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TMI Blog2015 (10) TMI 1879X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals) that the LTCG and STCG were not speculative transactions. - Decided against revenue. Addition of the apportioned expenditure towards speculation activity - CIT(A) deleted part addition - Held that:- As we have upheld the stand of the ld. Commissioner of Income Tax (Appeals) that such gains/losses were not speculative transaction, thus, under these circumstances, allocation of expenses was not required. The Assessing Officer treated the allocation of expenses to be speculative activity of the assessee on the basis of percentage of income/profit. Ultimately, it is the turnover, which requires incurring of expenses, thus, we are in agreement with the finding of the ld. Commissioner of Income Tax (Appeals) that the allocation of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with Rule-8D - Decided partly in favour of revenue - ITA NO.3271/Mum/2013 - - - Dated:- 7-8-2015 - Shri Joginder Singh and Shri Sanjay Arora, JJ. For The Revenue : Shri A.Ramchandran. Sr.AR-DR For The Assessee : Shri Beharilal ORDER Per Joginder Singh (Judicial Member) The Revenue is aggrieved by the impugned order dated 06/02/2013, of the ld. First Appellate Authority, Mumbai. 2. The first ground pertains to directing the Assessing Officer not to treat the long term capital gain and short term capital gain loss as speculation transactions. The crux of argument advanced by ld. DR, Shri A. Ramachandran, is broadly in support of the assessment order by advancing arguments which is identical to the ground ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the capital gain arising on the transfer of such asset should be treated as short term capital gain. However, the ld. Assessing Officer in view of explanation to section 73 of the Act held the transaction as speculative in nature and the entire long term capital gain of ₹ 41,24,265/- and short term capital loss of ₹ 30,54,731/- were treated as speculative income and adjusted with the speculative income/loss of ₹ 1,72,33,233/-. 2.2. On appeal, before the ld. Commissioner of Income Tax (Appeals), the submissions of the assessee were considered. The stand of the assessee before the ld. Commissioner of Income Tax (Appeals) was that application of explanation to section 73 of the Act is quite unjustified as the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilable for taxation for the current year, therefore, the profit of ₹ 41,24,261/- (Capital gains) is adjustable against other losses during the year itself. As per section 73(2) of the Act where for any assessment year, any loss is computed in respect of speculation business, which has not been wholly set off under sub-section (1), so much of the loss is not to be set off are whole loss, where the assessee has no income from any other speculation business, shall, subject to the other provisions of this chapter, be carried forward to the following assessment years and (i) It shall be set off against the profit and gains, if any, of any speculation business carried on by him assessable for that assessment year and (ii) If the loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The total expenditure debited in the account was ₹ 38,04,754/-, thus, the total speculative loss was worked out at ₹ 1,93,85,950/- by the Assessing Officer. We note that while dealing with ground no.1 (supra), we have upheld the stand of the ld. Commissioner of Income Tax (Appeals) that such gains/losses were not speculative transaction, thus, under these circumstances, allocation of expenses was not required. The Assessing Officer treated the allocation of expenses to be speculative activity of the assessee on the basis of percentage of income/profit. Ultimately, it is the turnover, which requires incurring of expenses, thus, we are in agreement with the finding of the ld. Commissioner of Income Tax (Appeals) that the alloca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce as the dominant object of the assessee was to earn profit on sale of shares as a investor and Rule 8D is applicable only to the investment and to the stock in trade. Without going into much deliberation, we note that under the facts available on record to this limited extent, we are in agreement with the ld. DR/Assessing Officer that the provision of section 14A read with Rule-8D of the Rules are applicable. The Tribunal, in the case of Dy.CIT vs Damani Estates and Finance Pvt. Ltd. (2013) 25 ITR 683 (Mum.) and D.H. Securities Pvt. Ltd. vs DCIT (2014) 146 ITD 1(Mumbai)(TM), has clarified that Rule 8D shall apply qua the shares held as stock-in-trade. The Tribunal has, therefore, in effect confirmed its earlier order, passed by its Speci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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