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2018 (3) TMI 1513 - AT - Income TaxRejection of loss by treating the same as speculative loss - Held that:- Both trading of shares and derivative transactions are not coming under the purview of section 43(5) of the Act which provides definition of “speculative transaction” exclusively for purposes of section 28 to 41 of the Act. Again, the fact that both delivery based transaction and derivative transactions are non-speculative as far as section 43(5) is concerned goes to confirm that both will have same treatment as regards application of the Explanation to section 73 is concerned, which creates a deeming fiction. Now before application of the said Explanation, aggregation of the business profit/loss is to be worked out irrespective of the fact, whether it is from share delivery transaction or derivative transaction. We remit the issue to the file of the Assessing Officer to bifurcate speculative loss and normal business loss as indicated above. In the case of Baljit Securities Pvt. Ltd. [2014 (6) TMI 475 - CALCUTTA HIGH COURT], the issue stands covered in favour of the assessee.This ground of appeal of the assessee is partly allowed for statistical purposes. Disallowance made u/s. 14A - Held that:- Rule 8D was inserted in Income Tax Rules with effect from 24/03/2008 by Income Tax (5th Amendment) Rules, 2008. Being so, Rule 8D cannot be applied for the assessment year 2007-08. However, there is every chance to incur certain administrative expenditure. Accordingly, we direct the AO to disallow 2% of the exempt income as expenditure incurred for the purpose of earning exempt income. This ground of appeal of the assessee is partly allowed Treatment of income as income from other sources OR busniss income - interest received on cancellation of the plots - Held that:- the plot allotted to the assessee is the business asset of the assessee. However, interest received on cancellation of the plots is a step removed from the business activities of the assessee. The derivation of interest from GIDA cannot be said that it is emanating from the business activities carried out by the assessee. On the other hand, it was emanating from the amount paid by the assessee and not directly from the business activities of the assessee. Therefore, in our opinion, that interest cannot be considered as business income of the assessee. It should be treated as income from other sources. - Decided against assessee Treatment of interest income earned on margin money paid by GIDA - nature of income - Held that:- Interest derived from deposits in Bank which was given for getting bank guarantee cannot be treated as capital receipt or business income and it is to be treated as interest income to be assessed under the head income from other sources in view of the judgment of the Supreme Court in the case of Pandian Chemicals Ltd. vs. CIT (2003 (4) TMI 3 - SUPREME Court). Accordingly, this ground raised by the Revenue is allowed.
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