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Download Full Text of the Judgement - TaxGuru

Download Full Text of the Judgement - TaxGuru

2ITA No.3360/Mum/20102.

2ITA No.3360/Mum/20102. The first dispute is regarding the decision of A.O. treating the loss frompurchase and sale of shares as speculation loss in place of business loss declared bythe assessee. The A.O. during the original assessment proceedings noted that theassessee had incurred loss of Rs.1,37,83,962 from trading in shares which hadbeen declared as business loss. The Assessing Officer asked the assessee as towhy the loss should not be treated as speculation loss under the provisions ofExplanation to section 73.The assessee explained that the income of theassessee mainly consisted of dividend, profit on sale of investment and otherincome and therefore the provisions of Explanation to section 73 were notapplicable. The details of income was given by the assessee as under :i) Dividend Rs. 23,47,650ii) Profit on sale of investment Rs. 85,38,736iii) Misc. income Rs. 22,898Total :Rs.1,09,09,2842.1 The A.O. did not accept the explanation given by the assessee. It wasobserved by him that total turnover in purchase and sale of shares of the assesseewas Rs.9.37 Crores and therefore the main activity of the assessee was trading inshares and A.O. thus concluded that the provisions of Explanation to section 73were applicable in the case of assessee.The A.O. further observed that theDownload Source- www.taxguru.in

3ITA No.3360/Mum/2010assessee had incurred total general expenses of Rs.5,85,248. He attributed suchexpenses to trading of shares in the ratio of trading turnover to total receipts ofbusiness (Rs.14.71 Crores) which came to Rs.3,72,671. He, therefore computed theloss from trading of shares at Rs.1,41,56,633 (1,37,83,962 + 3,72,671) which wastreated as speculation loss which was set off against speculation profit ofRs.21,615 and the balance speculation loss of Rs.1,41,34,958 was not set off againstincome from any other head and allowed to be carry-forward.2.2 In appeal, the CIT(A) confirmed the order of Assessing Officer. Infurther appeal by the assessee, the Tribunal restored the issue to the file of A.O.for deciding the issue afresh after examining the facts of the case in the light ofdecision of Tribunal in the case of ACIT Vs. Concord Commercial P. Ltd in ITANo.5220/Bom/94 Dt.28.1.2005 and the judgment of Hon’ble High Court of Calcuttain the case of Eastern Aviation & Industries Vs. CIT (208 ITR 1023).2.3 In the fresh assessment order, the A.O. again treated the loss fromtrading of shares as speculation loss after observing that the decision of theTribunal in the case of M/s. Concord Commercial P. Ltd. (supra) had not beenaccepted by the department. The assessee appealed to CIT(A) who on examinationof records observed that while considering the gross total income, the loss from aDownload Source- www.taxguru.in

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