1997 (2) TMI 567 - AT - Income Tax

Appeal success on professional charges and speculation loss; entertainment expenditure disallowance reduced.

The assessee's appeal was allowed regarding the deduction for professional charges and treatment of speculation loss, as the Tribunal agreed that the loss ... - Issues Involved: Cross-appeals by assessee and department against CIT (Appeals) order for AY 1986-87.Deduction for Professional Charges:The CIT (Appeals) erred by not granting deduction for professional charges provision of Rs. 16,500. Despite bills not being received, services were rendered, establishing liability. Therefore, the deduction was allowed.Treatment of Speculation Loss:The dispute arose regarding the loss of Rs. 5,05,000 from the sale of 1,00,000 shares of Express Leasing Ltd. The Assessing Officer and CIT (Appeals) treated it as speculation loss under Explanation to section 73, disallowing set off against business profit. Assessee argued it was a solitary investment transaction, not part of regular business. Tribunal agreed, emphasizing the need for repetitive activity in purchase and sale of shares for Explanation to section 73 to apply. As there was only one transaction involving one company, not constituting a business, the loss was not speculation loss. The appeal was allowed.Disallowance under Section 37(2A):The Revenue challenged the deletion of disallowance under section 37(2A) by CIT (Appeals) related to entertainment expenditure. The Assessing Officer found the expenditure to be entertainment-related, but CIT (Appeals) relied on an estimate and reduced the disallowance. Tribunal acknowledged lack of detailed scrutiny by CIT (Appeals) but considering the small issue, reduced the disallowance to Rs. 8,000 on an estimated basis. The Revenue's appeal was partly allowed.In conclusion, the appeal of the assessee was allowed, and that of the Revenue was partly allowed, based on the detailed arguments and interpretations of relevant legal provisions.