TaxTMI 
TaxTMI 
2015 (5) TMI 887
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....ssessee not pressing its Ground # 4 before us, while Gd. # 1 is general in nature, warranting no adjudication, the only issue raised in the instant appeal, i.e., per the effective grounds #2 & #3, is the validity or otherwise in law of the treatment of the loss on share trading, the specified income under Explanation to section 73 of the Act, with assessee also challenging the quantum of the loss so assessed. The primary figures are not disputed, being in fact furnished by the assessee itself, or otherwise borne out of its records. The dispute, in the main, as delineated before the authorities below, as also argued before us, concerns the manner in which the income, liable to be considered as speculative income, is to be quantified for the....
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....purposes of this section, be deemed to be carrying on a speculation business to the extent to which the business consists of purchase and sale of shares. A speculation business is always deemed to be distinct and separate from any other business (Explanation 2 to s. 28). It is by now well settled that the words 'mainly' in the Explanation are to be construed in a mathematical sense. Accordingly, a ratio of 50%, one way or the other, would decide the issue as to the applicability or otherwise of the provision of section 73. Up till here, there is in fact no dispute. The question, however, that arises is as to how the said ratio is to be reckoned where one or more of the specified incomes, i.e., in the Explanation to the section, and ....
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....guide or predicate the applicability of section 73, falling under Chapter VI. The matter could be looked upon from another angle as well. The whole import of section 73, as afore-noted, is whether income from purchase and sale of shares is to be regarded as speculative or non-speculative business income; different consequences attending the two classifications. Per contra, the loss from the purchase and sale of shares is not to be set off against any other income for the purpose of the applicability of section 73. To what effect therefore the negativity of the income per se? The GTI, for the purpose of section 73, must therefore be computed by giving effect to provisions up to Chapter V, and indeed of Chapter VI, i.e., in-so-far as they do ....
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....f positive income/s. How could the extent of income assessable under any head of income be taken into account if the same stands, or stands to be, set off, wholly or partly, against income falling under another head of income? The same could well be set off against any head of income, leading, however, to different consequences in terms and in view of Explanation to section 73. The mathematical prescription of the said Explanation would therefore suggest that the loss computed for any source of income falling under any head of income would stand to be reckoned in the computation of gross total income only where and to the extent it yields a positive income for or under the relevant head of income. Gross total income, thus, for the purpose o....
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....ision of sec.73, is being ascertained. The legislative intent behind a provision, it is well settled, is to be the foundational basis for any interpretative exercise [refer: Padmasundara Rao (Decd.) and Others vs. State of Tamil Nadu and Others [2002] 255 ITR 147 (SC); CIT vs. Baby Marine Exports [2007] 290 ITR 323 (SC)], and has guided our said interpretation. 3.3 In the admitted facts of the case, the assessee has income from advisory charges and brokerage at Rs. 121.81 lacs and Rs. 14.93 lacs respectively. Its other incomes are rent; dividend; and capital gains (long-term), at Rs. 6.39 lacs, Rs. 3.41 lacs and Rs. 19.68 lacs respectively. Quite plainly, the assessee's GTI, whichever way one may reckon it, cannot be considered as cons....
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....xpenditure of Rs. 1,21,605/-, i.e., qua speculation income, expenditure only for Rs. 42,735/-. A reading of the orders by the authorities below, show the A.O. to have made the allocation of the expenditure at para 2.2 of his order, so that the basis of the allocation of the commission expenditure by the A.O. has been clarified. No infirmity therein, which found confirmation with the ld. CIT(A), was brought to our notice during hearing, so that we have no reason to disturb the same. We decide accordingly. We may also clarify that in finally computing the loss on speculation business, the A.O. has also considered the said expenses as well as the dividend relatable to the speculation business, and which aspects have not been impugned by the as....