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2014 (5) TMI 74 - AT - Income TaxNon-assessment of losses incurred in the business of share trading – Speculation loss under Explanaition to 73 of the Act - Revision u/s 263 - Order prejudicial to the interest of the revenue - The assessee itself had shown the whole of its business income as non-speculative in nature - No part of the income was considered by the assessee as arising out of any speculative business - AO had at no point of time gone through the nature of business of the assessee so as to ascertain whether Explanation to section 73 stood attracted - there is much strength in the argument that derivative trading, though it fell out of the scope of speculative transaction by virtue of section 43(5) of the Act was still good enough to be considered as a speculative loss for applying Explanation to section 73 of the Act - There can be no doubt whatsoever that trading in Units did not result in any speculation loss – Relying upon Apollo Tyres Ltd. Versus Commissioner of Income Tax [2002 (5) TMI 5 - SUPREME Court] Units could not be construed as equivalent to shares and Explanation to section 73 applied only to shares. Treatment of different classes of income falling within the same head, as speculative or non-speculative has wide ramification - It has got a spillover effect to other years as well - Once income from speculative trading was available for a set off then nothing whatsoever of the share trading loss would be left - Even if whole of the business is considered to be falling within the purview of section 73, still total income was positive, and there could be no tax loss - treatment of speculative business income as normal business income and/or normal income as speculative income, goes to root of administration of tax laws - Non-adherence to the provisions of the statute do render the order prejudicial to the interests of the revenue. The treatment of income as claimed by the assessee, if accepted would definitely be prejudicial to the interest of the revenue - Prejudicial to the interest of the revenue cannot be interpreted in a restricted manner but has to be given in a wide meaning - the AO had not applied his mind at all during the course of original assessment proceedings - Assessee itself had failed to bifurcate its classes of income appropriately, though some of it pertained to speculative business – Relying upon CIT v. Hastings Proportion [2001 (8) TMI 64 - CALCUTTA High Court] - there was no reason to interfere with the order of CIT – Decided against Assessee.
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