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TMI Blog2010 (11) TMI 716X X X X Extracts X X X X X X X X Extracts X X X X ..... he judgment of Hon'ble High Court of Madras in case of CIT vs Vellore Electric Corporation Ltd. (1998 -TMI - 15293 - MADRAS High Court) held that the business had not closed and the claim of expenditure had to be allowed - Respectfully following the said decision of the tribunal hold that the business of the assessee had not been closed in the relevant year and therefoe FDRs had to be treated as pledged in connection with the business which was in existence and therefore the interest income had to be treated as incidental business income. treatment of business loss of Rs.19,08,876/- speculation loss -The dispute is regarding treatment of loss arising from valuation of closing stock of shares and due to invocation of shares by the lenders amounting to Rs.19,08,876/-. The loss has been treated as speculation loss by the authorities below applying the provisions of Explanation to section 73 - The said Explanation does not apply in case where gross total income of the assessee mainly consists of income under the head 'other sources', 'house property income' etc - In this case while dealing with the earlier ground have held that interest income of Rs.39,50,810/- has to be treated as b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examined in detail by the AO and the assessee could not prove the genuineness of loss. The AO had taken into account the adverse finding of the Special Auditors as well as the fact that the transactions were not carried out from the terminals of the exchange. The decision of the AO in assessment year 2001-02 had already been confirmed by the CIT(A) and therefore following the said decision of CIT(A) confirmed the orders of the AO in these years also aggrieved by which the assessee is in appeal before the tribunal. 2.1 Before us the Learned AR for the assessee submitted that the decision taken by the authorities below in assessment year 2001-02 has already been considered by the tribunal in the appeal for that year and vide order dated 17.10.10 in ITA No.7279 the tribunal had already restored the issue to the file of AO. The Learned DR on the other hand placed reliance on the orders of AO and pointed out that some of the bills of share transactions placed in the paper book related to assessment year 2001-02 and not for these years. 2.2 We have perused the records and considered the rival contentions carefully. The dispute is regarding genuineness of loss from share transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by the tribunal to the file of AO we set aside the order of CIT(A) for these years also and restore the matter to the file of AO for passing a fresh order after necessary examination in the light of observations made above and in the order of tribunal in assessment year 2001-02 and after allowing opportunity of hearing to the assessee. 3. The second dispute which is relevant only for assessment year 2002-03 is regarding disallowance of Rs.10,28,150/- being the sundry balances written off. AO during the assessment proceedings noted that the assessee had given only party-wise details of sundry balances written off. The assessee failed to give justification for write off and also failed to show that the amounts were declared as income in the earlier years. AO therefore disallowed the claim which was confirmed by CIT(A) aggrieved by which the assessee is in appeal before the Tribunal. 3.1 We have heard both the parties perused the records and considered the matter carefully. The claim has been allowed on the ground that the assessee could not file details to show that the amounts had been taken into account in the computation of income in the earlier years. In our view matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 2009/M/2007 relating to assessment years 2003-04 and 2004-05 held that the business of the assessee had not been closed and accordingly the tribunal allowed the claim of expenses. Following the said decision, it was argued that since the business was in existence, deposits made were in connection with the business and interest income has to be treated as business income. The Learned DR on the other hand placed reliance on the orders of authorities below. 4.2 We have perused the records and considered the matter carefully. The dispute is regarding nature of interest income received by the assessee from the FDRs pledged with the banks for issue of bank guarantee to the stock exchange in connection with the trading business of the assessee. The assessee had been debarred by SEBI for share transactions business in 2001 due to allegations of irregularities and manipulations. The case of the assessee is that the order of SEBI had been challenged. The license of the assessee had been cancelled only in the year 2005 and the order canceling the license had also been challenged by the assessee which was dismissed by SAT much later and the order of SAT was also confirmed by the Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s income then it would be speculation loss as held by the authorities below. The Learned DR placed reliance on the order of the authorities below. 5.2 We have perused the records and considered the matter carefully. The dispute is regarding treatment of loss arising from valuation of closing stock of shares and due to invocation of shares by the lenders amounting to Rs.19,08,876/-. The loss has been treated as speculation loss by the authorities below applying the provisions of Explanation to section 73. The said Explanation does not apply in case where gross total income of the assessee mainly consists of income under the head 'other sources', 'house property income' etc. In this case while dealing with the earlier ground we have held that interest income of Rs.39,50,810/- has to be treated as business income. Therefore gross total income of the assessee mainly consists of business income and Explanation to section 73 would apply. Since the Explanation applies loss has to be treated as speculation loss. We therefore uphold the action of CIT(A) treating the loss as speculation and allowing the same to be carried forward. 6. The fifth dispute which is relevant only for asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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