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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 ..... purchase and sale of shares. Treatment of loss from different heads included in the gross total income - Held that:- This issue is covered by the judgment of Park View Properties (P.) Ltd. (2003 (1) TMI 69 - CALCUTTA HIGH COURT) following the judgment of CIT v. Harprasad & Co. (P.) Ltd. [1975 (2) TMI 2 - SUPREME COURT] and CIT v. J.H. Gotla [1985 (8) TMI 5 - SUPREME COURT] wherein held that loss is negative income, held that while considering the different constituents of gross total income, the figures in absolute terms should be considered whether positive or negative. The Hon'ble Court followed the earlier judgment in case of Eastern Aviation & Industries Ltd. (1993 (7) TMI 41 - CALCUTTA HIGH COURT) in which it was held that whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereto of Rs. 31,12,030/- which had been disallowed by the AO who had treated the loss as speculation loss. 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. 3,2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 365 and on the judgment of same court in the case of Eastern Aviation Industries Ltd. v. CIT [1994] 208 ITR 1023. The AO thus treated the loss from trading of shares as speculation 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 specu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue raised in the appeal was covered by the judgment of Hon'ble High Court of Calcutta in case of Eastern Aviation Industries Ltd. (supra) the judgment in case of Arvind Investments 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 gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome, the figures in absolute terms should be considered whether positive or negative. The Hon'ble Court followed the earlier judgment in case of Eastern Aviation Industries Ltd. (supra), 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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