TaxTMI 
TaxTMI 
2022 (12) TMI 207
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.... the note the detailed reasoning given in the assessment order that though the assessment was reopened to consider disallowance of speculation loss as per explanation to section 73. the assessment was completed in view of the ITAT order in ITA 36/Coch/2018 dated 26.9.2018 of the appellant for the assessment year 2013-14 which was binding on the assessing officer. Thus the assessing officer had passed the assessment on proper application of mind and expressly stated the same in the assessment. Hence the assessment was not erroneous and hence the revision is invalid 3. Principal Commissioner of Income Tax erred in his conclusion that the assessing officer had omitted to consider the disallowance under section 14A. The appellant was subject to tax audit and in the tax audit report, your appellant had reported expenses against exempt income as nil and the same was accepted by the assessing officer. Hence, on this ground also the revision was not in order 4. Principal Commissioner of Income Tax erred in revising the order to withdraw excess depreciation on fixed assets which was apparent on the records and could have been rectified under section 154" 2. Facts of the....
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....a consequence, the loss in speculative business which was allowed to be set off against business income by the AO is not in order. Deemed speculation loss allowed to be set off was Rs.26,34,709/-. Accordinaly, the income from business which is to be charged to tax during AY 2014-15 comes to Rs.14,88,373/-. To this extent, the assessment order is erroneous in so far as it is prejudicial to the interest of revenue. During the previous year, the assessee had claimed a total depreciation of Rs.2,33,853/- under the Income Tax Act and the same is claimed as cany forward to subsequent years. However, it is seen that for AY 2013-14, CA has not verified that any depreciation under the IT Act has been made. The opening WDV values adopted in AY 2013-14 are not closing WDVs of the respective blocks as in .2012-13. The WDV adopted for AY 2013-14 in 15% block of Plant and Machinery' Is Rs._9,15,163/- instead of Rs.7,77,888/- (closing of AY 2012-13) 50% block is Rs.2,27,322/- instead of Rs.1,13,661/- 60% block Rs. 54,147/- instead of Rs.21,561/- and in F&F - 10% block, opening is shown as Rs.1,77,593/- instead of Rs.1,59,834/- (closing WDV of 12-13). On reworking the depreciation in ....
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..... CIT(A) further observed that the above omission by the Assessing Officer in the Assessment Order is erroneous in so far as it is prejudicial to the interest of revenue. Therefore, the Assessment Order on the above issues was set aside by him to the Assessing Officer for de-novo examination and to pass a speaking order in accordance with law as per time limit specified under Section 153 of the Act, after affording due opportunity to the assessee. Against this assessee is in appeal before us. 4. With regard to accepting the contention of the assessee that amendment came into effect from 1.4.2015 with respect to Explanation to section 73 of the Act, which is clarificatory in nature and therefore, operate retrospectively from 1.4.1977. The Ld. A.R. submitted that the original assessment in the case of the assessee was completed under section 143(1) of the Act dated 29.3.2016. The assessment was re-opened by issue of notice under section 148 of the Act. As per the 'reasons recorded, the re-opening was resorted to consider the application of explanation to section 73. 4.1 The Ld. A.R further submitted that the AO has considered the same and by a speaking order contained in pa....
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....on to section 73 introduced by Finance (No. 2) Act, 2014 which is applicable form assessment year 2015-16, the assessee cannot be granted set off of deemed speculation loss from trading of shares out of the business income of the assessee. The contention of the Ld. AR is that insertion of the amendment in Explanation to section 73 of the Act by the Finance (No. 2) Act, 2014 is curative and classificatory in nature. Therefore, the loss incurred in trading of shares by the assessee shall not be treated as deemed speculation loss and it is a normal business loss. Hence, the same could be adjusted with the business income of the assessee. We find force in this argument of the Ld. AR as this issue was considered by the ITAT, Mumbai Bench in the case of Fiduciary Shares & Stocks Private Ltd. vs. ACIT (159 ITD 554) and it was held as under: "Section 73 stipulates that any loss computed in respect of speculation business shall not be set-off except against profits and gains o f speculation business. Section 43(5) clarifies 'speculative transaction' to mean a transaction in which a contract for purchase or sale of any commodity including stock and shares is periodically or ....
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.... to treat purchase and sale of shares by companies whose main business is trading in shares as speculative business and therefore the Explanation to section 73 of the Act should be read only to the extent of the purpose for which it was inserted. The subsequent amendment made by Finance (No.2) Act, 2014 in the Explanation to section 73 of the Act appears to be made in order to clarify the real intention behind the insertion thereof, by removing the obvious hardship caused to various assessees whose main business is trading in shares. The amendment has removed the anomaly and brought the ambit of the Explanation to section 73 of the Act in line with the intention of the Legislature by placing the companies whose principal business is trading in shares as part of the exception to Explanation to section 73 of the Act, because such companies were not the companies for whom the Explanation was inserted. The insertion of the amendment in the Explanation to section 73 of the Act by the Finance (No. 2) Act. 2014, is curative and classificatory in nature. If the amendment is applied prospectively from assessment year 2015-16, a piquant situation would arise that an assesse....