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TMI Blog2006 (9) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1961, the Tribunal was correct in law in holding that the provisions of section are not applicable to the case of the assessee-company? 2. Whether, on the facts and in the circumstances of the case is the decision of the Tribunal perverse in holding that the income of the assessee mainly consisted of interest, dividend, hire charges, etc., and that 'Explanation' to section 73 of the Income-tax Act, 1961, is not applicable to the case of the assessee-company?" The assessee, which is a company, in the assessment year 1994-95 claimed loss on sale of shares amounting to Rs. 49,15,930 and set off the same against the "interest income", "dividend income", "hire charge income" and from" other income". The assessing authority in view of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f another speculation business, as the assessee-company does not come within the exception stipulated in the Explanation to section 73 of the Act. Mr. Bhuyan referring to the assessment order passed by the assessing authority pertaining to the assessment year 1994-95 has submitted that the assessing authority has rightly refused to set off the said loss in view of the provision contained in section 73 of the Act. It has further been submitted that the Commissioner of Income-tax (Appeals) as well as the Income-tax Appellate Tribunal have deleted the addition of the said amount Rs. 49,15,930 made by the assessing authority without even discussing as to whether the assessee-company comes within the exception stipulated in section 73 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that though the loss which was claimed is relating to the share transaction and in respect of loans and advances given by the assessee-company, it cannot be termed as losses in speculation business in view of the exception given in the Explanation to section 73 of the Act. Learned counsel for both the Revenue and the assessee-company relied on the provision of section 73, more particularly the Explanation thereto, in support of their contention. For better appreciation section 73 of the Act is quoted below: 73. Losses in speculation business.- (1) Any loss, computed in respect of a speculation business carried on by the assessee, shall not be set off except against profits and gains, if any, of another speculation business. (2) W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purchase and sale of shares of other companies, such company shall, for the purposes of this section, be deemed to be carrying on a speculation business to the extent to which the business consists of the purchase and sale of such, shares." Section 43(5) defines "speculative transaction" which means a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips. Explanation 2 to section 28 of the Act provides that where speculative transactions carried on by an assessee are of such a nature as to constitute a business, the business, i.e., the speculation business shall be deemed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an exception given in the Explanation to section 73 which stipulates that 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, consists in the purchase and sale of shares of other companies, such company shall not, for the purposes of section 73 be deemed to be carrying on speculation business. Learned counsel for the assessee-company has submitted that the assessee-company is entitled to set off the loss as the assessee-company i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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