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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 ..... y deleted the penalty. Accordingly, we uphold the decision of the CIT(A) in question and dismissed the appeal of the revenue - I.T.A. No.3903/Mum/2017 - - - Dated:- 26-7-2019 - Shri Shamim Yahya, AM And Shri Amarjit Singh, JM For the Assessee : None For the Revenue : Shri Chaudhary Arun Kumar Singh (SR. AR) ORDER PER AMARJIT SINGH, JM: The revenue has filed the present appeal against the order dated 28.02.2017 passed by the Commissioner of Income Tax (Appeals) -18, Mumbai [hereinafter referred to as the CIT(A) ] relevant to the A.Y.2009-10 in which the penalty levied by AO has been ordered to be deleted. 2. The revenue has raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Representative of the Department and has gone through the record carefully. Before going further, we deem it necessary to advert the finding of the CIT(A) on record.:- Decision Ground No.1 2 Under these Grounds of Appeal, the Appellant has agitated penalty u/s 271(1)(c) of ₹ 29,95,000/- levied by the A.O. I have considered the submissions of the Appellant as well as the penalty order. In the assessment order u/s 143(3), the A.O. has disallowed the loss of ₹ 96,90,815/- claimed by the assessee from share trading activities in view of provisions of explanation to section 73 of the I.T. Act. The A.O. treated the loss from share trading as Speculation Loss. Further, the A.O. allocated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsists mainly of income which is chargeable under the heads of interest on securities , income from housing property , capital gains and income from other sources . We have set out the relevant part of the assessment order which indicates that in the relevant year, the income from other sources was the only chargeable income, as the respondent had suffered a business loss otherwise. In that view of the matter, the judgment of the Division Bench of this Court in the case of Darshan Securities (P.) Ltd. (supra) supports the respondent's case. In that case, during the relevant assessment year, the assessee had a loss of about ₹ 2.33 crores in the share trading and had dividend income of about ₹ 4.80 lacs. The Division Ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m any other source under the head of profits and gains of business or profession. 8. In our view, the submission which has been urged on behalf of the Revenue cannot be accepted. Leaving aside for a moment, the exception, which is carved out by the explanation to Section 73, the explanation creates a deeming fiction by which a company is deemed to be carrying on a speculation business where any part of its business consists in the purchase and sale of shares of other companies. Now, the exception which is carved out applies to a situation where the gross total income of a company consists mainly of income which is chargeable under the heads Interest on securities , Income from house property , 'Capital gains and Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 accept 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 computation of the gross total income of the Company. The words consists mainly are indicative of the fact that the legislature had in its contemplation that the gross total income consists predominantly of income from the four heads that are referred to therein. Obviously, in computing the gross total income the normal provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon ble ITAT in the assessee s own case in ITA. No.3339/M/2013 dated 17.10.2014 has deleted the quantum, therefore, the CIT(A) has deleted the penalty. The contention of the Ld. Representative of the Department is that the Department has not accepted the decision of the Hon ble ITAT on the quantum deletion but it is a matter on record that at this stage, the quantum nowhere exists. Since the quantum has been deleted by Hon ble ITAT in the assessee s own case (supra), therefore, we are of the view that the CIT(A) has rightly deleted the penalty. Accordingly, we uphold the decision of the CIT(A) in question and dismissed the appeal of the revenue. 5. In the result, the appeal filed by the revenue is hereby ordered to be di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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