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2016 (1) TMI 991 - AT - Income TaxDisallowance of loss from purchase and sale of shares - CIT(A) treating it as speculation loss as assessed by Assessing Officer and not covering the case of the applicant within the Explanation to the provisions of section 73 - Held that:- From going through the main objects of the company we find that assessee’s main business is of dealing in shares, stocks, bonds etc. whereas under head of objects incidental or ancillary to the main object there are 41 types of activities and similarly under the head of other objects there are 43 types of activities which can be carried on by the assessee. The second condition of the explanation to section 73 refers to the principal business which is carried on by the assessee and in the case under appeal the principal business of the assessee is of purchase and sale of shares and the business of earning interest on loans and advances is covered under the ancillary and other objects and more so ever in the computation of income assessee is showing the interest income under the head income from other sources and not under the head income from business or profession because assessee is not running a non-banking financial company (NBFC) nor its main object was of finance and earning of income from giving loans else interest income from such loans and advances should have figured under the head profits and gains of business. Therefore, assessee’s business does not fulfill the condition no.2 of explanation to sec.73 of the Act. Further there has been an amendment made by Finance Act, 2015 w.e.f. 1.4.2015 where at the place of “principal business” fo which is banking has been substituted by “principal business of which the business is of trading in shares or banking”. This amendment itself conveys that business of trading in shares was not included in the explanation to sec.73 of the Act and assessee’s business is mainly of trading in shares as reflected from the main objects of the Memorandum of association and the audited financial statements. We are, therefore, of the view that assessee’s business is not covered under the explanation to section 73 of the Act and we find no reason to interfere with the order of ld. CIT(A) and we uphold the same. - Decided against assessee
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