TaxTMI 
TaxTMI 
2004 (1) TMI 631
X X X X Extracts X X X X
X X X X Extracts X X X X
....relevant facts giving rise to this appeal are that the assessee filed return of income declaring total income of Rs. 1140. The said income was arrived at after adjusting loss of Rs. 37,88,484 from trading of shares with profit from brokerage and commission of Rs. 38,40,890. 4. The Assessing Officer has stated that the assessee produced computerized books of account, but did not produce bills and vouchers and bank statement. The Assessing Officer has stated that from the details of account, it was noticed that the assessee derived income from (i) purchase and sale of shares and (ii) brokerage and commission. In the return of income on page 5, item D, under the head "Income from Other Sources", the assessee company had shown "Nil" income. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iness and did not allow it to be set off against the income from brokerage and commission but allowed the same to be carried forward for set off with future speculation profit, if any. Being aggrieved, the assessee filed appeal before the first Appellate Authority. 6. On behalf of the assessee it was contended before the first Appellate Authority that the income of Rs. 38,40,890 was on account of service charges by rendering the technical services under the head "Income from other sources" and similarly, the assessee company incurred loss of Rs. 37,88,484 in share trading. It was contended that the assessee company had shown in computation both the income and loss separately under the head "Income from other sources" and "loss from busin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he accounting period relevant to the assessment year 1999-2000. The net result in such activity was loss of Rs. 37,88,484. The Assessing Officer has treated the said loss as speculation loss in terms of Explanation to section 73 of the Income-tax Act. Before the Assessing Officer it was argued by the assessee that Explanation to section 73 has no application to the assessee as its gross total income consisted mainly of income from other sources. It is the case of the assessee that it brokered between a sister concern and M/s. Swaraj Mazda Ltd. in selling one of the software developed by its sister concern. In connection with this, the assessee has received a sum of Rs. 38,40,890 as brokerage and as such, its income from other sources was mu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t less than 50% as held in CIT v. Amritlal & Co. [1995] 212 ITR 504 (Bom.). Thus, it may be concluded that if more than 50% of gross total income of the assessee consists of income chargeable under the heads of interest on securities, income from house property, capital gains and income from other sources, the deeming provisions shall not apply. In the case of the assessee, the gross total income includes mainly income from other sources, i.e. commission or brokerage received, amounting to Rs. 38,40,890. In view of this, the Assessing Officer is not correct in treating the assessee as engaged in speculation business and disallowing the set off of share trading loss with that of income from other sources. The Assessing Officer is, therefore,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in the case of Eastern Aviation & Industries Ltd. v. CIT [1994] 208 ITR 1023 correctly while applying Explanation to section 73 of the Act. The ld. Authorised Representative of the assessee referred the paper book and submitted that the net income from business was Rs. 38,39,754. He further submitted that the income from brokerage and commission was received by the assessee only during the assessment year under consideration from technical services rendered to M/s. Swaraj Mazda Ltd., as one of the sister company of the assessee had developed a software technology which was brokered by the assessee and the assessee received the commission of Rs. 38,40,890. He submitted that the brokerage and commission received by the assessee in the assessm....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... appeal and no such business of brokerage and commission for marketing of software technology was done by the assessee in the preceding and/or succeeding assessment year to the assessment year under consideration. It is also a fact that the receipt of Rs. 38,40,890 was earned by the assessee on the single transaction for marketing the software technology and it is not the regular business of the assessee. The above facts prima facie establishes that the said income of brokerage and commission of Rs. 38,40,890 is the income from other sources and not an income from business. We agree with the ld. CIT(A) that the assessee cannot be considered in the business of earning commission on sale of software technology. Explanation to section 73, inte....