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TMI Blog2010 (9) TMI 846X X X X Extracts X X X X X X X X Extracts X X X X ..... f getting more in tax saving combined with the dividend likely to be received over the loss suffered and expenditure incurred by way of interest and charges paid to the broker. Therefore, in our view, the transaction of purchase and sale of units when done as a business in a speculative manner, the loss therefrom could be set off only against profit arising in speculation business in terms of section 73(1) of the Act. Assessee in fact claimed set off of loss from speculation business against income from tea plantation which in our view, is not admissible by virtue of the prohibition contained in section 73(1) of the Act following the judgment of the Supreme Court in Apollo Tyres Ltd.'s case (2002 (5) TMI 5 - SUPREME Court) we dismiss the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year in which interest accrues or is received by the assessee. We do not find any merit in the department's Appeal on this question and we, therefore, confirm the finding of the Tribunal. However, first question calls for detailed consideration and, therefore, we proceed to consider the same. Since the counsel engaged by the assessee died during pendency of the I.T.A., we directed the Registry to issue fresh notice intimating death of the assessee's counsel. Even though notice was served with such intimation, assessee has not chosen to engage another counsel. Therefore, we proceed to dispose of the appeal after hearing Senior counsel appearing for the appellant-department. 2. The facts leading to the controversy are the following. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany which provided loan to the assessee to fund the purchase for 60 days on payment of interest at 17 per cent per annum. In terms of the contract, units of the U.T.I., 15 lakhs in number, were purchased at the rate of Rs. 14.90 per unit from Pearless General Finance and Investment Ltd. on 7-5-1990 and were resold to the very same company i.e., Pearless General Finance and Investment Company on 9-7-1990 at the rate of Rs. 13.20 per unit leading to assessee suffering a loss of Rs. 26,62,500. Even though the purchase and sale of units has led to a loss to the assessee, in effect assessee gained in two ways, first one being the tax saved on the business loss of Rs. 26,62,500 which is the loss booked by the assessee in the purchase and sale of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontended that the transaction is literally "speculation business" because assessee booked specific loss in advance in the purchase and sale of units of U.T.I. speculating that there will be net gain by getting tax-free dividend on units and tax saving on the business loss booked which according to the expectation of the assessee would be much more than the business loss suffered. Even though the issue raised is apparently covered in favour of the assessee by decision of this Court in the case of Apollo Tyres Ltd. (supra) wherein the transaction involved is similar to the one arising in this case and the said decision is confirmed by the Supreme Court by decision in Apollo Tyres Ltd.'s case (supra) and the decisions are binding on us, we sti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Explanation 2 to section 28 where it is defined as a business involving speculative transactions. Speculative transaction is defined under section 43(5) of the Act which is as follows:- "S.43(5) "Speculative transaction" means a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips." What is clear from the above definition is that speculative business is not limited to purchase and sale of stocks or shares alone, but purchase and sale of any commodity in a speculative manner will also be a speculative transaction and when it is done in the course of business or as part o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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