9911796707
|
Home
Issues Involved:
1. Treatment of loss from purchase and sale of shares and securities as speculation loss u/s Explanation to section 73. 2. Applicability of section 154 for rectification of the assessment order. Summary: Issue 1: Treatment of Loss from Purchase and Sale of Shares and Securities as Speculation Loss u/s Explanation to Section 73 The assessee was aggrieved by the CIT(A)'s confirmation of the loss from purchase and sale of shares and securities amounting to Rs. 1,41,60,772 as speculation loss as per Explanation to section 73 of the Income-tax Act, 1961. The Assessing Officer (AO) observed that the main source of income for the assessee was 'income from business,' and thus, the case was not covered by the exclusion clause in Explanation to section 73. The AO rejected the assessee's argument that the transactions involved actual delivery of scrips and should not be treated as speculative transactions u/s 43(5). The AO relied on the plain language of the statute and the CBDT Circular No. 204, treating the loss as speculation loss. The CIT(A) upheld this view. The Tribunal examined the provisions of sections 70, 72, and 73, emphasizing that section 73, being a specific provision, overrides the general provisions of sections 70 and 72. The Tribunal rejected the assessee's argument that the definition of 'speculation business' for purposes other than section 73 should be governed by section 43(5). It was held that the Explanation to section 73 supplements the definition under section 43(5) and applies specifically to certain companies. The Tribunal also dismissed the alternate contention that the loss was due to a fall in the value of shares held as closing stock, noting that the loss was on account of transactions in shares. The Tribunal concluded that the CIT(A) was justified in confirming the loss as speculation loss as per Explanation to section 73 and declined to interfere with the orders of the authorities below. Issue 2: Applicability of Section 154 for Rectification of the Assessment Order The assessee challenged the CIT(A)'s confirmation of the AO's order treating the loss of Rs. 233.83 lakhs from the business of sale and purchase of shares as speculation loss and rectifying the assessment order u/s 154. The AO had realized post-assessment that the loss should have been treated as speculation loss as per Explanation to section 73 and issued a notice for rectification. The Tribunal referred to the principles laid down by the Supreme Court in the case of T.S. Balaram, ITO v. Volkart Bros., emphasizing that a mistake apparent from the record must be obvious and not subject to debate. The Tribunal held that the provisions of Explanation to section 73 were clearly applicable, and there was no ambiguity in the statutory provisions. The Tribunal found no merit in the assessee's argument that two views were possible regarding the application of Explanation to section 73. The Tribunal upheld the CIT(A)'s decision, affirming the AO's rectification order u/s 154, and declined to interfere in the matter.
|
