TaxTMI 
TaxTMI 
2006 (4) TMI 459
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....en against the profit on non-speculative shares trading (delivery basis)." The relevant facts leading to the controversy are that the assessee-company is a private limited company engaged in the business of purchase and sale of shares of other companies. The admitted position is that this is the only business activity of the assessee and there is no other source of income. In the return of income filed by the assessee, the assessee disclosed loss of Rs. 63,67,946 on trading of shares where delivery was not taken and profit of Rs. 5,32,963 on trading of shares where delivery was taken. There is no dispute about the fact that in respect of share transactions which have been settled without actual delivery, the provisions of section 43(5) a....
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.... Tribunal, Mumbai Bench order dated May 26, 2004, in the case of Swamini Leasing and Investment P. Ltd. in I. T. A. No. 2150 (Mum.) of 2000, for the assessment year 1997-98. A copy of the order is placed on record. The learned Departmental Representative contended that in that case, the assessee-company was carrying on the business of trading in shares and there was no other activity. It was claimed that the Explanation to section 73 is not applicable and the assessee's claim was negatived by the Department. The matter ultimately travelled before the Tribunal and the issue was decided in the assessee's favour with the following observations at paragraph 6 of the order : "We have heard the rival submissions and considered the facts and ma....
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....any whose only source of income is trading in shares. We have given a careful consideration to the rival submissions and have gone through the facts as also the precedents cited before us. The Incometax Appellate Tribunal, Mumbai Bench, in the case of Swamini Leasing and Investment P. Ltd. (supra) have held that the Explanation to section 73 would apply only to a case where there are more than one source of income or business activity. The learned Departmental Representative has also referred to the Income-tax Appellate Tribunal, Mumbai Bench decision in the case of Aakrosh Investment and Leasing P. Ltd. [2004] 90 ITD 287. The ratio of this case may be reproduced from the short headnote : "Section 73 of the Income-tax Act-Losses-In sp....
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....e been settled without actual delivery, the profit has arisen from shares where delivery has taken place. Here, a reference may be made to the Calcutta High Court decision in the case of Arvind Investments Ltd. (supra) and the ratio of this case is reproduced below from the headnote : "Sub-section (2) of section 73 of the Income-tax Act, 1961, restricts the scope of section 72 which provides for carrying forward and setting off of business losses. If any loss computed in respect of a speculation business has not been wholly set off, such loss may be carried forward and set off against profits and gains of any speculation business in the following assessment years. The Explanation to section 73 introduces a legal fiction. The section appl....
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....e 'where any part of the business of a company'. 'Any' is a word which excludes limitation or qualification. A restricted meaning should not be given to the phrase 'any part of the business'. The object of Circular No. 204, dated July 24, 1976, is to curb devices to manipulate and reduce the taxable income of a company under the management of a controlling group of persons. But the circular has clearly stated in paragraph 19.1 that 'the business of purchase and sale of shares by companies which are not investment or banking companies or companies carrying on business of granting loans and advances will be treated on the same footing as the speculation business'. The phrase in the Explanation to section 73 'to the extent to which the busines....