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TMI Blog2013 (2) TMI 179X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 2. Facts in brief are that the AO during the assessment proceedings after examining the details furnished by the assessee noted that the assessee had shown income from house property at Rs. 35,73,950/-, income from other sources at Rs. 24,92,129/- and capital gain on sale of flat at Rs. 62,285/-. The assessee had also made purchase and sale of shares in which it had incurred loss of Rs. 3,25,23,981/- as per details given below :- Opening stock Rs. 4,13,68,458/- Purchases Rs. 697,73,83,642/- Sales Rs. 698,41,67,611/- Closing stock Rs. 20,60,608/- Loss Rs. 3,25,23,981/- 2.1 The AO referred to the provisions of Explanation to section 73 as per which in case gross total income does not consist mainly of income from house property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulation loss. As regards allocation of expenses, the AO observed that the assessee had claimed composite expenses of Rs. 31,37,574/- in relation to all activities which consisted of sale of shares to the tune of Rs. 698 crores and other income of Rs. 25.54 lacs. He, therefore allocated expenses relating to other income at 1% of such income i.e., Rs. 25,540/- and expenses relating to share trading were estimated at Rs. 31,12,030/-. The AO therefore, disallowed expenses to the tune of Rs. 31,12,030/- (wrongly mentioned as Rs. 27,36,426/- in the computation) and speculation loss was allowed to be carried forward and not adjusted against other income. 2.2 The assessee disputed the decision of AO and submitted before CIT(A) that gross total inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts Ltd. (supra) and judgment in case of CIT v. Park View Properties (P.) Ltd. [2003] 261 ITR 473. It was accordingly argued that the appeal of the revenue has to be allowed. 4. We have perused the records and considered the rival contentions carefully. The dispute is regarding application of provisions of Explanation to section 73 as per which in case of a company, other than a company gross total income of which consists mainly of income from house property, capital gain and other sources or the company principal business of which consists of banking or of granting loan/advances, any part of the business consists of purchase and sale of shares of other companies loss arising therefrom has to be treated as speculation loss. The assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pra), in which it was held that when the income from house property, capital gain and other sources even if positive is lower than figure of loss from business activities, it will not be a case of gross total income consisting mainly of income from house property, capital gain and other sources. Since the figure of loss in absolute terms in share trading was higher then income from other sources taken together, it was held that the provisions of Explanation to Section 73 would be applicable. Situation in the present case is identical. Therefore, following the above judgments it has to be held that case of the assessee will be covered by the provisions of Explanation to section 73. No contrary judgment of any other High Court or Apex Court h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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