TaxTMI 
TaxTMI 
2022 (4) TMI 712
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....there is no delay in fact. We confronted the Ld. DR who agreed to the submission of Ld. AR. In view of this, the appeal is proceeded with for hearing, there being no delay. 3. The assessee filed his Return of Income declaring a total income of Rs. 3,08,290/-. The case was selected for scrutiny and the Ld. AO completed assessment u/s. 143(3) of the Act by order dated 21.12.2018 by accepting the total income declared by the assessee. 4. Subsequently, the Ld. PCIT invoked the provisions of section 263 of the Act by issuing show-cause notice dated 23.02.2021, the relevant extract of which is reproduced below: "2. In your case, after completion of scrutiny proceedings, on verification of the records, it is found that, 'As seen from the profit & loss account, net profit of Rs. 4,60,69,635/- includes net gain of Rs. 13,08,856/- on day trading of shares (speculative business) in stock exchange. As per the computation of income statement, the assessee set off the profit of Rs. 4,60,69,635/- against the Brought forward business loss. Since the day trading of shares (settled otherwise than delivery of shares) falls under the speculation business, the gain of Rs. 13,08,856/- on day t....
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....ention to the provisions of section 72 and 73 of the Act. For the ready reference, we reproduce below the relevant portion of section 72 and 73: Section 72: "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 a speculation business, and such loss cannot be or is not wholly set off against income under any head of income in accordance with the provisions of section 71, so much of the loss as has not been so set off or, where he has no income under any other head, the whole loss 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 business or profession carried on by him and assessable for that assessment year; (ii) if the loss cannot 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:" Section 73: "73. (1) Any loss, computed in respect of a speculation business carried on by the assessee, shall not be set off except against profits a....
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.... Court to be still holding the field) provide that if speculation losses for earlier years are carried forward and if in the year of account a speculation profit is earned by the assessee, then such speculation profits for the current accounting year should be adjusted against carried forward of speculation losses of the earlier year, before allowing any other losses to be adjusted against those profits. Hence, it is clear that there is no bar in adjustment of unabsorbed business losses from speculation profit of the current year, provided the speculation losses for the year and earlier has been first adjusted from speculation profit. In the present case, no case has been made out by the Revenue that the current or earlier speculation losses have not been adjusted from the speculation profit. Hence, in view of the aforesaid case laws including that from the Hon'ble jurisdictional High Court and CBDT Circular mentioned hereinabove, we set aside the order of the authorities below and decide the issue in favour of the assessee." Reverting to the facts of present appeal, the Ld. AR submitted that the assessee has claimed set off of brought forward "non-speculative business loss" a....
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...." nor the "loss of non-speculative business" could be set off against the "profit of speculative business". Being so, the Ld. DR argued, the set off of "non-speculative business loss" against "profit of speculative business" claimed by the assessee is against the prescription of section 28 and by allowing the same, the Ld. AO has committed an error prejudicial to the interest of revenue. Hence the Ld. PCIT was justified in making revision u/s. 263. The Ld. DR therefore prayed to uphold the revision-order passed by Ld. PCIT. 10. We have considered the rival submissions, perused the material available on record as also the legal precedents cited before us. As can be seen from the above submissions of parties, we are concerned with the provisions of section 28, 72 and 73. At the outset, we would like to note that Income-tax Act, 1961 has divided into several Chapters, which prescribe a definite scheme for a specific purpose. To illustrate, Chapter IV of the Act prescribes computation of income under various heads and Chapter VI prescribes aggregation of income and set off of losses. We observe that the section 28 pressed by the Ld. DR falls within Chapter IV but the section 72 and 73....