2013 (2) TMI 179

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..... 2. Facts in brief are that the AO during the assessment proceedings after examining the details furnished by the assessee noted that the assessee had shown income from house property at Rs. 35,73,950/-, income from other sources at Rs. 24,92,129/- and capital gain on sale of flat at Rs. 62,285/-. The assessee had also made purchase and sale of shares in which it had incurred loss of Rs. 3,25,23,981/- as per details given below :- Opening stock Rs. 4,13,68,458/- Purchases Rs. 697,73,83,642/- Sales Rs. 698,41,67,611/- Closing stock Rs. 20,60,608/- Loss Rs. 3,25,23,981/- 2.1 The AO referred to the provisions of Explanation to section 73 as per which in case gross total income does not consist mainly of income from house property,....

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....lation loss. As regards allocation of expenses, the AO observed that the assessee had claimed composite expenses of Rs. 31,37,574/- in relation to all activities which consisted of sale of shares to the tune of Rs. 698 crores and other income of Rs. 25.54 lacs. He, therefore allocated expenses relating to other income at 1% of such income i.e., Rs. 25,540/- and expenses relating to share trading were estimated at Rs. 31,12,030/-. The AO therefore, disallowed expenses to the tune of Rs. 31,12,030/- (wrongly mentioned as Rs. 27,36,426/- in the computation) and speculation loss was allowed to be carried forward and not adjusted against other income. 2.2 The assessee disputed the decision of AO and submitted before CIT(A) that gross total inco....

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....ts Ltd. (supra) and judgment in case of CIT v. Park View Properties (P.) Ltd. [2003] 261 ITR 473. It was accordingly argued that the appeal of the revenue has to be allowed. 4. We have perused the records and considered the rival contentions carefully. The dispute is regarding application of provisions of Explanation to section 73 as per which in case of a company, other than a company gross total income of which consists mainly of income from house property, capital gain and other sources or the company principal business of which consists of banking or of granting loan/advances, any part of the business consists of purchase and sale of shares of other companies loss arising therefrom has to be treated as speculation loss. The assessee is....