2013 (4) TMI 115 - HC - Income Tax

Speculative transaction - nature of transaction - purchase of shares - genuine transaction or fictitious transactions - set-off of that speculative loss from the speculative profit - Held that - the Commissioner of Income Tax (Appeals) and the Tribunal, on the basis of materials placed by the assessee, concurrently came to the conclusion that there was speculative profit of Rs.28,90,460 00 and the amount of Rs.10,79,875 00 being the speculative loss having already been found in the earlier litigation to be correct, the assessee was entitled to get benefit of set-off of that speculative loss from the speculative profit. The aforesaid findings cannot be said to be one based on No evidence nor can it be said that the same was perverse finding of fact justifying interference within the narrow scope of Section 260A of the Act - Appeal of the revenue is dismissed.

Summary

Issues:
1. Whether the nature of transactions conducted by the assessee amounted to speculative transactions.
2. Whether the speculative loss of Rs.10,79,875 should be set-off against the speculative profit of Rs.28,90,460.

Analysis:
1. The first issue revolves around the nature of transactions conducted by the assessee and whether they qualified as speculative transactions. In the initial round of litigation, the Commissioner of Income Tax (Appeals) upheld the Assessing Officer's view that the transactions were speculative due to the absence of actual delivery of shares. However, the assessee later contended that it had earned a profit from similar transactions, necessitating a fresh consideration. The Commissioner remitted the matter back to the Assessing Officer for reevaluation with the directive to allow the assessee to provide necessary evidence. The Tribunal subsequently affirmed the Commissioner's decision, leading to the Revenue's appeal. Upon reevaluation, the Assessing Officer found a profit in similar business but labeled a specific transaction as fictitious, resulting in a loss being added to the total income.

2. The second issue focuses on whether the speculative loss of Rs.10,79,875 should be set-off against the speculative profit of Rs.28,90,460. The Commissioner of Income Tax (Appeals) independently reviewed the matter and concluded that the assessee had indeed earned speculative profit and that the previously determined speculative loss was genuine and entitled to set-off. The Tribunal upheld this decision, prompting the Revenue to appeal. The High Court, after considering the materials on record, concurred with the lower authorities' findings, stating that no substantial question of law was involved. The Court dismissed the appeal, emphasizing that the findings were supported by evidence and did not warrant interference under Section 260A of the Income Tax Act.

In conclusion, the High Court upheld the decision to allow the set-off of the speculative loss against the speculative profit, finding no grounds for intervention based on the evidence presented.