2015 (7) TMI 909

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....0. 2. The first issue in this appeal of assessee is against the order of CIT(A) deleting the disallowance of speculation loss by invoking the provisions of Explanation to Sec. 73 of the Act. For this, revenue has raised following three grounds: "1. That on the facts and circumstances of the case and in law, whether the Ld. CIT(A) is justified in deleting the addition made by the A.O. to the tune of Rs. 1,05,10,702/- on account of ' speculation loss' and to treat the principal business of the assessee is granting of loan & advances even though the deployment of fund invested in share trading business is higher than the business of granting of loans and advances? 2. That on the facts and circumstances of the case and in law, ....

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....Y 2006-07 to the extent of 83.10% is from other sources other than share dealing and income to the extent of 16.90% is from share trading in AY 2007-08. The income from trading in shares comes to 51.15% as against income from other than share trading at 48.55%. Similarly, in the present AY i.e. AY 2008-09, the investment in shares is to the extent of 14.51% as against the investment in other activities or other business at 85.49% of the total net worth. He narrated the facts relating to AY 2008-09, which reads as under: "c) In the Asst. Year 2008-09 that is the Asst. Year under scrutiny it will be not out of the place to mention that the Total Net worth of the Company was Rs. 9,64,88,653/- out of the same investment in shares were Rs. 1,....

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.... there was no purchase of shares in this year. Only the old stock was mostly disposed of and so far as the shares of M/s. Hospet Ispat Ltd. are concerned, the entire stock, brought forward from the earlier year, was fully sold off to increase the deployment of funds in making loans and advances on interest. Due to this reason the loans and advances has increased from Rs. 3,38,33,668/- (as on 31.03.2007) to Rs. 8,07,74,436/- (as on 31.03.2008.)" (vii) In view of the above, I am of the opinion that the loss of Rs. 1,05,10,702/- on share trading is not a speculative loss and the provision of section 73 of the I.T. Act, 1961 does not apply the this loss incurred by the appellant. In the result this ground of appeal is decided in favour of th....

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....lso in other business. The AO will also find out the turnover of the assessee in all the business and then compare the same on comparative basis. He has to give a finding qua the principal business of the assessee and then decide the issue. In term of the above, this issue of revenue's appeal is set aside to the file of AO for fresh examination. This issue of revenue's appeal is allowed for statistical purposes. 5. The next issue in this appeal of revenue is against the order of CIT(A) deleting the addition made by AO in respect to expenses incurred for earning the exempt income by invoking the provisions of section 14A of the Act. For this, revenue has raised following ground no. 4: "4. That on the facts and circumstances of ....