TaxTMI 
TaxTMI 
2016 (1) TMI 991
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....roduced by the appellant with regard to the impugned additions. 2.1 The ld. CIT(A) has grievously erred in law and on facts in confirming that the case of the appellant is not covered by the Explanation to provision of section 73. 2.2 That in the facts and circumstances of the case as well as in law, the ld. CIT(A) ought not to have upheld the set off of loss on purchase & sale of shares as speculative loss applying the provisions of section 73 of the Act. 2.3 That in the facts and circumstances of the case, the ld. CIT(A) ought to have allowed the loss on sale of purchase & sale of shares applying the explanation to the provisions of sec.73 of the Act. It is, therefore, prayed that the disallowance of Rs. 14,93,823/- upheld by the CIT(A) may kindly be deleted. 2. The assessee has raised various grounds but the solitary grievance revolves against the decision of ld. CIT(A) in upholding the disallowance of Rs. 14,93,823/- on loss from purchase and sale of shares by treating it as speculation loss as assessed by Assessing Officer and not covering the case of the applicant within the Explanation to the provisions of section 73 of the I.T. Act, 19....
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.... the capital employed in any other business. Based on this, the appellant contended that its case was covered by one of the two exceptions provided by Explanation to section 73 i.e. business of the appellant was granting loans and advances. Hence the loss of Rs. 14,93,823/- was not to be treated as speculation loss : Explanation to Sc.73 of the Act reads as follows : [Explanation.-Where any part of the business of a company ( [other than a company whose gross total income consists mainly of income which is chargeable under the heads "Interest on securities", "Income from house property", "Capital gains" and "Income from other sources" ], or a company [the principal business of which is the business of banking] or the granting of loans and advances) consists in the purchase and sale of shares of other companies, such company shall, for the purposes of this section, be deemed to be carrying on a speculation business44 to the extent to which the business consists of the purchase and sale of such shares.] After considering rival submissions, I am inclined to agree with the AO that the case of the appellant is not covered by the exceptions provided by Explanat....
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....the assessee was purely into business of money lending and leasing. In view of this, the ratio of judgment of this case is not applicable to the present case. 3) Judgment of Hon'ble ITAT, Delhi in ITO vs. Bijal Paper Traders & Investments Ltd. (2010) 38 SOT 378 (Del). In this case the appellant was into business of trading in paper, shares, financing and real estate. The appellant in the present case deals in shares and securities. Facts being different the ratio of the judgment in the above case is not applicable to the present case. In view of discussion above, I hold that the AO was justified in holding that the case of the appellant is not covered by exceptions provided in Explanation to sec.73. Therefore, I hold that the AO was justified in treating loss of Rs. 14,93,823/- as speculation loss and disallowing the same. Accordingly, the addition of Rs. 14,93,823/- is upheld and the same is confirmed. This ground of appeal is dismissed." 5. Aggrieved, the assessee is now in appeal before the tribunal. 6. The ld. AR submitted that principal activity of the assessee company is granting loans and advances and also referred to the details showing perc....
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....ains" and "Income from other sources" ], or a company [the principal business of which is the business of banking] or the granting of loans and advances) consists in the purchase and sale of shares of other companies, such company shall, for the purposes of this section, be deemed to be carrying on a speculation business to the extent to which the business consists of the purchase and sale of such shares.] 9. From the perusal of the explanation to section 73 the conditions in which the company will get benefit under the provisions should either be one of the following :- (a) Gross total income of the company consists mainly on income which is chargeable under the head interest on securities, income from house property, capital gains and income from other sources. (b) Principal business of the company is the business of banking or the granting of loans and advances. 10. If the business of the company fulfills any one of the conditions mentioned above then the business of purchase and sale of shares shall not be treated as a speculation business. Let us examine the facts of the case of assessee in the light of above conditions. (a) In the computation of inc....