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TMI Blog2012 (2) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... e explanation to Section 73 and that consequently the assessee would not be deemed to be carrying on a speculation business for the purpose of Sec. 73(1) – Decided in favor of assessee. - IT Appeal NO. 2886 OF 2009 - - - Dated:- 2-2-2012 - DR. D.Y. CHANDRACHUD and M.S. SANKLECHA, JJ. JUDGMENT Dr. D.Y. Chandrachud, J. In this Appeal by the Revenue, there was a delay of 366 days. By the order of a Division Bench dated 10 December 2007, the Motion taken out by the Revenue for condoning the delay, was dismissed. The Revenue carried the matter in Appeal before the Supreme Court. By a Judgment dated 30 November 2009, the Supreme Court allowed the Civil Appeal, which arose out of the Judgment of the Division Bench in the Motion f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeal, which was allowed by the Commissioner (Appeals) on 14 January 2000. The Tribunal in an Appeal by the Revenue confirmed the decision of the Commissioner following its earlier Judgment in Assistant Commissioner of Income Tax, Special Circle 18(1) v. Concord Commercials Pvt. Ltd. (ITA No.5220/MUM/1994) decided on 28 January 2005. 4. In order to appreciate the issue, which arises in the Appeal, a reference briefly to the relevant facts would be in order. During the assessment year, the assessee returned an Income of Rs. 2,25,04,588 from service charges. The assessee had a loss of Rs. 02,23,32,127 in share trading. The assessee had a dividend income of Rs. 4,79,325/-. The assessee claimed that in computing the gross total income for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urce against income from another source under the same head. Section 72 makes provision for carry forward and set off of business losses, under the head of profits and gains of business or profession other than a loss sustained in a speculation business. Sub Section (1) of Section 73 provides that any loss, computed in respect of a speculation business carried on by the assessee, shall not be set off except against profits and gains, if any, of another speculation business. As a result of the provision of Sub Section (1) of Section 73, a bar is introduced against the setting off of a loss which has arisen in respect of speculation business carried on by the assessee save and accept against the profits and gains of another speculation busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s", "Income from house property", "Capital gains" and "Income from other sources" or a company whose principal business is of banking or the granting of loans and advances. 7. The submission which has been urged on behalf of the Revenue is that in computing the gross total income for the purpose of the explanation to Section 73, income under the heads of profits and gains of business or profession must be ignored. Alternatively, it has been urged that where the income from business includes a loss in the trading of shares, such a loss should not be allowed to be set off against the income from any other source under the head of profits and gains of business or profession. 8. In our view, the submission which has been urged on behalf of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether a company is carrying on a speculation business within the meaning of the explanation, sub section (1) of Section 73 is applied in the first instance. This would in our view not be permissible as a matter of statutory interpretation, because the explanation is designed to define a situation where a company is deemed to carry on speculation business. It is only thereafter that sub section (1) of section 73 can apply. Applying the provisions of Section 73(1) to determine whether a company is carrying on speculation business would reverse the order of application. That would be impermissible, nor, is it contemplated by Parliament. For, the ambit of Sub Section (1) of Section 73 is only to prohibit the setting off of a loss which has r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t consequently the assessee would not be deemed to be carrying on a speculation business for the purpose of Sec. 73(1). 10. The view, which we have taken, also accords with the judgments of this Court in C.I.T. v. M/s. Hero Textiles and Trading Ltd. (Income Tax Appeal No. 296 of 2001 decided on 29 January, 2008) and in C.I.T. v. Maansi Trading Pvt. Ltd. (Income Tax Appeal No.47 of 2001, decided on 29 January, 2008). The Tribunal has relied upon its earlier decision in the case of Concord Commercial Pvt. Ltd. of 18 March 2008. A Division Bench of this Court had dismissed Notice of Motion no. 1921 of 2007 in Income Tax Appeal (Lodging) No.852 of 2007 for condonation of delay against the decision of Concord Commercial Pvt. Ltd. holding that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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