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2017 (4) TMI 813 - AT - Income TaxDisallowance of loss arising out of share transactions - Held that:- There is no dispute with regard to the fact that the impugned shares form part of the stock in trade of the assessee. Even if the shares under consideration formed part of shares acquired during the stock scam period, yet the fact remains that the loss claimed by the assessee relates to valuation of closing stock and the loss has arisen on account of diminution in the value of stock only. Since the valuation of stock in trade has been done as per the accounting system followed by the assessee and since the value adopted is supported by stock exchange quotation, we are of the view that the same cannot be considered as non-genuine loss. Accordingly we are of the view that the impugned loss should be allowed while computing the income of the assessee. Accordingly, we set aside the order passed by the learned CIT(A) and direct the Assessing Officer to allow the loss Assessment of interest income - under the head Income from Other sources OR Income from Business - Held that:- Since the assessee was held to be continuing its business activities and since these deposits have been made in connection trading activities of the assessee, the co-ordinate benches in assessee's own case for previous AYs have held that the interest income should be treated to incidental business income and accordingly directed the AO to assess the same as business income of the assessee. Assessment of Prior period income - Held that:- The interest income should be in the respective years only, as the AO is not entitled to assess an item of income which does not belong to that year. Accordingly we direct the AO to exclude the income of other years and they may be assessed in the respective years in accordance with law. The TDS credit should also be restricted to the extent of relevant income assessed during the year under consideration and the remaining amount of TDS should be allowed credit in the respective years of assessment. The deduction of prior period expenses may also be considered in the respective years. We order accordingly. The order of Ld CIT(A) is modified accordingly. Disallowance of expenses - assessee did not carry on any business activities - Held that:- As in the earlier paragraphs, by following the orders passed by coordinate benches, we have held that the assessee should be considered as carrying on business activities. Hence the expenditure claimed by the assessee should be allowed. Accordingly we set aside the order passed by Ld CIT(A) on this issue. Applicability of Explanation 73 to the assessee - Held that:- In AY 2002-03 & 2003-04 the coordinate bench of Tribunal has held that the provisions of Explanation 73 would apply to the assessee in that year, since the interest income was directed to assessed as business income. In the instant year also, we have held that the interest income should be assessed as business income. However, the Ld A.R requested that this matter may be set aside to the file of the AO for examining the applicability of Explanation 73 to the assessee during the instant year. Hence the above said provisions would apply to the assessee as the assessee did not have income from other sources. However, if the assessee is able to demonstrate before the AO to his satisfaction that the provisions would not apply to the assessee, the AO may decide the issue in accordance with the law.
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