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Download Full Text of the Judgement - TaxGuru

Download Full Text of the Judgement - TaxGuru

4ITA

4ITA No.3360/Mum/2010particular source was also required to be considered being the negative income.For the said proposition, he placed reliance on the judgment of Hon’ble High Courtof Calcutta in the case of CIT Vs. Park View Properties Pvt. Ltd. (261 ITR 473) andthe decision of Mumbai Bench of Tribunal in case of Mafatlal Securities Ltd Vs.JCIT (21 SOT 245) (Mum) and several other judgments. He also referred to thedecision of Special Bench of Ahmedabad Bench in case of Gujarat CreditCorporation Ltd. Vs. ACIT (113 ITD 133) in which, since major investment was inshares, it was held that the principal business was share investment and not ofgranting loans and advances and therefore Explanation to section 73 was attracted.The Special Bench had considered the decision of the Tribunal in case of ConcordCommercial Pvt. Ltd. (supra). The CIT(A) noted that loss from share trading wasmuch more than income from other sources and therefore held that Explanation tosection 73 was applicable in this case and accordingly upheld the order of A.O.treating the loss as speculation loss. Aggrieved by the said decision, the assesseeis in appeal before the Tribunal.2.4 We have heard both the parties, perused the records and considered therival contentions carefully.The dispute is regarding nature of income frompurchase and sale of shares under the provisions of Explanation to section 73. AsDownload Source- www.taxguru.in

5ITA No.3360/Mum/2010per the said Explanation, the case of company whose gross total income does notconsist mainly of income chargeable under the head ‘income from house property’,‘capital gain’ and ‘income from other sources’ or the principal business of which isnot granting loans or advances, if any part of business of the company consists ofpurchase and sale of shares of other companies, then, such company is deemed tobe carrying on speculation business to the extent to which the business consists ofpurchase and sale of shares. In this case, the assessee had loss from purchase andsale of shares of Rs.1,41,34,958. The assessee also had income from capital gainand other sources totaling to Rs.70,06,755. It is a settled legal position that lossis also negative income and therefore while considering the gross total income losshas to be considered in absolute figure.The income from share trading (inabsolute figure) included in gross total income is more than income from capitalgain and other sources. Therefore the provisions of Explanation to section 73 willbe applicable in this case. This view is supported by the judgment of Hon’ble HighCourt of Calcutta in case of Park View Properties Pvt. Ltd. (supra) and the decisionof Special Bench of Tribunal in case of Gujarat Credit Corporation (supra). Thereare several other decisions of the Tribunal also in which the same view has beenfollowed. In view of the above position, the claim of the assessee based on theDownload Source- www.taxguru.in

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