AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (3) TMI 789
X X X X Extracts X X X X
X X X X Extracts X X X X
.... a broker. The return of income for the year under consideration was filed by it on 28.09.2011 declaring a loss of Rs. 50,98,090/-. During the course of assessment proceedings, it was noticed by the A.O. that the assessee company after deducting STT of Rs. 1,37,32,628/- had suffered a loss of Rs. 97,17,719/- in its business of purchase and sale of shares. According to him, the assessee company was not entitled to set off the said loss against its brokerage and other income as per the specific provision contained in Explanation to Section 73. He, therefore, required the assessee company to offer its explanation in the matter. In reply, it was submitted on behalf of the assessee company that the loss from the business of purchase and sale of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 97,17,719/- suffered by the assessee in share trading as speculation loss by invoking Explanation to Section 73 and disallowed the claim of the assessee for set off of the same against other business income from brokerage etc. 4. The Assessing Officer also found that the assessee company during the year under consideration had earned income from dividend and long term capital gain which was claimed to be exempt from tax. Since no disallowance on account of expenditure incurred in relation to the earning of the said exempt income was offered by the assessee, the A.O. applied Rule 8D to work out such expenditure at Rs. 2,77,821/- and made a disallowance to that extent under section 14A. 5. The order of the A.O. passed u/s 143(3) invoking E....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the share dealing business, one has to take into account not only the profit or loss on sale and purchase of shares but also brokerage earned on the purchase and sale of shares since the brokerage income is inextricably related with the said share transaction business. Further, reference is placed in another judgment of ITAT Kolkata Bench in the case of DCIT vs Baljit Securities Pvt. Ltd. ITA No. 1183/K/12, 'C' Bench, order dated 21.10.2014 wherein the assessee was engaged in the business of share trading which involves stock and share broking activities, purchase and sale of delivery based shares and purchase & sale of non-delivery based shares i.e. derivative trading. The ITAT, Kolkata held that before application of the Explanation to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ncome? In respect of question no. (a), I have observed that the A.O. did not accept the revised computation relying on the judgment of Goetz (India) Ltd. (supra) where it was held that no new claim can be made without filing any valid revised return. On this issue reference may be made in the case of CIT s Natraj Stationery Products (P) Ltd. 312 ITR 22 where the Hon'ble Delhi High Court held that the assessee was not required to file revised ROI since it has not made any 'new' claim and Goetze India's case was not applicable in such a situation. I find that in the instant case, the appellant did not make any new claim by filing the revised computation by enhancing any claim of expenditure (as was done in Goetz's case) but merely changed ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 14A. I find force in the alternative submission of the appellant wherein it was contended that the disallowance u/s 14A is restricted to the investment out of which exempt income was generated. In this regard, reference is made to the judgment of the ITAT, Kolkata Bench in the case of REI Agro Ltd. order dated 19.06.2013 wherein it was held that disallowance u/s 14A is to be considered in relation to the income which does not form part of the total income. I find that in the computation of disallowance u/s 14A as filed during the course of appellate proceedings and considering the investment out of which exempt income is earned works out to Rs. 8,3332/-. The said computation is in consonance with the order of ITAT, Kolkata Bench in the cas....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bifurcated for applying the provisions of Explanation to Section 73. In another decision rendered in the case of ITO vs Preferred Securities Pvt. Ltd. vide its order dated 06.09.2017 in ITA No. 1113/Kol/2015, the Co-ordinate Bench of this Tribunal has held that the activity of the assessee of share trading which was carried on its own account and on behalf of the client formed single composite indivisible business and the profit or loss of the same could not be artificially bifurcated for the purpose of Explanation to Section 73. In our opinion, the issue relating to applicability of Explanation to Section 73 as raised by the revenue in present case thus is squarely covered inter alia by the said two decisions of the Tribunal and respectful....