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TMI Blog2022 (4) TMI 712X X X X Extracts X X X X X X X X Extracts X X X X ..... and 73 supported by the legal precedents. We do not want to reproduce the same for the sake of brevity but the Ld. AR is right in submitting the interpretation that the loss of speculative business cannot be set off against the profit of non-speculative business but the loss of non-speculative business is allowed to be set off against profit of speculative business . We observe that the assessee was justified in claiming set off of the brought forward non-speculative business loss against the profit of speculative business and the Ld. AO has allowed the same, which is very much in accordance with the provisions of the Act. Therefore the order passed by the Ld. AO is neither suffering from any error nor prejudicial to the interest of revenue. Being so the Ld. PCIT has wrongly invoked the provisions of section 263 which are not applicable to the present case. Therefore we are persuaded to quash the revision-order passed by the Ld. PCIT u/s. 263 - Decided in favour of assessee. - ITA No. 526/Hyd/2021 - - - Dated:- 24-3-2022 - K. Narsimha Chary, Member (J) And Bhagirath Mal Biyani, Member (A) For the Appellant : A.V. Raghuram, Adv. For the Respondents : Raje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer should not be treated as erroneous and prejudicial to the interest of revenue in as much as the Assessing Officer did not examine the above aspects. 5. In response to the aforesaid notice, the assessee made submissions before the Ld. PCIT. However, the Ld. PCIT was not satisfied and treated the order of assessment as erroneous in so far as it is prejudicial to the interest of revenue. The Ld. PCIT, therefore, set aside the assessment-order with a direction to the Ld. AO to redo the assessment. Being aggrieved by this revision-order of Ld. PCIT, the assessee has presented this appeal and now before us. 6. By means of various grounds, the assessee has challenged the very assumption of revisional-jurisdiction by the Ld. PCIT and claimed that the revision-order passed by the Ld. PCIT u/s. 263 is wrong, illegal and without jurisdiction and deserves to be quashed since the relevant assessment-order passed by the Ld. AO was neither erroneous nor prejudicial to the interest of revenue. 7. Precisely stated the assessee earned a profit of ₹ 13,08,856/- from day trading of shares which is classified as profit of speculative business under the provisions of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness. He submitted that the word, any appearing in clause (i) of section 72(1) is not restricted to profit of non-speculative business alone. It could be the profit of non-speculative business or even the profit of speculative business . Therefore, the brought forward non-speculative business loss can be set off against the profit of non-speculative business or even against profit of speculative business . To support this interpretation, the Ld. AO also relied upon following decisions: (a) CIT Vs. Ramshree Steels (P.) Ltd. (2018) 400 ITR 61 (All High Court): Loss - Set off - Set off of brought forward and current business loss against profits of speculation business - Is allowable - Tribunal while allowing set off of non-speculative loss against profits of speculative business having relied on the decision of Supreme Court and Bombay High Court, calls for no interference - CIT Vs. Jagannath Mahadeo Prasad (1969) 71 ITR 296 (SC) and A.R. Mahadevia Vs. CIT (1967) 65 ITR 308 (Bom) relied on. In this case, the ITAT allowed set off of brought forward and current business loss against the profits of speculation business. Against ITAT's order, the revenue fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be set off against any profit or gain, except the profit of another speculative business . That means the loss of speculative business cannot be set off against profit of non-speculative business . According to the Ld. AR, section 73 is ex facie not applicable to the assessee as the assessee does not have loss of speculative business . The Ld. AR submitted, for the sake of completeness, that the assessee has brought forward loss of non-speculative business which has been claimed as set off against profit of speculative business and this set off is not at all prohibited by section 73. With these submissions, the Ld. AR argued that the assessee has validly claimed the set off of brought forward non-speculative business loss against profit of speculative business and the Ld. AO has validly permitted this set off as per the scheme of section 72 read with section 73. According to the Ld. AR, therefore, the order passed by Ld. AO is neither having any error nor prejudicial to the interest of revenue. Therefore, the Ld. PCIT has wrongly invoked the provisions of section 263. In conclusion, the Ld. AR prayed to quash the revision-order passed by Ld. PCIT. 9. Per con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s shall be treated as a separate and distinct business from non-speculative business . This simply means the computation of taxable income of 'speculative business and non-speculative business cannot be combined together, the figures have to be separately arrived at for each segment. Having arrived at such separate figures of two segments, if there arises necessity of set off in case of negative figure (i.e. loss) from either segment, we have to look upon the provisions of section 72 and 73. We believe that it may not be correct to say that by segregating two segments as per mandate of section 28, there is an automatic consequence that loss of one segment cannot be set off against profit of another segment. If that be so, what would be the necessity of section 72 and 73? Therefore, we have to look upon the provisions of section 72 and 73, which fall under the Chapter VI, to understand what is allowed and what is prohibited in the matter of set off. The Ld. AR has already put forward the analysis of section 72 and 73 supported by the legal precedents. We do not want to reproduce the same for the sake of brevity but the Ld. AR is right in submitting the interpretation that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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