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TMI Blog2014 (2) TMI 793X X X X Extracts X X X X X X X X Extracts X X X X ..... that giving loans and advances cannot be termed as the business of the assessee - The Tribunal’s conclusion that the gross total income of the assessee consisted mainly of income chargeable under the heads of interest on security, house property, capital gains or income from other sources calls for no interference – thus, the assessee would not be governed by the explanation to section 73 - the deeming fiction would not apply - Loss could not treated as speculative loss – Decided against Revenue. - Tax Appeal No. 1579 of 2010 - - - Dated:- 4-2-2014 - Akil Kureshi And Sonia Gokani,JJ. For the Appellant : Mr. Varun K. Patel, Advocate For the Respondent : Mr. B. S. Soparkar, Advocate ORDER (Per : Honourable Mr. Justice A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out that the assessee s gross total income included income from interest of Rs.13.48 lakhs (rounded off) against the trading loss of shares of Rs.10.35 lakhs. When the Assessing Officer did not accept such contention and disallowed the claim, the assessee preferred the appeal. CIT(Appeals) rejected the assessee s appeal upon which further appeal came to be filed before the Tribunal. The Tribunal reversed the decision of Revenue authorities making following observations:- 10. We have heard the rival submission and perused the orders of the lower authorities and the materials available on record. In the instant case for assessment year 2000-01, the assessee earned interest income of Rs.13,48,350/- and claimed set off of loss from share tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 was also earned from one party. The assessee has also filed at page-54 of the paper book details of other income which comprises of profit of sale of computer on Rs.38,904/- and other income of Rs.3500/- aggregating Rs.42,404/-. Thus, the total income from other sources and capital gain during the year earned by the assessee was Rs.7,03,169/-. It was contended by the Learned Authorised Representative of the assessee during the year under consideration, the assessee was not engaged in any organized and systemic activity of advancing loans and therefore, such interest income earned from advancing loan to one party alone cannot be considered a business income of the assessee merely because the assessee mistakenly classified it as its busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsists of income which is chargeable under the head income from other sources and capital gain, therefore, in our considered view the provision of explanation to section 73 is not attracted in the case of the assessee in both the years under appeals. We therefore, set aside the orders of the lower authorities for both the years under consideration and direct the Learned Assessing Officer to recomputed the income of the assessee in the light of the observations made hereinabove. Thus, the assessee in light of the observations made hereinabove. Thus, the ground of appeal of the assessee is allowed for both the years under consideration. 5. Having heard learned counsel for the parties, we do not see any error in the view of the Tribunal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Interest on securities , Income from house property . Capital gains and Income from other sources , or a company the principal business of which is the business of banking or the granting of loans and advances) consists in the purchase and sale of shares of other companies, such company shall, for the purposes of this section, be deemed to be carrying on a speculation business to the extent to which the business consists of purchase and sale of such shares. 8. From the plain reading of the explanation it can be seen that the same provides for deeming fiction under which the business of company could be treated to be a speculation business. For the said explanation to apply, however, it would be necessary that there is a company othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew, the Tribunal correctly appreciated the facts. From one isolated instance, it could not be concluded that the assessee was in business of advancing loans and earning interest. The Tribunal s conclusion, therefore, that the gross total income of the assessee consisted mainly of income chargeable under the heads of interest on security, house property, capital gains or income from other sources calls for no interference. That being the position, the assessee would not be governed by the explanation to section 73. In turn, the deeming fiction would not apply. Loss, therefore, could not treated as speculative loss. No question of law, therefore, arise. 12. With respect to Question [B], we notice that the amount involved is extremely small ..... X X X X Extracts X X X X X X X X Extracts X X X X
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