TaxTMI 
TaxTMI 
2010 (10) TMI 503
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....ed in the business of trading in shares was treated as speculation loss by invoking the provisions of Explanation to section 73 in the earlier years. He, therefore, required the assessee to explain why the loss from share trading activity shown in the year under consideration should not be treated as speculation loss in terms of Explanation to section 73. In reply, the following explanation was offered by the assessee company in support of its stand that Explanation to section 73 is not applicable in its case: "(1) The assessee has taken the delivery of shares and hence it should not be treated as speculation transaction. (2) The principal business for which the assessee was incorporated is granting loans and advances. Hence, the provisions of explanation to section 73 of the Act are not applicable to the assessee. (3) The assessee is engaged in the business of dealing in shares i.e. purchasing and selling of shares. The explanation to section 73 is applicable when "any part" of the business of the company is entirely and nothing but dealing in shares, the explanation to section 73 is not applicable to the company." 4. The above explanation of the assessee company was n....
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....share dealing activity is laughably indecorous. Finally, as regards the gross total income-test, the Assessing Officer has already shown that the share dealing loss is quantitatively greater than the loss under the head capital gains and hence the exclusion clause does not apply. Similarly, the volume of advancing or granting of loan does not make a company's business. The business involves truly the return in terms of money from such activity. I am also of the view that the contention of treating the badla charges included in the purchase as separate transactions and non-speculative has no basis at all, especially when the entire share trading activity has been deemed to be speculative. In the case of Eastern aviation & Industries case 208 ITR 1023, the Hon'ble Calcutta High Court had even gone up treating the figure of share trading loss of Rs. 12,90,145 greater than the positive figure of income from other sources to the tune of Rs. 3,87,603. The same principle had been also the judicial mandate in the case of Aryasthan Corporation Ltd., 253 ITR 401. In the instant case, the share trading loss as such was greater than the capital loss and the main business activity during ....
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.... for the assessee while challenging the action of the authorities below in treating the loss from purchase and sale of shares as speculation loss by invoking Explanation to section 73 is that the main provisions of section 73 are applicable only in a case where any loss is computed in respect of speculative transaction within the meaning of section 43(5) carried on by the assessee. According to him, if in a case like the one in hand where there is no such loss incurred by the assessee, section 73 has no application and the question of invoking Explanation to the said section does not arise. A perusal of the assessment order, however, shows that badla charges of Rs. 2,47,33,023 claimed by the assessee were treated by the A.O. as a loss suffered by the assessee on account of actual speculative transaction of purchase and sale of shares without involving actual delivery of shares and the said loss was treated by him as speculation loss within the meaning of section 43(5). It is also observed that the decision of the A.O. on this issue has not been reversed by the ld. CIT(A) and there is no ground taken by the assessee company in its present appeal to dispute the said decision. In any ....
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....as also held that the provisions of Explanation to section 73 have to be contrasted with the provisions of section 43(5) which defines speculative transaction to mean a transaction in which a contract for the purchase and sale of any commodity including any stocks and shares is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips. It was held that the Explanation to section 73, on the other hand, treats any purchase and /or sale of shares by certain companies to be speculative for the purpose of section 73 only. It was held that for the purpose of setting off and carried forward of loss, the buying and selling of shares by certain companies are regarded by the statute as speculation business even though the transfer of purchase and sale was followed up by delivery of scrips and as such cannot be treated as "speculative transaction" as defined in section 43(5). 10. In the case of SPFL Securities Ltd. vs. DCIT 6 SOT 562 (Del) it was contended on behalf of the assessee that only in case the assessee was deemed to have a speculation business in terms of sections 28 to 43 in which he suffered a loss that it would fall within ....
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....dvances given by the assessee company for non-business purpose thus were given out of the borrowed funds and proportionate interest paid on such borrowed funds to the extent utilized for non-business purpose was liable to be disallowed. He, therefore, proceeded to examine the loans and advances given by the assessee company and found that an amount of Rs. 85 lacs given by the assessee company to M/s Puneet Infosis Pvt. Ltd. in the earlier years had remained outstanding throughout the year under consideration. He also noted that interest attributable to the said amount was disallowed even in the earlier years. Similarly, he found that no interest was charged by the assessee on the amount of Rs. 50 lacs which had remained receivable from M/s Wockhardt Life Sciences Ltd. throughout the year whereas on the amount payable by the assessee to the said company, interest was regularly paid. He further found that share application money of Rs. 9,90,00,000received by the assessee company from M/s Puneet Advisory Services P. Ltd. in the earlier year was squared off by transferring the said amount to M/s Wockhardt Life Sciences Ltd. According to him, such squaring off had an effect of substitut....
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....et Infosis Pvt. Ltd. for purchase of shares in its name. It was held by the Tribunal that the said advance therefore could not be said to be not for the purpose of assessee's business and interest attributable thereto could not be disallowed. Respectfully following the said decision of the Tribunal, we direct the A.O. to allow the claim of the assessee on account of interest to the extent it was attributable to amount of Rs. 85 lacs paid to M/s Puneet Infosis Pvt. Ltd. As regards the advance amount of Rs. 50 lacs and Rs. 40,53,750 related to M/s Wookhardt Life Sciences Ltd. and M/s Sarkar Builders, the ld. Counsel for the assessee has submitted that these advances were given by the assessee company in the normal course of its business. He has contended that a proper and sufficient opportunity, however, was not given by the authorities below to the assessee company to establish the business expediency of the transactions involving giving of the said advances. He has also contended that even the advance of Rs. 9,90,00,000 related to M/s Puneet Advisory Services Pvt. Ltd. was actually not given by the assessee company but this fact could not be established in the absence of any specif....