TaxTMI 
TaxTMI 
2016 (1) TMI 571
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....hand, Shri Nishit Gandhi, ld. counsel for the assessee defended the conclusion arrived at in the impugned order. 2.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee, a private ltd. company, is a member broker with National Stock Exchange (NSC) and Bombay Stock Exchange (BSE). The business of the assessee consists of broking in shares, government and other securities, corporate advisory and mutual fund distribution. During the relevant period, the assessee made ten transactions in shares on exchange without delivery, which were duly treated by the assessee as speculative transaction. The assessee had been investing own funds in shares, mutual funds and other securities. The Assessing Officer treated the investment in shares as adventure in the nature of trade, consequently, he held the investment as trading asset by opining that huge funds were utilized by the assessee and caused substantial loss with commercial motive. The stand of the assessee is that the assessee was having net worth of Rs. 12.54 crores (as on 31/03/2008) and Rs. 12.61 crores (as on 31/03/2009), whereas, the investment in shares....
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.... in two different types of transactions. The first set of transactions involved investment in shares. The second set of transactions involved dealing in shares for the purposes of business (described in paragraph 8.3 of the judgment of the Tribunal as transactions purely of jobbing without delivery). The Tribunal has correctly applied the principle of law in accepting the position that it is open to an assessee to maintain two separate port folios, one relating to investment in shares and another relating to business activities involving dealing in shares. The Tribunal held that the deliverybased transactions in the present case, should be treated as those in the nature of investment transactions and the profit received therefrom should be treated either as short-term or, as the case may be, long-term capital gain, depending upon the period of the holding. A finding of fact has been arrived at by the Tribunal as regards the existence of two distinct types of transactions, namely, those by way of investment on the one hand and those for the purposes of business on the other hand. Question (a) above, does not raise any substantial question of law. 3. In so far as question (b....
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.... loss of Rs. 20,70,934/- as loss in speculation business. Now, question arises, whether invoking section 73 of the Act is justifiable. The term "business" has been defined in section 2 (13) of the Act, which includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. Meaning thereby, the term is of wide import and encompasses any facet of an occupation carried on with a profit motive. Whereas, Explanation -2 to section 28 reads as under:- "Where the speculative transactions carried on by as assessee are of such a nature as to constitute a business, the business (hereinafter referred to as "speculation business") shall be deemed to be distinct and separate from other business." The term "speculative transaction" has been provided in section 43(5) of the Act which is reproduced hereunder:- "(5) "speculative transaction" means a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips: Provided that for the purposes of this clause- ....
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....ange as referred to in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and which fulfils such conditions as may be prescribed and notified by the Central Government for this purpose; [Explanation 2.-For the purposes of clause (e), the expressions- (i) "commodity derivative" shall have the meaning as assigned to it in Chapter VII of the Finance Act, 2013; (ii) "eligible transaction" means any transaction,- (A) carried out electronically on screen-based systems through member or an intermediary, registered under the bye-laws, rules and regulations of the recognised association for trading in commodity derivative in accordance with the provisions of the Forward Contracts (Regulation) Act, 1952 (74 of 1952) and the rules, regulations or byelaws made or directions issued under that Act on a recognised association; and (B) which is supported by a time stamped contract note issued by such member or intermediary to every client indicating in the contract note, the unique client identity number allotted under the Act, rules, regulations or bye-laws referred to in sub-clause (A), unique trade number and perm....
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.... the principle of consistency. So far as, invocation of section 73 of the Act is concerned, the case of the assessee, is covered by the ratio laid down by Hon'ble Delhi High Court in Bhagwan Das Rameshwar Dayal 149 ITR 387 (Del.). No wise businessman will suffer loss neither there is intention to suffer loss rather the investment is gainfully made for earning income, thus, treating the business transaction as speculative in nature is the subjective approach of the Assessing Officer. We find no infirmity in the conclusion of the ld. Commissioner of Income Tax (Appeals). 2.3. So far as, allocating Rs. 56,86,633/- as expenses towards speculative transaction are concerned, since, the above grounds have been decided in favour of the assessee, by holding that it was not a speculative business transaction, therefore, we find no merit in the ground of the assessee. The total turnover of the assessee is Rs. 7,76,72,915 and loss is about 1% of the total turnover. Thus, we find no infirmity in upholding the addition to the extent of Rs. 10,08,268/- and deleting the addition of Rs. 46,50,365/-. This ground of the Revenue is therefore, dismissed. 2.4. The next ground pertains to deleting ....