2016 (12) TMI 1482

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....1 & 3 Ld. CIT (A) erred in law and on facts in determining speculative loss of Rs. 46,58,750/- ignoring correct computation considering net effect of transactions for which detailed were submitted before the AO & CIT (A), the net ordinary loss came to be Rs. 37, 18, 167/-Ld. CIT (A) ought to have accept computation made by the appellant by allowing set off of loss in delivery based transaction and against the speculative profit in the return of income and treat the same as ordinary business loss eligible for set off. It be so held now. 2. Ld. CIT (A) erred in law and on facts in confirming disallowance of loss to the tune of Rs. 46,58,750/-treating same as speculation loss, ignoring facts that appellant has earned profit of Rs. 98,92,730/....

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....same as speculation loss. Speculation loss In this regards, the above statement made by you is far from the truth and far from the facts because if you have seen our submission dated 21st August 2009, particularly page no 6 to 8 (share purchase account same day) and page no. 27 to 33 (share sales account same day) the assessee has made profit as under in case of Bhansali bullion. Same day sales Rs, 194827069 Same day purchases Rs.184900624 Same day profit (Bulion) Rs. 9926445   Hence there is profit from the above business activity and not loss and it cannot be treated as speculation loss". 4. The A.O. dismissed the claim of the assessee by holding as under:- 3.1.1 The above submission of the assessee was compared wit....

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....-. We also find that the assessee has earned a profit of Rs. 98,93,469/- in the same day transaction and loss of Rs. 738 was incurred individual capacity which resulted into a net profit of Rs. 98,92,731/-. The net loss of Rs. 1,36,10,898/- was set off against profit of Rs. 98,92,731/- resulting into a net loss of Rs. 37,18,167/-. 9. At this juncture, it would be pertinent to consider the provisions of Section 72 vis-à-vis provisions of Section 73 of the Act:- Section 72 enumerates provisions of Carry forward and set off of business losses. "72 [(1) Where for any assessment year, the net result of the computation under the head "Profits and gains of business or profession" is a loss to the assessee, not being a loss sustained in ....

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....not be wholly so set off, the amount of loss not so set off shall be carried forward to the following assessment year and so on." 10. A perusal of the aforementioned section shows that Section 73 enumerates provisions of losses in speculation business and it says that any loss computed in respect of a speculation business shall not be set off except against profit and gains of another speculation business. 11. At this point, let us consider the definition of speculation business as given in section 43 of sub-section (5) of the Act and the same reads as under:- (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 settle....