2011 (11) TMI 705 - AT - Income Tax

Summary

Issues Involved:
The issues involved in this judgment are:
1. Validity of notice u/s 148 and completion of proceedings u/s 148/147.
2. Treatment of loss as speculative loss.
3. Allowability of expenditure on installation of V-Sat terminals.

Issue 1: Validity of notice u/s 148 and completion of proceedings u/s 148/147:
The assessee challenged the notice issued u/s 148 and completion of proceedings u/s 148/147. The CIT(A) upheld the Assessing Officer's actions. The Tribunal dismissed this ground as not pressed by the assessee.

Issue 2: Treatment of loss as speculative loss:
The assessee incurred a loss in transactions for purchase and sale of shares on its own behalf. The Assessing Officer treated this loss as speculative in nature under Explanation to Section 73 of the Income Tax Act, 1961. The CIT(A) confirmed this treatment. However, the Tribunal disagreed with this classification. It held that the transactions in futures and options are not speculative transactions as defined in section 43(5) of the Act. The Tribunal relied on precedents and concluded that the loss from trading in shares on its own account should not be treated as speculation loss. The Tribunal directed that the loss be carried forward as per the provisions of section 73.

Issue 3: Allowability of expenditure on installation of V-Sat terminals:
The Assessing Officer disallowed the expenditure incurred on the installation of V-Sat terminals, considering it as of capital nature. The CIT(A) upheld this disallowance. However, the Tribunal reversed this decision, stating that the expenditure on installation of V-Sat terminals at the locations of sub-brokers is revenue in nature as no capital asset was acquired. The Tribunal directed the Assessing Officer to allow this expenditure as a business expense.

In conclusion, the Tribunal allowed the appeal of the assessee, reversing the decisions on the treatment of loss as speculative and the disallowance of expenditure on V-Sat installation.