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2017 (11) TMI 219 - AT - Income TaxSTCL on sale of shares - AO holding ST Capital Loss and Loss on F&O as speculative invoking explanation to Section 73 - Held that:- Loss suffered by the assessee on sale of shares held by it as investments is to be treated as speculation loss, and the assessee was to be deemed to have been carrying on speculation business, to the extent of business of purchase and sale of shares of other companies within the meaning of Explanation to Sec.73 of the 'Act'. Thus, the loss so suffered by the assessee would be eligible to be set off against the speculation profit, as per provisions contained in s. 73 of the 'Act'. We thus uphold the order of the CIT (A) on this aspect of the matter, which as observed by us hereinabove is clearly supported by the judgment of the Hon'ble High Court of Calcutta in the case of Arvind Investments Ltd. (1990 (3) TMI 5 - CALCUTTA High Court). The Ground of appeal No. 1, to the extent the same is relatable to the issue of loss suffered by the assessee on sale of shares held by it as investment, is dismissed in terms of our aforesaid observations. Whether the loss suffered by the assessee on the sale of shares held by it as 'stock in trade' would fall within the realm of the 'Speculative loss'? - Held that:- As the adjudication on the issue as to whether the loss suffered by the assessee on the sale of shares held by it as 'stock in trade' would fall within the realm of the 'Speculative loss', or not, had been set aside by us to the file of the CIT (A) for fresh adjudication for verifying the fulfillment by the assessee of the requisite conditions contemplated u/s 43(5)(d) r.w. Explanation 1, therefore, the issue as regards the disallowance of any part of expenses relatable to such transactions would be dependent on the adjudication by the CIT (A) of the aforesaid issue. We thus restore the issue as regards the disallowance of expenses relatable to transactions pertaining to sale of shares held by the assessee in 'stock in trade' to the file of the CIT (A). The assessee shall be at liberty to raise fresh submissions in context of the expenses relatable to the transactions pertaining to sale of shares held by it as 'stock in trade' before the CIT (A), in case the need so arise. The CIT (A) is directed to pass a fresh order as regards the disallowance of the expenses to the extent relatable to the transactions pertaining to the sale of shares held by the assessee as stock in trade, in case if the assessee is found to have failed to satisfy the requisite conditions contemplated u/s 43(5)(d) pertaining to the sale transactions of the shares held by it as 'stock in trade'. The Ground of appeal No. 2 is thus partly allowed in terms of our aforesaid observations.
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