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of <h1>Tribunal affirms share trading profits as non-speculative, emphasizes fund deployment analysis</h1> <h3>Deputy Commissioner of Income-tax, Circle-6, Kolkata Versus Gulshan Investment Co. Ltd.</h3> Deputy Commissioner of Income-tax, Circle-6, Kolkata Versus Gulshan Investment Co. Ltd. - TMI Issues involved: The judgment involves the interpretation of section 73 of the Income Tax Act regarding the treatment of share trading profits as speculative profits.Summary:1. Issue 1 - Treatment of share trading profit as speculative profit: - The Assessing Officer contended that the explanation to sec.73 was not applicable as the funds deployed in granting loans were substantially more than in stock trading. - The Ld. CIT(A) held that the business of purchase and sale of shares should be treated as 'speculation business' and directed the set off of profits against speculation losses. - The Revenue appealed against this decision, arguing that the share trading profit should not be considered speculative under sec.73. - The Ld. Counsel for the assessee supported the decision of the Ld. CIT(A).2. Issue 2 - Applicability of exceptions under sec.73: - The Assessing Officer's direction indicated that the company did not fall under the exceptions provided in the explanation to sec.73. - The Ld. CIT(A) analyzed the company's income composition and fund deployment over the years to determine the principal business. - The judgment referenced a special bench decision highlighting the factors to consider in determining the principal business of an assessee. - It was concluded that both exceptions under sec.73 were not applicable to the appellant's case, leading to the treatment of share trading as a speculation business.3. Final Decision: - The Tribunal upheld the order of the Ld. CIT(A) as no contrary material was presented by the Revenue. - Consequently, the appeal of the Revenue was dismissed, affirming the treatment of share trading profits as speculative and the set off against speculation losses.This judgment clarifies the application of sec.73 in determining the nature of profits derived from share trading activities and emphasizes the importance of considering fund deployment and income composition in such assessments.
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