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2014 (12) TMI 552 - ITAT DELHIAllowability of set off of speculation losses against business income – Sale and purchase of shares as speculation income - Held that:- The AO denied set off of speculative losses of earlier years by holding that the business of purchase and sale of shares is not speculative business but its regular business and the income from purchase and sale of shares excluding jobbing income or speculative income should be treated as regular business income and the AO denied set off of brought forward speculative losses - explanation to section 73 clarifies that where any part of business of a company consists of purchase and sale of shares of other companies, then such company shall for the purpose of section 73 of the Act be deemed to be carrying on speculation business to the extent to which the business consists of the purchase and sale of such shares - CIT(A) was rightly of the view that the income or loss derived by the assessee company is from speculation business which was accepted by the AO in the earlier years and if there is no change of facts and circumstances in the subsequent year under consideration, then the set off of brought forward speculative losses cannot be denied for the assessee – Decided against revenue. Unexplained credits u/s 68 – Onus discharged by assessee or not – Establishment of identity and creditworthiness of parties – Held that:- No addition/ disallowance can be made on suspicion, surmises and conjectures as decided in Dhirajlal Girdharilal Versus Commissioner Of Income-Tax, Bombay [1954 (10) TMI 8 - SUPREME Court] - assessee during the arguments has drawn attention towards paper book wherein it has been mentioned that the assessee filed copies of the confirmation, bank statements, income tax returns along with computation of income from 2000-01 to 2003-04 of the investors of the share application money before the AO and the CIT(A) - the AO proceeded to make addition u/s 68 of the Act without any further examination and verification of the details, confirmations, Income tax returns, bank accounts of the alleged investors who contributed share application money simply keeping aside the same – in COMMR. OF INCOME TAX Versus M/s LOVELY EXPORTS(PVT) LTD [2008 (1) TMI 575 - SUPREME COURT OF INDIA] it has been held that if the share application is received by the assessee company from alleged bogus shareholders whose names are given to the AO, then the department is free to proceed to reopen their individual assessments of respective share application money contributing investors in accordance with law but the amount of share application money cannot be regarded or considered undisclosed income of the assessee u/s 68 of the Act – thus, the order of the CIT(A) is upheld – Decided against revenue.
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