9911796707
TMI Blog2012 (12) TMI 565X X X X Extracts X X X X X X X X Extracts X X X X ..... ased purchase and sale of shares is deemed to be speculative business under the provisions of Explanation to section 73 of the I.T. Act and income from such business is speculative in nature. 3. On the facts and in the circumstances of the case and in law, the CIT (A) erred in holding that business consisting of purchase and sale of shares is deemed to be speculative business under the provisions of Explanbation of section 73 of the I.T. Act and income from such business of share trading is allowed to be set off against the speculative loss from derivative tradings". 2. Briefly stated, the assessee company is engaged in trading and investment of shares and securities. During the course of the assessment proceedings, AO required assessee t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst the non speculative business income of assessee. 3. Before the CIT (A) assessee made detailed submissions which have been incorporated from Pages 5 to 8 of the order. The sum and substance of assessee's contention was that: i) As per the provisions of section 43(5)(d), loss/profit arising on derivative transactions in equity futures and options at BSE/NSE was to be treated as business loss/profit. Notification to this effect was issued vide Board's Circular No.SO-89(E) dated 25.1.06. Since the notification was dated 25.1.06, AO treated the equity derivatives F&O losses upto 25.01.2006 as speculative loss. ii) Explanation to section 73 is applicable to any part of the business of the company other than "investment company" an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income under section 73 read with explanation thereof. 4. The learned CIT (A), though agreed with the decision of AO in holding that the loss of Rs..1,60,06,306/-had to be treated as speculative loss however, held that there is no merit in not allowing such speculative loss to be set off against the profit of delivery based business in share trading in view of the Explanation to section 73(1). He thus held that AO's finding that delivery based trading is outside the purview of the Explanation to section 73 is not correct. Further he observed in his order vide Para 7.4 to 7.6 as under: "7.4 Again the reference by AO to explanation 2 to section 28 is not correct because the said explanation only says that speculation business is separate f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ambit within which it is intended to operate. The deeming fiction created by the explanation to Section 73 defines when an assessee is to be deemed to be carrying on a speculation business for the purposes of the Section. The deeming fiction is, therefore, one which arises specifically in the context of the provisions of Section 73 and is confined to that purpose alone. The explanation stipulates that where an assessee is a company whose business consists in any part of the purchase and sale of shares of other Companies, it shall be deemed to be carrying on a speculation business to the extent to which the business consists of purchase and sale of such shares. Whether or not it is a profit or loss that has resulted from carrying on such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l position as brought out above, AO is directed to allow the loss from derivative transactions of Rs.1,60,06,306/- to be set off against profit arising out of delivery based transactions; as both are speculative/deemed speculative transactions. This ground is allowed". 5. The learned Sr. DR relied upon the findings of AO and the learned Counsel on behalf of assessee relied on the findings of the CIT (A) as well as the judgment of the jurisdictional High Court in the case of CIT vs. Lokmat Newspapers (P) Ltd. 6. After carefully considering the rival submissions, the findings given by AO as well as the CIT (A), we find that the reasons given by the CIT (A) are in consonance with the judgment of the Hon'ble jurisdictional High Court as refer ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
