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Issues Involved: The judgment deals with the issue of whether the loss from share transactions by the assessee should be considered as speculation loss or not, and the applicability of the exceptions provided in Explanation to Section 73 of the Income Tax Act.
Summary: Issue 1: Classification of Loss from Share Transactions The assessee, a non-banking finance company engaged in granting loans and trading in shares, incurred a loss on share trading. The Assessing Officer treated this loss as speculation loss under Explanation to Section 73, while taxing interest income separately. However, the Ld. Commissioner of Income Tax (Appeals) held that since the main business of the assessee is granting loans, the exceptions provided in Explanation to Section 73 apply. Referring to a Special Bench decision, it was concluded that the loss from share trading cannot be considered as speculation loss. The Ld. Commissioner emphasized the rule of consistency in assessing such cases. Issue 2: Applicability of Explanation to Section 73 The Special Bench decision highlighted that the Explanation to Section 73 should be strictly construed, and the onus is on the revenue to show that the case falls within the deeming provisions of the law. It was noted that the nature of the assessee's activities, not the income, determines whether the exceptions in the Explanation apply. Based on this precedent, the Tribunal upheld the Ld. Commissioner's decision that the assessee's case falls within the exceptions provided in Explanation to Section 73, and the loss should be treated as a business loss, not speculation loss. In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the Ld. Commissioner's order regarding the classification of the loss from share transactions and the applicability of the Explanation to Section 73. This summary provides a detailed overview of the judgment, focusing on the issues raised and the Tribunal's decision on each issue.
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