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TaxTMI 
TaxTMI 
TaxTMI 
2017 (8) TMI 653
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....ni Steel Ltd. The source of income of the assessee is therefore income from leasing of land, plant and machinery and premises. There was a search and seizure operation conducted in the case of the assessee on 24.04.2008. Pursuant to the search assessment u/s 153A r.w.s. 143(3) of the Act was framed for A.Y.2005-06 to 2008-09. In the return of income for A.Y.2009-10 the assessee declared a total income of Rs. 75,75,460/-. Since A.Y.2009- 10 was not part of the block of 6 years for which assessment has to be framed u/s 153A of the Act, proceedings u/s 143(3) of the Act for framing the assessment were initiated by the AO. 4. In the course of assessment u/s 143(3) of the Act the AO noticed that the assessee had claimed a sum of Rs. 51,00,000/- as deduction while computing its income under the head "Income from Business or Profession". The facts and circumstances under which a sum of Rs. 51,00,000/- was claimed as deduction by the Assessee was that the Assessee entered into a contract on 09.07.2008 for purchase of 200MT of "Silicon Magnum" and 50MT of "Ferro Silicon" at a rate of Rs. 78,000/MT and Rs. 86,000/MT respectively with Global Alloys Pvt. Ltd. of Kanpur. The agreement was va....
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.... commodity, including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips. As per Sec.73 of the Income Tax Act, 1961 (Act), loss from purchase and sale of shares in the case of an Assessee which is a company had to be regarded as speculation loss and therefore cannot be set off against normal business income from trading in derivatives. "Sec.73: Losses in speculation business. (1) Any loss, computed in respect of a speculation business carried on by the assessee, shall not be set off except against profits and gains, if any, of another speculation business. (2) Where for any assessment year any loss computed in respect of a speculation business has not been wholly set off under sub-section (1), so much of the loss as is not so set off or the whole loss where the assessee had no income from any other speculation business shall, subject to the other provisions of this Chapter, be carried forward to the following assessment year, and- (i) it shall be set off against the profits and gains, if any, of any speculation business carried on by him assessable for that assessm....
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....Assessee and the counter party. Therefore, the loss of Rs. 51 lakh to Assessee was a speculative loss u/s, 43(5) of the I. T. Act on account of settlement of the contract rather than breach of contract. The revenue also rejected the plea of the Assessee that the purchase of material under the agreement for its intended use in manufacture of steel which it expected to commence. It was held by the revenue that the Assessee had leased out its entire factory premises to Kalyani Steels Ltd. and the only business income it had was the lease income from Kalyani Steel Ltd. who were operating from the factory of appellant. Therefore, the purchase deal of 200MT of "Silicon Magnum" and 50MT of "Ferro Silicon" could not have been entered into in the ordinary course of business of leasing out the factory by the Assessee. The contract was not cancelled because Assessee did not require these materials in any production or manufacturing process due to defect in material or other such normal business reason. The contract was destined to be cancelled because it was speculative in nature, and was not required in the business of appellant. 8. Accordingly a sum of Rs. 51,00,000/- was added to the to....
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....ccurate particulars regarding income of the Assessee. It was argued by him that the findings in the quantum proceedings were relevant in penalty proceedings but not conclusive and the Tribunal is competent to look into all facts and circumstances afresh in coming to a conclusion whether penalty can be levied or not. 10. The AO however held that the assessee was guilty of furnishing inaccurate particulars of income and the facts of the assessee's case are distinguishable from the decision of the Hon'ble Supreme Court rendered in the case of Reliance Petro Products Pvt. Ltd. (supra). According to the AO the assessee by claiming set off of loss arising from transactions which was a speculative transaction within the meaning of section 45(5) of the act against the normal business income had indulged in furnishing inaccurate particulars of income. The AO accordingly imposed penalty on the assessee. 11. On appeal by the assessee the CIT(A) was of the view that the assessee had not furnished inaccurate particulars of income and the issue before the AO was whether the loss of Rs.,51,00,000/- was speculative loss or normal business loss. The CIT(A) was of the view that the fact that a....
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....n by the assesese by upholding the finding recorded by the ld. CIT(Appeals) that the same cannot be regarded as a bogus loss. By the said order, the Tribunal, however, has upheld the order of the ld. CIT(Appeals) passed in the quantum proceedings whereby it confirmed the action of the Assessing Officer in treating the said share trading loss as deemed speculation loss as per Section 73 of the Act and consequently not entitled for set off against other income of non-speculative nature. The question that requires our consideration and decision is whether the disallowance of assessee's claim for set off of share trading loss against other income by treating the same as speculation loss as per Explanation to Section 73 of the Act will attract the penalty under section 271(1)(c). In this regard, we find that this issue is squarely covered in favour of the assessee by the various judicial pronouncements cited by the ld. counsel for the assessee including those which have been relied upon by the ld. CIT(Appeals) in his impugned order while cancelling the penalty imposed by the Assessing Officer under section 271(1)(c). In one of such cases, namely CIT -vs.- SPK Steels Pvt. Limited [270 IT....