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TMI Blog2018 (1) TMI 943X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly excepted out of the application of the explanation. The assessee thus not deemed to be carrying on speculation business, loss incurred by it would be a business loss and the assessee entitled to set off the same against its income from other sources under section 71. That being our view, we accept the submissions of Mr. Khaitan in distinguishing the cases cited on behalf of the Revenue as not applicable to this case. Calculation of interest under section 234B - direction by CIT-A to give credit for tax from 6th August, 2008 being the 120th day from the date of last authorization for search as provided in the second proviso in subsection (1) of section 132B. The Tribunal upheld such findings and direction and we have no reason to int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il, 2008 at the common address of 9 persons including the assessee. During the search and seizure the group of persons voluntarily disclosed a sum of ₹ 15 crores as additional income in the hands of the assessee and ₹ 30 crores in the hands of Umang Vincom Pvt. Ltd., one of the 9 persons, for the financial year 2007-08 relevant to assessment year 2008-09. Cash of an amount of ₹ 17,50,99,994/- was seized from the bank account of Shoparna Brothers Pvt. Ltd., another one of the 9 persons, which however stood explained. The assessee had recorded a statement under section 132(4) of the Act on 8th April, 2008 saying that tax liability arising out of the disclosure be adjusted out of the balance of ₹ 17 crores and odd lying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Assessing Officer. Additional income disclosed had to be treated under the head income from other sources. That would make such income the main income of the assessee bringing it within the exception in the explanation under section 73. Therefore, the assessee could not be said to have had speculative income to any extent for adjustment of speculative loss incurred by it. That loss could only be carried forward for the period permissible in law. Mr. Chowdhary relied upon several decisions, the first being in the case of CIT Vs. J. P. Kanodia Co. reported in 1970 AIR SC 1588, to the portion extracted below:- This Court held disagreeing with Jagannath Mahadeo Prasad s case that in the computation of the income, profits and g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008 and hence it is only then that its liability under section 140A had crystallized. Prior to that there could not be any adjustment from the seized cash. Mr. Khaitan, learned senior Advocate appeared on behalf of the assessee and submitted that the distinction made by the Assessing Officer regarding application of the exception in the explanation under section 73, relating to the assessee, could not be made. Once the assessee was excepted out of the explanation to the extent to which its business could be deemed to be speculative business, loss incurred could not be said to be speculative loss but was business loss. He referred to section 43(5) to submit that the Assessing Officer had resorted to the deeming provision in section 73 si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the assessee deeming its business to be speculation business. Regarding Eastern Aviation (supra) he submitted that an assessee could be excepted out of the application of the explanation either arithmetically, on the basis of its main income, or on the basis of its principal business. In that case the speculative loss was taken to be negative income and arithmetically the same being larger than the positive income from dividend, this court had held that the explanation applied to that assessee. In the case of his client, the income from other sources was arithmetically much larger than the loss suffered by it in share trading. Lastly on R.P.G. Industries Ltd. (supra) he submitted, that case too was not applicable since what fell for co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the source of cash seized, ie, regular books of account, was not explained by Mr. M/s Shoparna Brothers Pvt. Ltd in their application dated 28.05.2008 and there was any tax liability remaining to be adjusted in their case. In view of these facts, as requested by both appellant and M/s Shoparna Brothers Pvt. Ltd., Assessing Officer should have released the cash seized from the custody of M/s shoparna brothers Pvt. Ltd. and, should have applied it towards payment of tax liabilities of ₹ 4,43,00,000/- of appellant, on or before 06.08.2008. However, it appears that the Assessing Officer did act upon such requests, but after a delay of a few months on 30.03.2009 Therefore, in calculation of interest u/s 234B, Assessing Officer should ..... X X X X Extracts X X X X X X X X Extracts X X X X
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