2013 (10) TMI 222

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....ng that the Assessing Officer was not justified in making proportionate disallowance out of interest expenses under section 14A of the Act thereby giving relief out of total addition of Rs. 9,27,427/- made by the Assessing Officer under the said Action, without properly appreciating the facts of the case and the material brought on record by the Assessing Officer?"      (B) "Whether the Appellate Tribunal is right in law and on facts in not appreciating that the said proportionate interest expenditure was relatable to the dividend income on sales of shares which was exempt from tax as a portion of the borrowings, on which the said proportionate interest has been worked out, were utilized for the purpose of investment ....

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.... Assessing Officer that the assessee was regularly engaged in purchase and sale of shares constituting business activity as per explanation to section 73 of the Act?" Issue, in brief, is that the respondent assessee had earned certain income during the previous year to the relevant assessment year 2005-06 by sale of shares. The Assessing Officer applied explanation to section 73 of the Income Tax Act, 1961 and held that the income arose out of speculative business of the assessee and taxed the income as business income of the assessee. The assessee's contention that the receipt was in the nature of capital gain was not accepted. The assessee carried the matter in appeal. The CIT(Appeals) allowed the appeal of the assessee and held tha....

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....or more than four assessment years. Thus the entire section has application when the assessee has incurred loss or intends to carry forward non-absorbed loss. Explanation to section 73 reads as under:      "Explanation - Where any part of the business of a company (other than a company whose gross total income consists mainly of income which is chargeable under the heads "interest on securities", Income from house property", "Capital gains" and "Income from other sources" or a company the principal business of which is the business of banking or the granting of loans and advances) consists in the purchase and sale of shares of other companies, such company shall, for the purposes of this section, be deemed to be carry....