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TMI Blog2017 (4) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... dealing in shares and had suffered a loss during its regular course of business. Therefore, in our opinion, the AO was not justified in holding it to be speculative business. Now, if the facts of the case are considered it becomes clear that the assessee was a investment company and the share were sold in the normal course of its business. Therefore, in our opinion, the order of the FAA does not suffer from any legal or factual infirmity. Upholding the same, we decide the effective ground of appeal against the AO. - Decided in favour of assessee - I.T.A. /3648/Mum/2013 - - - Dated:- 29-3-2017 - Sh. Rajendra, Accountant Member and Amarjit Singh, Judicial Member For The Revenue : Shri Vishwas Mundhe-DR For The Assessee : None ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to ₹ 20.52 lakhs was brought to tax. 3. Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority(FAA)and made elaborate submissions. It relied upon several case laws and argued that provisions of explanation 1 to section 73 were not applicable. After considering the submission of the assessee and the assessment order, the FAA held that the assessee had adjusted income from short-term capital gain against loss from share trading business, that the AO had held that loss was incurred in the delivery-based share trading transactions. He referred to the explanation to section 73 and held that case of the assessee company fell out of the limbs of explanation to section 73, that the gross t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the FAA reversed his order. The assessee, being an investment company, was dealing in shares and had suffered a loss during its regular course of business. Therefore, in our opinion, the AO was not justified in holding it to be speculative business .Before proceeding furhte, we would like to refer to the matter of Darshan Securities P. Ltd. ( 341 ITR 556),delivered by the Hon ble Bombay High Court. Facts of the case were that the assessee had returned an income of ₹ 2,25,04,588/- from service charge and it had suffered a loss of ₹ 2,23,32,127/- in share trading .It had earned dividend income of ₹ 4,79,325/-.It claimed that in computing the gross total income for the purpose of the Explanation to section 73 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces. The Explanation is designed to define a situation where a company is deemed to carry on speculation business. It is only thereafter that sub-section (1) of section 73 can apply. Applying the provisions of section 73(1) to determine whether a company is carrying on speculation business would reverse the order of application. That would be impermissible, nor is it contemplated by Parliament. For the ambit of sub-section (1) of section 73 is only to prohibit the setting off of a loss which has resulted from a speculation business, save and except against the profits and gains of another speculation business. In order to determine whether the exception that is carved out by the Explanation applies, the Legislature has first mandated a com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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