2015 (1) TMI 235 - AT - Income Tax

Miscellaneous application Rectification of mistake apparent on record Held that - In the order dated 18/04/2013, there is a typographical error which requires to be rectified as Assessment Year mentioned as 2006-07 instead of AY 2008-09 and it is modified as AY 2008-09. Carry forward and set off u/s 43(5) and 73 Speculation Business Held that - CIT(A) rightly allowed the claim of the assessee by following the judgement of CIT vs. Lokmat Newspapers (P) Ltd. 2010 (2) TMI 94 - BOMBAY HIGH COURT The profit on account of sale of shares is ₹ 21949309 and loss on account of sale of shares of ₹ 8237695 assessee is having business income greater than the income from other sources or capital gain income and hence the income earned by it on account of sale and purchase of shares is to be treated as income earned from speculative transactions as per the provisions of explanation to section 73 - Also such a situation, both the profits as well as losses incurred on account of trading in shares become speculative transactions Decided in favour of assessee.

Summary

Issues:
Rectification of mistake in Tribunal's order regarding treatment of share transactions as business loss or capital loss.

Analysis:
The Appellate Tribunal received a miscellaneous application from the Assessee seeking rectification of the Tribunal's order dated 18/04/2013, which allowed the appeal filed by the Respondent for statistical purposes. The Assessee contended that the Tribunal's order contained an error apparent from the record. The Assessee argued that the Tribunal failed to consider the judgment of the Bombay High Court in the case of CIT vs. Lokmat Newspapers (P) Ltd., which was crucial to the matter at hand. The Respondent strongly opposed the application, claiming no mistake was present in the record, and the Assessee was attempting to review the Tribunal's order under the guise of rectification.

Upon reviewing the submissions, the Tribunal noted the typographical error in the order regarding the Assessment Year, which was corrected. The Assessee's main contention was that the Assessing Officer (AO) treated the loss from share transactions as speculative loss without allowing set off against the profits, contrary to the judgment of the Bombay High Court in the Lokmat Newspapers case. The AO invoked Section 73 of the Income Tax Act to treat the loss as speculative, leading to penalty proceedings. However, the Assessee argued that the profits and losses from share transactions should be treated as speculative transactions, as per the judgment of the Bombay High Court.

The Tribunal acknowledged that the judgment of the Bombay High Court in the Lokmat Newspapers case was not considered in the earlier order, which constituted an error apparent from the record. Therefore, the Tribunal modified its previous order based on the Bombay High Court's ruling. The Tribunal upheld the decision of the Commissioner of Income Tax (Appeals) in treating the share transactions as speculative income, in line with the judgment cited. Consequently, the appeal of the Revenue was dismissed, and the miscellaneous application filed by the Assessee was allowed as per the modifications made.

In conclusion, the Tribunal rectified the order to align with the judgment of the Bombay High Court, emphasizing the treatment of share transactions as speculative income in accordance with the provisions of Section 73 of the Income Tax Act. The decision highlighted the importance of considering relevant case law in determining the nature of income from share transactions and the applicability of set off provisions for losses incurred.