AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2013 (9) TMI 798
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....re transaction as speculation in nature." 3. The assessee has taken following grounds in its appeal: "1.1 On facts and inn law, ld CIT(A) erred in confirming action of the AO of not allowing unabsorbed business loss of earlier years to be set off against income for the year. 1.2 On facts & in law, ld CIT(A) failed to appreciate that the taxable of income was on sale of business asset and thereby erred in not allowing unabsorbed business loss to be set off against income for the year. 2. The AO erred in levying interest u/s.234B of the I.T.Act." 4. The relevant facts giving rise to these appeals are that assessee is a Private Limited Company and is engaged in the business of trading in shares, giving loans and advances and property development. For the assessment year under consideration, assessee filed return of income on 30.10.2004 declaring total income at Rs.Nil. 5. Assessee has shown following incomes for the assessment year under consideration: (i) Sale of shares & securities Rs. 9,81,993 (ii) Rent Income Rs. 4,96,155 (iii) Interest income Rs. 7,74,028 (iv) Income from joint venture Rs. 9,28,046 (v) Profit on sale of o....
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....er than capital gain. In view of his above findings, ld CIT(A) has stated that assessee has derived its income of Rs.1,97,18,710 comprising of capital gains u/s.50 to the tune of Rs.1,95,68,230 and house property income to the tune of Rs.4,18,603 which is more than the loss of shares as arrived at by the AO at Rs.32,43,945. ld CIT(A) has held that provisions of Explanation to Section 73 of the Act is not applicable. Consequently, ld CIT(A) has treated the said share loss of Rs.32,43,945 as business loss of the assessment year under consideration and directed the AO to allow the same to be set off against other income under the head of the current year. Ld CIT(A) held that unabsorbed brought forward loss cannot be allowed against assessee's other income under other head in the current year. 11. In view of above, assessee as well as department are in appeal before the Tribunal. 12. In the appeal filed by the assessee, as may be observed from the grounds of appeal, the only issue involved is as to whether short term capital gain computed under section 50 of the Act could be set off against brought forward business loss. 13. During the course of hearing, ld A.R. submitted that short....
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....f income. Ld A.R. submitted that there is a close nexus of the assets sold by the assessee which were used for the business purpose and the character of receipt on sale of the said assets and, therefore, said STCG computed u/s.50 of the Act has to be considered as business income of the assessee. When the attention of ld A.R. was drawn to the decision of Special Bench ITAT (Bangalore) in the case of M/s. Nandi Steels Ltd. vs ACIT, 17 Taxmann.93(Bang)(SB)/(2012) 13 ITR (Trib) 494 (SB) wherein, Tribunal has held that capital gain arising to the assessee on sale of land used for business purposes cannot be set off against carry forward business loss, ld A.R. submitted that ITAT Bangalore (SB) had not considered the character of receipt on sale of land which was used for business purposes as the same was not argued before it. He further submitted that Special Bench relied on the decision of Hon'ble Supreme Court in the case of CIT vs. Express Newspaper Ltd, 53 ITR 250(SC). Ld A.R. submitted that the case of Special Bench, if read in entirety, it cannot be made applicable to the case of the assessee and rather cases cited by him are applicable, and are relevant. Ld A.R. relying on the d....
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.... under section 50 of the Act on the ground that said short term capital gain on sale of asset is capital gain and it is not a business income. In the first appeal, ld CIT(A) has held that capital gain arising u/s.50 of the Act should not be treated differently than the other capital gain. Ld CIT(A) has held that provisions of section 45 do not specify the capital gains arrived at u/s.50 to be treated differently. Thus, for all the purposes of Income tax Act, 1961, the capital gains arising u/s.50 of the Act have to be treated as capital gains only in quite normal sense and not otherwise. In view thereof, ld CIT(A) has treated the said short term capital gain computed u/s.50 of the Act as normal capital gain and has held that income of the assessee from capital gain and house property is more than the loss arrived at by the AO on trading of shares. Therefore, said share loss cannot be treated as speculation loss in view of exception to Explanation of Section 73 of the Act. Since ld CIT(A) has treated the capital gain computed u/s.50 of the Act as normal capital gain, he has also held that the unabsorbed business loss cannot be allowed to be set off against capital gain computed u/s.....
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....siness and for earning income from such business or profession is only allowable as deduction. The Tribunal after considering the decision of Hon'ble Apex Court in the case of Express Newspapers Ltd (supra) held that capital gain on sale of capital assets is not to be set off against brought forward losses of earlier years. Thus, the Tribunal decided the issue against the assessee. 18. Keeping in view of above decisions cited by ld A.R. and also the decision of Special Bench in the case of Nandi Steel Ltd (supra) relied by ld D.R., which is subsequent to the decisions relied by ld A.R., and also keeping in view the principle that the decision of Special Bench prevails over the decisions of Division Benches, we hold that capital gain even though computed u/s.50 of the Act, cannot be treated differently and same is to be considered as capital gain and consequently, brought forward business loss could not be set off against capital gain that has arisen to the assessee in the assessment year under consideration on account of sale of its premises at Pune. Hence, we uphold the order of ld CIT(A) by rejecting grounds of appeal taken by assessee in its appeal. 19. Now coming to grounds o....