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TMI Blog2004 (1) TMI 327X X X X Extracts X X X X X X X X Extracts X X X X ..... ments is to be viewed as an integral part of carrying on of assessee s business and is, therefore, not liable to be judged as a speculation loss. The decision of the jurisdictional High Court in the case of Bhagwan Das Rameshwaar Dayal [ 1984 (5) TMI 35 - DELHI HIGH COURT] supports the stand of the assessee. Reliance placed by the learned Departmental Representative in the case of SRJ Securities Ltd.[ 2003 (1) TMI 260 - ITAT DELHI-B] is, in our view, misplaced in so much as that the same is on different facts. Therefore, following the same, as the facts are on similar footing, we dismiss the appeal of the Revenue. In the result, the appeal is allowed and appeal is dismissed. - Member(s) : Smt. DIVA SINGH., G. S. PANNU. JUDGMENT: These two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness of broking. It is a well-settled legal proposition that the fine or penalty paid on breach of law is not a normal expenditure. A reference in this regard can be gainfully made to the following decisions: (i) Haji Aziz Abdul Shakoor Bros. vs. CIT (1961) 41 ITR 350 (SC) (ii) Saraya Sugar Mills (P) Ltd. vs. CIT 1978 CTR (All)(FB) 329 : (1979) 116 ITR 387 (All)(FB) (iii) CIT vs. Dhanraj Mills (P) Ltd. (1994) 209 ITR 851 (Bom) 4. Hence, the orders of the CIT(A) are reversed and the disallowance made by the AO in this regard is hereby confirmed. 5. Accordingly, the appeal of the Revenue stands allowed. ITA No. 4025: 6. This is an appeal by the Revenue arising out of the order of CIT(A), dt. 30th April, 1997, and pertains to asst. yr. 1992- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the matter was carried in appeal before the CIT(A). 8. Before the CIT(A), the assessee reiterated its stand taken before the AO. It was emphasised by the assessee that the impugned loss has to be viewed as a business loss. It was explained that the AO fell in error in not appreciating that as a share broker, the assessee entered into a contract for purchase and sale of shares on behalf of its clients; sometimes clients did not own up the transaction when they felt they were going to suffer a loss. In such situations, the assessee being a broker, was necessarily required to honour his commitment in the market and sometimes losses are incurred on such transactions. Thus, such a loss was to be held as on account of breach of contract and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demonstrate that there was a breach of contract resulting in the impugned losses. The learned Departmental Representative also referred to a decision of the Tribunal in ITA No. 109/Del/2001 dated nil in support of his submissions. 10. On the other hand, learned counsel, Shri Sunil Jain, has not only defended the orders of the CIT(A) but has referred to a decision of the Tribunal in ITA No. 2897/Del/1997, dt. 27th May, 2003 referred by the Tribunal on similar facts. According, to him, reliance placed by the learned Departmental Representative on the decision of the Tribunal in the case of SRJ Securities Ltd. vs. Asstt. CIT (2003) 81 TTJ (Del) 484 was distinguishable on facts as the Tribunal therein was primarily dealing with Explanation to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... settled for some other reasons by payment of damages or even without payment of damages it may or may not be speculation transaction depending upon the circumstances of the case. The Hon ble Court further held that if a contract is broken, i.e., for any reasons one party is unable to give delivery order the other party is unable to take delivery, it is a case of breach of contract. A breach takes place on repudiation of contract or failure to perform it. When the obligation to supply or to take delivery comes to an end, it does not make the transaction speculative. The Hon ble Court clarified that if it was settled by mutual consent to avoid delivery then it would be speculative. But if it was settled because of inability of the assessee t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... normal business loss. Accordingly, I hold that the loss of Rs. 3,01,785 is normal business loss and not the speculation loss." 14. A perusal of the aforesaid leads to an inference that the legal aspect has been properly discussed and appreciated by the CIT(A). Admittedly, the assessee, being in the business of broking, would be facing situations wherein some of the clients do not own up the transactions on anticipating losses. In such situations, the consequential loss incurred by the assessee to honour the commitments is to be viewed as an integral part of carrying on of assessee s business and is, therefore, not liable to be judged as a speculation loss. The decision of the jurisdictional High Court in the case of Bhagwan Das Rameshwaar D ..... X X X X Extracts X X X X X X X X Extracts X X X X
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