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2019 (11) TMI 1151 - ITAT KOLKATABenefit of set off of loss in share dealing by treating the same as business loss - whether the principal business of the assessee was granting loans & advances and therefore the case of the assessee came within the exception set out in the Explanation to Section 73 ? - HELD THAT:- No additional rider or covenant has been attached by their Lordships which would in any manner suggest that such principal business of granting loans & advances must be inter-related with the business of share dealing so as to avail the benefit of the exception set out in Explanation to Section 73. DR's argument that the exception provided in Explanation to Section 73 i.e. "a company the principal business of which is the business of banking or the granting of loans and advances" is required to be read along with phrase 'consists in the purchase and sale of shares of other companies' and therefore only when the activity of granting loans & advances is inter-linked or inter-connected with business of purchase & sale of shares that the Explanation to Section 73 is not applicable, is wholly unsustainable. What constitutes the 'principal business' has not been defined anywhere in the Act. Accordingly what constitutes principal business will essentially depend on the facts and circumstances of each case. We however note that certain guiding principles and factors have been laid down by the Special Bench of this Tribunal at Kolkata in the case of Dy. CIT v. Venkateshwar Investment & Finance [2004 (12) TMI 310 - ITAT CALCUTTA-E] Amongst the two, the principal or dominant business of the assessee was granting loans & advances and thereby the assessee falls outside the ambit of the Explanation to Sec. 73 of the Act. Consequent thereto, the loss incurred by the assessee in the business of share dealing cannot be construed as speculation loss. We therefore have no hesitation in holding that the loss incurred by the appellant during the relevant year was assessable as business loss and which the appellant could set-off against its business income inter alia including interest income derived from the business of granting loans. Appeal of the assessee is allowed.
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