2018 (11) TMI 1425 - AT - Income Tax

Claim for set off of share trading loss against other income - Held that - CIT(A) has allowed the same after having found that the case of the assessee was not covered under Explanation to section 73. He also found that income shown by the assessee to the extent of ₹ 66,22,069/- was in the nature of speculation income only and accordingly held that the assessee company even otherwise was eligible to set off its share trading loss against the said income. At the time of hearing before us, entitled the DR has not been able to bring on record anything to rebut or controvert the findings recorded by the CIT(A). As a matter of fact, the revenue in the ground specifically raised in its appeal has clearly admitted the fact that speculation income of ₹ 66,22,069/- was declared by the assessee company. No justifiable reason to interfere with the impugned order of the CIT(A) giving relief to the assessee on this issue and upholding the same, we dismiss ground no. 1 of revenue s appeal. Disallowance of 50% of expenses claimed under the various heads - addition restricted by the CIT(A) to 10% after taking into consideration the fact that the assessee company had maintained regular books of account, which were duly audited u/s. 44AB and the expenses claimed were duly supported with bills and vouchers - Held that - The relief given by the CIT(A) to the assessee on this issue is well founded and the disallowance sustained by the CIT(A) being fair and reasonable in the facts and circumstances of the case, we uphold the impugned order on this issue and dismiss ground no. 2 of the revenue s appeal.

Summary

Issues:
1. Whether the claim for set off of share trading loss as speculation loss under Explanation to section 73 is allowable against other income.
2. Whether the disallowance of expenses claimed by the assessee under various heads by the Assessing Officer was justified.

Analysis:
1. The appeal was filed by the revenue against the order of Ld. CIT (Appeals) - XII, Kolkata dated 22-07-2014. The assessee, a company engaged in share trading, declared a loss of &8377; 68,95,588/- from share trading in the return of income for the year. The Assessing Officer (AO) treated the loss as speculation loss under Explanation to section 73, disallowing the set off against interest and other income. The assessee failed to provide any explanation or documentary evidence to support the claim. The AO completed the assessment u/s. 144, disallowing the set off and part of the expenses claimed. The Ld. CIT (A) allowed the set off of speculation loss against speculative gain, stating that the case was not covered under Explanation to section 73. The Tribunal upheld the CIT (A)'s decision, as the revenue failed to provide any rebuttal to the findings.

2. The AO disallowed 50% of the expenses claimed by the assessee, which was reduced to 10% by the Ld. CIT (A). The CIT (A) considered that the assessee maintained regular books of account audited under sec. 44AB, and the expenses were supported by bills and vouchers. The Tribunal found the relief given by the CIT (A) to be reasonable and fair, upholding the decision on this issue. Consequently, the appeal of the revenue was dismissed, affirming the orders of the Ld. CIT (A) regarding both issues.