2011 (8) TMI 1124

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

...."dividend" is placed under the head "Income from other sources"? 2. Issue arises in following factual background. Respondent assessee is a Company engaged in share trading. During the process of such business, it also derives income by way of dividend on shares which are held as stockintrade and also brokerage. In the accounts, the assessee had shown expenditure of Rs. 6 crore 39 lakhs towards legal charges, audit fees and other expenses incidental to business. Assessee had also shown loss due to trading charges of Rs. 9 crore 11 lakhs. Assessing Officer was of the opinion that entire amount of Rs. 15 corers and 51 lakhs was net loss due to trading in shares. He therefore, was of the opinion that said amount should be considered as loss ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....t rejected the appeal by making minor clarification in the approach adopted by CIT(Appeals). Tribunal was of the opinion that explanation to Section 73 was not properly applied by the Assessing Officer. Such explanation requires the Assessing Officer to consider the business of share as a whole and business cannot be confined only to purchase and sale of shares and further that incidental expenditure and receipts are also to be considered as part of the business. It was further observed that shares in the present case were held as stockintrade and not as investment and that therefore, dividend income should be treated as incident to share business, irrespective of provisions contained in Section 56(2) of the Act which requires to assess the....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... Cocanada Radhaswami Bank Ltd.(supra) is perfectly valid. 7. In case of Cocanada Radhaswami Bank Ltd.(supra), the assessee company was carrying on banking business and had held securities as part of trading assets. During the assessment year under consideration, it incurred loss under head business and earned certain amount as interest on securities, still resulting into net loss of Rs. 55,912/. Assessing Officer refused to set off such such loss against income under the head of interest on securities. Apex Court held that the assessee was entitled to set off loss against entire income including the interest on securities during the succeeding years. It was observed that though for purpose of computation of income, interest on securit....