 1999 and this being second assessment year and A.O. having accepted the transaction as on 31/3/2000, the issue cannot be disturbed in this assessment year. Since the assessee is in share trading business, the valuation of stock at the end of the year at market price which is less than the cost, is according to the accounting principles. On the 3 same shares, without there being any purchase or sale the assessee has offered profit in the next A.Y. as the market value has increased to that extent. This was also accepted by the A.O. Further, as seen from the statement of transactions of later years the assessee is consistently following the same method of accounting. In view of this assessee's contention that it has incurred loss on revaluation is to be accepted. Consequently, the ground is allowed. The A.O. is directed to allow the loss as claimed. " 5. The view taken by the Tribunal cannot be faulted. We do not see any substantial question of law is involved in the appeal. 6. In the result, appeal is dismissed with no order as to costs. (J.P.DEVADHAR,J.) (V.C.DAGA, J.)