2013 (6) TMI 901

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.... CIT(DR) appeared on behalf of Revenue. 3. In assessee's appeal the assessee has raised the following grounds: "1. That on the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeal) erred in confirming the addition of ₹ 1,59,01,933/- as made by the Assessing Officer, by holding that the loss incurred by the appellant as a Stock Exchange member, on Derivative Transactions are covered u/s 43(5) and are Speculative Transactions. 2. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in not the allowing set-off of loss arising on derivative transactions against normal business income. 3. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirmi....

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.... was the submission that in the course of assessment, the AO had held that the loss on account of the derivative transctions and day transactions was in the nature of speculative transactions and consequently disallowed the loss on the ground that the speculative loss could not be set off against the regular business income. It was the submission by the Ld. AR that the assessee was in the business of purchase and sale of shares, which as per the provisions of Explanation to Section 73 was liable to be deemed as speculative business. It was the submission that admittedly, in view of the provisions of section 43(5) of the Act the transactions done by the assessee in the day transactions of the shares as also the derivatives was speculative tr....

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....ional High Court in the case referred to above, respectfully following the same the AO is directed to restrict the disallowance u/s. 14A of the Act to 1% of the exempt income. 6. In regard to ground no. 4, the Ld. AR did not press the same. Consequently, the same is dismissed as not pressed. 7. In regard to ground nos. 1, 2 and additional ground as filed by the assessee, it was submitted by the Ld. DR that the said ground was not before the Ld. CIT(A) and the issue of treating the share transactions which have been disclosed by the assessee as business income as speculation business was not permissible. It was the submission that the additional ground itself could not be admitted as it was not a legal ground and the facts were not on reco....

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....atives and the day transaction as speculation, the AO ought to have treated the transaction of the purchase and sale of shares in the regular course also as speculative transaction in view of the Explanation to Section 73. It was the submission that in view of the decision of the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd., referred to supra, all the facts were available on record and the additional ground raised was a question of law in so far as it related to the treatment to be given to the share transactions done by the assessee, which is a company. 9. We have considered the rival submissions. At the outset, a perusal of P&L Account of the assessee, it clearly shows that the share transactions as also the trans....