TaxTMI 
TaxTMI 
2013 (12) TMI 190
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.... not make the accounting entries properly ? (2) Whether on the basis of loss claimed in the computation of income filed along with return and taken to capital account, the claim of loss can be allowed ? (3) Whether statutory audit under s. 44AB is applicable in this case as the assessee's loss claim is exceeding the statutory turnover prescribed ? (4) Whether loss claim of Rs. 66,52,220 on account of loss in share trading and F.O. activity can be allowed without statutory audit under s. 44AB ? (5) It is, therefore, prayed that the order of the CIT(A) being perverse on facts and law on the above grounds be set aside and that of the....
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.... future account has been routed through the audited accounts' does not hold any relevance because this account does not bifurcate the credits in the account between repayments and profits and also does not bifurcate the debits in the accounts as loan charges and losses. (g) The assessee has not prepared a trading account in shares on its own. The figure of loss so claimed has been transcribed from the account extract or the debit note issued by M/s J.M. Financial Services. (h) The assessee has not shown any opening stock or any closing stock in respect of this so claimed trade. (i) For the residuary claim of the assessee that the loss is the part of the audi....
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....t to be qualified as a speculation loss which cannot be set off against other income as per sub-s. (1) of the s. 73 of the IT Act. As discussed above, the loss claim of Rs. 66,52,220 is hereby disallowed. Penal proceedings under s. 271(l)(c) are separately initiated for concealment of income by filing untrue and inaccurate particulars. Penal proceedings under s. 271B are also initiated for not getting the accounts audited in respect of the share trading business." 3. Being aggrieved by the order of the AO, the assessee carried the matter before CIT(A) who has allowed the appeal in favour of the assessee, which is reproduced as under : "3.3 I have considered the facts of the case, as....
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....ted in the books and from trial balance, P&L a/c capital account and balance sheet were prepared and audited. Appellant met all three arguments of the AO and proved that the losses suffered were genuine in view of steep decline in share market from January, 2008. Sec. 43(5) has excluded futures and options transactions from the purview of speculation from asst. yr. 2005-06 if the transactions are carried out at recognised stock exchange and time stamped contract notes were issued. Since these transactions were through a recognized stock exchange and time stamped contract notes were issued, the transactions of the appellant fulfilled the criteria of business. The transactions in futures and options cannot be capit....
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....resentative vehemently argued that the appellant had not maintained proper books of account to calculate the correct income from the share business. The learned Departmental Representative relied on cases of Kedarnath Jute Mfg. Co. Ltd. v. CIT [1971] 82 ITR 363 (SC) and Tuticorin Alkali Chemicals & Fertilizers Ltd. v. Commissioner of Income-tax, [1997] 227 ITR 172 (SC) and argued that the matter of the taxability cannot be decided on the basis of the entries which the assessee may choose to make in his accounts but has to be decided in accordance with the provisions of law. Thus, he has requested to reverse the order of the CIT(A). At the outset, learned Authorised Representative filed the paper book which includes the copy of the audit rep....
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.... directly in capital account but debited in consolidated P&L a/c of the appellant. But the appellant had filed all the evidence of claiming loss before the AO from the accounts of brokers' books which includes a copy of contract note issued by the brokers containing unique client code and PAN of the appellant. In audit report also, the nature of activity had been mentioned as professional consultant and share trading. The balance sheet as well as capital account have been audited by the chartered accountant. The credit balance of capital as on 31st March, 2008, has been transferred to audited balance sheet at Rs. 2,22,87,082. But for share, loss, the appellant had not submitted any evidence whether any delivery of shares has been taken or n....