TaxTMI 
TaxTMI 
2021 (4) TMI 847
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.... 73 of the I.T. Act. 3. The learned Commissioner of Income tax Appeals considered share trading as speculation loss and not allowed to adjust against the normal business income and allowed to carry forward speculation loss. 4. The learned Commissioner of Income tax Appeals erred in confirming the addition of Rs. 10,637/- of vatav kasar a/c. 5. The Commissioner of Income tax Appeals not believed that the share broker need to provide vatav kasar for wrong transactions or some dealers mistake and hence disallowed the expenses and added to the total income. 6. In view of all these and other grounds which may be produced during the hearing of appeal, the appeal may please be allowed and justice rendered. 7. The appellant craves leave to add, to alter, amend, modify, substitute, delete and / or rescind all or any of the grounds of appeal on or before the final hearing, if necessity so arises." 2. Brief facts of the case are that the assessee is a company dealing in shares and a stock broker. The assessee is also a member of Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). The assessee while filing the return of income declared....
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....al before this Tribunal. 4. We have heard the submissions of learned Authorised representative (AR) of the assessee and the learned departmental representative (DR ) for the revenue. At the outset, on hearing, the ld. AR of the assessee submits that the assessee is not pressing ground no.4 & 5, due to smallness of amount and the same may be dismissed as not pressed. Considering the submission of ld.AR of the assessee, ground no.4 &5 are dismissed as not pressed. 5. Ground No.1 to 3 relates to the denial of the loss by treating as speculation loss. The ld.AR of the assessee submits that during the period under consideration, the assessee earned income comprising income from business of Rs. 70,94,288/- capital gain of Rs. 1,47,843/- and income from other sources of Rs. 94,28,211/-, which includes the dividend income of Rs. 14,84,967/-. The assessee's gross total income consists mainly of income which is chargeable under head 'income from other sources' and 'capital gain'. The income under the head income from other sources and capital gain is of Rs. 95,76,054/-. Thus, the case of assessee falls within the purview of the exception carved out in the Explanation to Section 73 of t....
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.... be treated ad speculating business and losses arising therefrom shall be set-off against profit and gain of another speculation business. 8. We have considered the rival contention of both the parties and have gone through the order of authorities below. We have also deliberated on various case laws relied by the ld.AR of the assessee as well as by the ld.CIT(A) in the impugned order. The AO treated the loss in sale trading as a speculation loss by taking view that profit and gain of business of assessee is only Rs. 70,79,288/- and income from other sources of Rs. 79,43,244/-, thus, it may not be said that assessee's gross total income mainly consist from other sources as mentioned in Section 73 of the Act.The profit and gain of business or profession also includes loss in share trading of Rs. 13,76,206/. 9. Before the ld.CIT(A), the assessee made similar submission as made before this Tribunal. The assessee brought to the notice of the ld.CIT(A) that assessee earned income from business and profession of Rs. 70,94,288/- and capital gain of Rs. 47,843/-. The assessee's income from other sources is Rs. 94,28,211/- which includes the dividend income of Rs. 14,84,967/-. The ....
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.... or ultimately settled, otherwise than by the actual delivery or transfer of the commodity or scrips. Consequently, where a contract for purchase or sale of shares is settled by actual delivery, it does not fall within the definition of the expression. Section 70(1) provides for a setting off of loss from one source against income from another source under the same head. Section 72 makes provision for carry forward and set off of business losses, under the head of profits and gains of business or profession other than a loss sustained in a speculation business. Sub Section (1) of Section 73 provides that 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. As a result of the provision of Sub Section (1) of Section 73, a bar is introduced against the setting off of a loss which has arisen in respect of speculation business carried on by the assessee save and accept against the profits and gains of another speculation business. The explanation to Section 73 provides as follows : "Where any part of the business of a company ([other than a company whos....
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....part of its business consists in the purchase and sale of shares of other companies. Now, the exception which is carved out applies to a situation where the gross total income of a company consists mainly of income which is chargeable under the heads "Interest on securities", "Income from house property", "Capital gains" and "Income from other sources". Now, ordinarily income which arises from one source which falls under the head of profits and gains of business or profession can be set off against the loss which arises from another source under the same head. Sub Section (1) of Section 73 however sets up a bar to the setting off of a loss which arises in respect of speculation business against the profits and gains of any other business. Consequently, a loss which has arisen on account of speculation business can be set off only against the profits and gains of another speculation business. However, for Sub Section (1) of Section 73 to apply the loss must arise in relation to a speculation business. The explanation provides a deeming definition of when a company is deemed to be carrying on a speculation business. If, the submission of the Revenue is accepted, it would le....