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TMI Blog2019 (7) TMI 1488X X X X Extracts X X X X X X X X Extracts X X X X ..... "1. On the facts and circumstances of the case, the Ld. CIT(A) erred in deleting the penalty u/s 271(1)(c) levied by the AO amounting to Rs. 29,95,000/- without appreciating the fact that the Department has not accepted the decision of the Hon'ble ITAT on the quantum addition and appeal before the Hon'ble High Court has been preferred, which is pending for adjudication. 2. The appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the AO be restored. 3. The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary." 3. The brief facts of the case are that the assessment of the assessee was completed on 14.12.2011 determining total income to the tune of Rs. 71,67, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed by the A.O. is Rs. 1,01,46,356/-. The A.O. in the penalty order has mentioned that C1T(A) has upheld the disallowance of speculation loss to the extent of Rs. 96,90,815/-. During the course of Appellate proceedings, the AR of the Appellant has filed a copy of order of ITAT dated 17th October, 2014 in the Appellant's own case for A.Y. 2009-10 itself, wherein the Hon'ble ITAT has allowed assessee's appeal relying upon the decision of Hon'ble Bombay High Court in the case of CIT Vs. HSBC Securities as Capital Markets India (P) Ltd. reported in [2012] 23 taxman.com 377 (Born), wherein the Bombay High Court while relying on the another decision of the Bombay High Court in the case of CIT Vs. Darshan Securities Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and sale of shares of other companies, such company shall, for the purposes of the section be deemed to be carrying on a speculation business to the extent to which the business consists of the purchase and sales of such shares. The deeming fiction applies only to a company and the provision makes it clear that the deeming fixation (sic) extends only for the purposes of the section. The bracketed portion of the explanation, however carves out an exception. The exception is that the provision of the explanation shall not apply to 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 73 however sets up a bar to the setting off of a loss which arises in respect of speculation business against the profits and gains of any other business. Consequently, a loss which has arisen on account of speculation business can be set off only against the profits and gains of another speculation business. However, for Sub-Section (1) of Section 73 to apply the loss must arise in relation to a speculation business. The explanation provides a deeming definition of when a company is deemed to be carrying on a speculation business. If, the submission of the Revenue is accepted, it would lead to an incongruous situation, where in determining as to whether a company is carrying on a speculation business within the meaning of the expla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase the gross total income of the assessee was required to be computed inter alia by computing the income under the head of profits and gains of business or profession as well. Both the income from service charges in the amount of Rs. 2.25 crores and the loss in share trading of Rs. 2.23 crores, would have to be taken into account in computing the income under that head, both being sources under the same head. The assessee had a dividend income of Rs. 4.7 lacs (income from other sources). The Tribunal was justified, in coming to the conclusion that the assessee fell within the purview of the exception carved out in the explanation to Section 73 and that consequently the assessee would not be deemed to be carrying on a speculation business f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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