2015 (1) TMI 235 - AT - Income Tax

Tribunal aligns with Bombay HC on share transactions, treating as speculative income. Commissioner decision upheld.

Rasvick Apparels Pvt. Ltd. Versus The ACIT Circle-4, Baroda

Rasvick Apparels Pvt. Ltd. Versus The ACIT Circle-4, Baroda - TMI Issues:Rectification of mistake in Tribunal's order regarding treatment of share transactions as business loss or capital loss.Analysis:The Appellate Tribunal received a miscellaneous application from the Assessee seeking rectification of the Tribunal's order dated 18/04/2013, which allowed the appeal filed by the Respondent for statistical purposes. The Assessee contended that the Tribunal's order contained an error apparent from the record. The Assessee argued that the Tribunal failed to consider the judgment of the Bombay High Court in the case of CIT vs. Lokmat Newspapers (P) Ltd., which was crucial to the matter at hand. The Respondent strongly opposed the application, claiming no mistake was present in the record, and the Assessee was attempting to review the Tribunal's order under the guise of rectification.Upon reviewing the submissions, the Tribunal noted the typographical error in the order regarding the Assessment Year, which was corrected. The Assessee's main contention was that the Assessing Officer (AO) treated the loss from share transactions as speculative loss without allowing set off against the profits, contrary to the judgment of the Bombay High Court in the Lokmat Newspapers case. The AO invoked Section 73 of the Income Tax Act to treat the loss as speculative, leading to penalty proceedings. However, the Assessee argued that the profits and losses from share transactions should be treated as speculative transactions, as per the judgment of the Bombay High Court.The Tribunal acknowledged that the judgment of the Bombay High Court in the Lokmat Newspapers case was not considered in the earlier order, which constituted an error apparent from the record. Therefore, the Tribunal modified its previous order based on the Bombay High Court's ruling. The Tribunal upheld the decision of the Commissioner of Income Tax (Appeals) in treating the share transactions as speculative income, in line with the judgment cited. Consequently, the appeal of the Revenue was dismissed, and the miscellaneous application filed by the Assessee was allowed as per the modifications made.In conclusion, the Tribunal rectified the order to align with the judgment of the Bombay High Court, emphasizing the treatment of share transactions as speculative income in accordance with the provisions of Section 73 of the Income Tax Act. The decision highlighted the importance of considering relevant case law in determining the nature of income from share transactions and the applicability of set off provisions for losses incurred.