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TMI Blog2013 (12) TMI 190X X X X Extracts X X X X X X X X Extracts X X X X ..... he nature of activity had been mentioned as professional consultant and share trading - For share loss, the appellant had not submitted any evidence whether any delivery of shares has been taken or not - the loss on future trading was supported by evidences with time stamped contract notes issued by the brokers containing unique client code and PAN of the appellant. From asst. yr. 2005-06, under s. 43(5), the future and option transaction had been excluded from the purview of speculation, if the transactions are carried out at recognized stock exchange and time stamped contract notes were issued - The appellant had routed the transaction through recognized stock exchange notes - appeal on future and option transaction is dismissed - the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated in the assessment order dt. 16th Dec, 2010 which is as under : "The above plea of the assessee circumvents the real issue at stake for the following reasons: (a) The assessee might have entered the amount of loss in the capital account being a of the Form No. 3CD/3CB. However, the income/loss as per the audited account does not give even a cursory mention of the loss of Rs. 66.52 lacs claimed to have been incurred in the share trading activity. (b) The Annexure to Form No. 3CD, which shows the comparative business results of assessee, in part B thereof, shows the 'gross receipts' as Rs. 39,50,000 and the "net profit' as Rs. 28,19,250, (c) The audit report does not cover the turnover in the share trading ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : (i) Credit card expenses Rs. 2,09,367 (ii) Gift Rs. 1,00,000 (iii) Loss on future trading Rs. 40,43,471 (iv) Loss on share trading Rs. 19,46,113 (v) Different heads of salary (vi) Different capital gains receipts (j) Merely mentioning 'share trading' in column 8(a) of Form No. 3CD does not mean that the particular activity and the business results therein have been subjected to audit under s. 44AB unless and until the data has been incorporated in the P L a/c and the balance sheet accompanying the audit report. From the reasons recorded as above, the claim of loss of Rs. 66,52,220 cannot be allowed both legally and factual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The disallowance of losses is on account of reasons mentioned by the AO in para 4.2 on p. 6 of assessment order. The reasons are : loss is not part of regular books of account, activity from which losses claimed has not been subjected to audit under s. 44AB and P L a/c of the above activity was not, drawn. From this, it can be seen that AO disallowed the losses only on the grounds that entries of transactions were not made in books of account and that audit was not made. Appellant submitted that the ledger account of share trading and futures and options transactions and working of profit/loss were submitted to the AO. The same were also audited while auditing capital account. Copies of accounts from brokers' books were also submitted. Apa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns have been made in the books of account but the net results of the same were taken to capital account of the appellant. The gross transaction value should have been taken to P L a/c but the net result of the same will not be different. In view of this, appellant cannot be penalised just because he did not make accounting entries properly. While determining the taxable income, one has to see the substance and not the form in which the transactions were presented. In view of the aforesaid discussion, it is clear that the appellant's transactions are business in nature and accordingly the losses suffered by the appellant are business losses. The alternative argument of the AO that these losses will be speculative is not correct since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss on future trading has been debited at Rs. 40,43,471 and loss on share trading at Rs. 19,46,113 which has been adjusted against other business income in computation of income in the year under consideration by the appellant. Similar treatment has been also given in asst. yr. 2009-10 by the appellant, for which necessary papers have been filed by the appellant in paper book. Learned counsel for the appellant had stated that he had submitted the audit report in prescribed performa which has been duly signed by the chartered accountant as per IT Rules. On that basis, the loss on share was claimed in the computation of income. The assessee was in the consultancy as well as share trading business during year under consideration. 5. We have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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