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TMI Blog2015 (2) TMI 361X X X X Extracts X X X X X X X X Extracts X X X X ..... ess, because loss from speculation business should be set off only from a profit of speculation business. Therefore, the Tribunal was justified in setting aside the order passed by the authorities and allowing the claim of the assessee. - Decided in favour of assessee. - INCOME TAX APPEAL NO.829 OF 2008 & INCOME TAX APPEAL NO.831 OF 2008 - - - Dated:- 2-9-2014 - MR. N.KUMAR AND MRS. RATHNAKALA, JJ. FOR THE APPELLANT : SRI K.V.ARAVIND, ADV. FOR THE RESPONDENT : SRI. S.PARTHASARATHI, ADV. JUDGMENT N. Kumar J.- The assessee in both the appeals are common and the substantial questions of law in these two appeals are also the same, hence, both the appeals are taken up together for consideration to dispose of in this common judgment. 2. The Revenue has preferred these two appeals against the finding of the Tribunal upholding the claim of the assessee on the ground that under the proviso (c) of section 43(5) of Income-tax Act, 1961 (hereinafter referred to as 'the Act'), the nature of jobbing and arbitrage cannot be considered as a speculative transaction. 3. The assessee is a share broker and a member of both National Stock Exchange and Bangalore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal. 4. Learned counsel for the Revenue assailing the impugned order contended that Explanation to section 73 of the Act is squarely attracted to the facts of the case as the assessee is in the business of purchase and sale of shares of other companies and, therefore, by a deeming fiction, the said business is to be treated as a speculation business and any loss in the said business cannot be set off against other business profit but it has to be set off only against the profit accrued from speculation business and, therefore, the impugned order requires to be set aside. 5. Per contra, learned counsel for the assessee submitted that before section 73 or the Explanation to section 73 of the Act is attracted, the activity carried on by the assessee should be a speculative transaction. In the instant case, the transaction falls under section 43(5)(c) of the Act, which is not a speculative transaction and, therefore, the Tribunal was justified in upholding the claim of the assessee. 6. In the light of the aforesaid facts and the rival contentions, the substantial question of law that arise for our consideration is as under : Whether the Tribunal was corr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of India Act, 1992 (15 of 1992), or the Depositories Act, 1996 (22 of 1996), and the rules, regulations or bye-laws made or directions issued under those Acts or by banks or mutual funds on a recognised stock exchange ; and (B) which is supported by a time stamped contract note issued by such stock broker or sub-broker or such other intermediary to every client indicating in the contract note the unique client identity number allotted under any Act referred to in sub-clause (A) and permanent account number allotted under this Act ; (ii) 'recognised stock exchange' means a recognised stock exchange as referred to in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and which fulfils such conditions as may be prescribed and notified by the Central Government for this purpose ;Explanation 2.-For the purposes of clause (e), the expressions- (i) 'commodity derivative' shall have the meaning as assigned to it in Chapter VII of the Finance Act, 2013 ; (ii) 'eligible transaction' means any transaction,- (A) carried out electronically on screen-based systems through member or an intermediary, registered under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orward to the following assessment year, and- (i) it shall be set off against the profits and gains, if any, of any speculation business carried on by him assessable for that assessment year ; and (ii) if the loss cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following assessment year and so on. (3) In respect of allowance on account of depreciation or capital expenditure on scientific research, the provisions of sub-section (2) of section 72 shall apply in relation to speculation business as they apply in relation to any other business. (4) No loss shall be carried forward under this section for more than four assessment years immediately succeeding the assessment year for which the loss was first computed. Explanation.-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 or the granting of loans and advances) cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies (Profits) Surtax Act, 1964. The proposals relating to the amendments to these enactments have been formulated after a detailed examination of the recommendations of the Direct Taxes Enquiry Committee (Wanchoo Committee) and the Forty-seventh Report of the Law Commission on the Trial and Punishment of Social and Economic Offences, the latter in so far as they relate to direct taxes. Opportunity has been taken to sponsor some amendments on the basis of suggestions received from various other quarters as well. Technical difficulties arising in the operation of some of the provisions of these enactments have also been taken into account in formulating these proposals. 2. The main objectives of the amendments proposed to be made are to unearth black money and prevent its proliferation ; to fight and curb tax evasion ; to check avoidance of tax through various legal devices, including the formation of trusts and diversion of income or wealth to members of family; to reduce tax arrears and to ensure that in future, tax arrears do not accumulate ; to rationalise the exemptions and deductions available under the relevant enactments, and to streamline the administrative set up and mak ..... X X X X Extracts X X X X X X X X Extracts X X X X
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