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2006 (5) TMI 110 - AT - Income TaxSpeculation Loss - Addition on account of loss in sale and purchase of shares while treating the same as speculation loss - disallowance of foreign travel expenses of the director. Whether addition of Rs. 20,38,775 on account of loss in sale and purchase of shares while treating the same as speculation loss be allowed? - HELD THAT:- The loss arisen to assessee does not fall within the ambit of Explanation to s. 73. The loss occurred to assessee was in the course of its business activity of brokerage. It is not the case of Revenue that loss has not occurred to assessee and the same is not genuine. Thus, the loss is allowable as business loss in the normal course of business of the assessee and is available to be set off against brokerage income - In the decision in the case of COMMISSIONER OF INCOME-TAX, KERALA VERSUS PANGAL VITTAL NAYAK AND CO. PVT. LIMITED [1968 (8) TMI 19 - SUPREME COURT], the assessee was found to be carrying on sale and purchase of shares of other companies on his own account also. Thus, it was held that both the activities of business, i.e., business of brokerage and business of dealings in shares were separate activities and thus assessee was held not entitled to set off the loss. Here in the present case, the assessee is found to have no business activity of sale and purchase of shares at its own. Thus, this decision has no application to the facts of present case - assessee is entitled to get set off of a sum of Rs. 20,38,775, being loss accrued to assessee being incidental to its business activity as a broker against its brokerage income - appeal allowed. Whether disallowance of foreign travel expenses of the director of Rs. 6,20,841 to be allowed in full? - HELD THAT:- There are force in the argument of learned counsel that the visit of director was not purely personal. It may have some elements of business nature. Therefore, entire expenses could not be disallowed and expenses relating to the director only should be estimated which have been incurred for the purpose of business. The expenses relating to the wife of director cannot be allowed being not wholly and exclusively incurred for the purpose of business of assessee. Keeping in view the entirety of facts, 25 per cent of total expenses is allowed and rest 75 per cent is held disallowable. The AO will work out the disallowance accordingly. This ground is partly allowed. The appeal filed by the assessee is partly allowed.
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