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2012 (11) TMI 815 - AT - Income TaxLoss on Purchase and Sale of Shares - Business loss vs Speculation loss - held that:- The transaction of purchase and sale of shares would be held as speculative business only if the company was hit by the explanation to section 73 of the Act. The implication of the explanation is that if a company incurs a speculation loss in a manner deemed in the explanation such loss shall not be set off except against profit and gains, if any, of another speculation business But, the explanation has provided two exceptions. The first exception is available in the case of a company whose gross total income consists mainly of income which is chargeable under the head “interest on securities”, “income from house property”, “capital gain” and “income from other sources”. The second exception is in the case of a company whose principal business is business of banking or granting loans and advances. As seen from the facts of the present case, though the assessee made a plea that the it is carrying on multiple business as principal business, but the facts do not support the plea of the assessee. - held as speculation loss - Decided against the assessee. Claim of bad debts in respect of certain sales made to foreign companies - held that:- Debt arising in the course of business activity is to be considered as bad debt if it is written off in the books of account as per the provisions of section 36(2)(iii) of the Act. In the present case the assessee submitted that it had obtained permission from RBI. The assessee is directed to adduce necessary evidence as the assessee has failed on earlier occasion to furnish necessary evidence. - matter remanded back.
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