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2016 (9) TMI 945 - AT - Income TaxCIT invoking revisionary jurisdiction u/s 263 - funds deployed in share business is more than that deployed in loans and advances - why the loss incurred on purchase and sale of shares amounting should not be treated as speculation loss by invoking the Explanation to section 73 - Held that:- CIT had taken the total inventories of ₹ 43.95 crores as stock of shares, whereas it admittedly includes closing stock of sarees to the extent of ₹ 38.66 crores, thereby leaving a balance of ₹ 5 crores approx towards the closing stock of shares. From the Note No. 8 of the audited financial statements, the assessee had given the clear break up of closing stock of shares and closing stock of sarees. We also find that the ld CIT in his order itself in page 2 had stated that the closing stock of shares is only ₹ 5,17,00,000/-. Hence the very basis for his decision based on funds deployed in share business is more than that deployed in loans and advances gets defeated. On both the counts of income criterion and funds deployment criterion, it could be safely concluded that the assessee’s case squarely falls under the two exceptions provided in Explanation to Section 73 of the Act and hence the order passed by the ld AO in these circumstances cannot be termed as erroneous much less prejudicial to the interests of the revenue warranting revisionary jurisdiction u/s 263 of the Act. Apart from this, we also find that the ld AO had made a specific enquiry with regard to the applicability of Explanation to Section 73 of the Act during the course of original assessment proceedings for which the necessary order sheet entries were placed on record in the paper book. We find from the said order sheet entry on 10.3.2010 and 24.3.2010, a specific query was raised by the ld AO on the applicability of Explanation to section 73 of the Act and the assessee had given due reply to the same and the fact of assessee’s reply is also mentioned in the said order sheet entry recorded on 24.3.2010 by the ld AO. The queries raised by the ld AO and the replies filed thereon in this regard are part of the records. Hence in these circumstances, it could be safely concluded that the ld AO on due appreciation of the replies filed in the given set of facts and circumstances after making requisite enquiries thereon, had come to a conscious conclusion that provisions of Explanation to Section 73 of the Act could not be made applicable to the assessee and had taken a possible view in the matter by allowing the claim of share trading loss in the sum of ₹ 1,07,87,500/- in the assessment to be set off against some other income. It is well settled that this possible view cannot be the subject matter of revision u/s 263 of the Act by the ld CIT. - Decided in favour of assessee.
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