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TMI Blog2016 (1) TMI 571X X X X Extracts X X X X X X X X Extracts X X X X ..... also indicative of the intention of the assessee. It is not worthy that in earlier years, the department had been accepting to the stand of the assessee as investment in shares, therefore, unless and until contrary facts are brought on record, a different view is not expected, on the principle of consistency. So far as, invocation of section 73 of the Act is concerned, the case of the assessee, is covered by the ratio laid down by Hon’ble Delhi High Court in Bhagwan Das Rameshwar Dayal (1984 (5) TMI 35 - DELHI High Court ). No wise businessman will suffer loss neither there is intention to suffer loss rather the investment is gainfully made for earning income, thus, treating the business transaction as speculative in nature is the subjective approach of the Assessing Officer. We find no infirmity in the conclusion of the ld. Commissioner of Income Tax (Appeals) setting aside the invocation of provisions of section 73 treating the loss on sale of investment as business loss and not speculation loss - Decided in favour of assessee So far as, allocating expenses towards speculative transaction are concerned, since, the above grounds have been decided in favour of the assessee, by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l for the assessee defended the conclusion arrived at in the impugned order. 2.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee, a private ltd. company, is a member broker with National Stock Exchange (NSC) and Bombay Stock Exchange (BSE). The business of the assessee consists of broking in shares, government and other securities, corporate advisory and mutual fund distribution. During the relevant period, the assessee made ten transactions in shares on exchange without delivery, which were duly treated by the assessee as speculative transaction. The assessee had been investing own funds in shares, mutual funds and other securities. The Assessing Officer treated the investment in shares as adventure in the nature of trade, consequently, he held the investment as trading asset by opining that huge funds were utilized by the assessee and caused substantial loss with commercial motive. The stand of the assessee is that the assessee was having net worth of ₹ 12.54 crores (as on 31/03/2008) and ₹ 12.61 crores (as on 31/03/2009), whereas, the investment in shares of listed companies was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urisdictional High Court in Gopal Purohit 336 ITR 287, Karamchan dThapar Bros. vs CIT 82 ITR 899 (SC) supports our view. We are usefully, quoting hereunder the relevant portion form the decision from Hon ble Bombay High Court in the case of Gopal Purohit, wherein, it was held as under:- 2. The Tribunal has entered a pure finding of fact that the assessee was engaged in two different types of transactions. The first set of transactions involved investment in shares. The second set of transactions involved dealing in shares for the purposes of business (described in paragraph 8.3 of the judgment of the Tribunal as transactions purely of jobbing without delivery). The Tribunal has correctly applied the principle of law in accepting the position that it is open to an assessee to maintain two separate port folios, one relating to investment in shares and another relating to business activities involving dealing in shares. The Tribunal held that the deliverybased transactions in the present case, should be treated as those in the nature of investment transactions and the profit received therefrom should be treated either as short-term or, as the case may be, long-term capital gain, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sale proceeds Gain or Loss Short Term Mutual Funds 25,00,000 25,16,602 16,602 Short Term Shares 76,89,747 72,22,640 (-),467,107 Long Term Shares 52,28,237 36,07,628 (-)16,20,609 Total (-)20,71,114 The ld. Assessing Officer, in view of the above loss, invoked the provisions of section 73 of the Act and treated the resultant loss of ₹ 20,70,934/- as loss in speculation business. Now, question arises, whether invoking section 73 of the Act is justifiable. The term business has been defined in section 2 (13) of the Act, which includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. Meaning thereby, the term is of wide import and encompasses any facet of an occupation carried on with a profit motive. Whereas, Explanation -2 to section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion) Act, 1956 (42 of 1956) or the Securities and Exchange Board 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee is also one of the relevant factor, whether it is treated as investment or stock in trade and also whether shown opening/closing stock or shown separately as investment or non-trading asset. Also whether the assessee borrowed money for purchasing such shares and paid interest thereupon. The frequency of transactions, the dates of purchase and sale holding period also indicative of the intention of the assessee. It is not worthy that in earlier years, the department had been accepting to the stand of the assessee as investment in shares, therefore, unless and until contrary facts are brought on record, a different view is not expected, on the principle of consistency. So far as, invocation of section 73 of the Act is concerned, the case of the assessee, is covered by the ratio laid down by Hon ble Delhi High Court in Bhagwan Das Rameshwar Dayal 149 ITR 387 (Del.). No wise businessman will suffer loss neither there is intention to suffer loss rather the investment is gainfully made for earning income, thus, treating the business transaction as speculative in nature is the subjective approach of the Assessing Officer. We find no infirmity in the conclusion of the ld. Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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