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TMI Blog2014 (12) TMI 552X X X X Extracts X X X X X X X X Extracts X X X X ..... t year under consideration, then the set off of brought forward speculative losses cannot be denied for the assessee – Decided against revenue. Unexplained credits u/s 68 – Onus discharged by assessee or not – Establishment of identity and creditworthiness of parties – Held that:- No addition/ disallowance can be made on suspicion, surmises and conjectures as decided in Dhirajlal Girdharilal Versus Commissioner Of Income-Tax, Bombay [1954 (10) TMI 8 - SUPREME Court] - assessee during the arguments has drawn attention towards paper book wherein it has been mentioned that the assessee filed copies of the confirmation, bank statements, income tax returns along with computation of income from 2000-01 to 2003-04 of the investors of the share application money before the AO and the CIT(A) - the AO proceeded to make addition u/s 68 of the Act without any further examination and verification of the details, confirmations, Income tax returns, bank accounts of the alleged investors who contributed share application money simply keeping aside the same – in COMMR. OF INCOME TAX Versus M/s LOVELY EXPORTS(PVT) LTD [2008 (1) TMI 575 - SUPREME COURT OF INDIA] it has been held that if the share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed set off of brought forward speculation losses of ₹ 12,82,930. The AO also made the addition u/s 68 of the Act of ₹ 5 lakh by holding that the assessee failed to discharge its onus to substantiate share application money received from various share applicants. The aggrieved assessee preferred an appeal before the CIT(A) which was partly allowed on aforementioned both the issues. Now, the aggrieved revenue is before this Tribunal with the grounds as reproduced hereinabove. Ground No.3 3. Apropos ground no.3, on specific query from the Bench, ld. DR fairly accepted that the assessee had not produced any additional evidence during first appellate proceedings. Accordingly, ground no. 3 of the revenue having no substance and being devoid of merits is dismissed. Ground No.1 4. Apropos ground no.1, we have heard arguments of both the sides and carefully perused the relevant material placed on record, inter alia assessment order and impugned order. Ld. DR submitted that the AO rightly observed that the business of purchase and sale of shares is not a speculative business but the same is a regular business and the income from purchase and sale of shares excluding j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the current year income is to be treated as regular business income. Explanation to Section 73 reads as under: Where any part of the business of a company (other than a company whose gross total income consists mainly of income which is chargeable under the heads 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 on 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 the purchase and sale of such shares. 7.5 From the above provisions it is very clear that income/loss derived by the assessee is from speculation business which was accepted in earlier year / s. There is no change of facts in the impugned year. The action of the AO is unjustified, The AO is hereby directed to allow set off of loss as claimed by the assessee. Accordingly, Ground No. 2 is allowed. 7. In view of above, we observe that the AO denied set off of speculative losses of earli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the decision of Hon ble Supreme Court in the case of Lovely Exports (supra) and the decision of Hon ble Jurisdictional High Court of Delhi in the case of CIT vs Divine Leasing Finance Ltd. 207 CTR 38(Del) and submitted that when the assessee has provided necessary details including the ward/circle where the share applicants were assessed to income tax and properly discharged the onus cast by the Act on the assessee company and in the light of peculiar fact when the share applicants were also allotted shares by the assessee company, then addition u/s 68 of the Act is not sustainable. The AR vehemently contended that the AO has not brought out anything adverse on record to dispute or discard the facts, details and explanation submitted by the assessee, then without any further verification and examination by the AO, simply relying on surmises and conjectures, the addition u/s 68 of the Act is not sustainable. 10. On careful consideration of above submissions and contentions and vigilant perusal of the impugned order, we observe that the CIT(A) granted relief for the assessee by placing reliance on the decision of Hon ble Supreme Court in the case of Lovely Exports (supra) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the AO and the CIT(A). We also observe that the assessee has filed written submissions before the AO during assessment proceedings on 07.07.2006, 20.11.2006 and 06.12.2006 which are available from page no. 102 to 110 of the paper book, hence, observation and conclusion of the AO about non-furnishing of required detail is not sustainable. 12. From careful reading of the assessment order, we also observe that the AO proceeded to make addition u/s 68 of the Act without any further examination and verification of the details, confirmations, Income tax returns, bank accounts of the alleged investors who contributed share application money simply keeping aside the same. In these peculiar facts and circumstances of the case, we are inclined to approve the impugned order in the light of ratio of the decision of Hon ble Supreme Court in the case of Lovely Export (supra) and ratio of the decision of Hon ble Jurisdictional High Court of Delhi in the case of Divine Leasing (supra). In the case of Lovely Export (supra), the Hon ble Apex Court held that if the share application is received by the assessee company from alleged bogus shareholders whose names are given to the AO, then the dep ..... X X X X Extracts X X X X X X X X Extracts X X X X
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