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2016 (4) TMI 1011 - AT - Income TaxNature of business - Treatment to part of the transactions of the business of the assessee as speculative in view of Explanation to section 73 and the other part as non-speculative, in view of u/s 43(5)(c) - Held that:- We find that issue before us is no more res-integra. In the case of ITO v. Snowtex Investment Ltd. (2015 (12) TMI 38 - ITAT KOLKATA ), Hon’ble Kolkata Bench has discussed the law in detail and held that in such kind of cases, aggregation of share trading transactions and derivative transactions should be done before applying explanation to section 73. Where the assessee is a dealer in shares, the entire business consists in sale purchase of shares, then, it should be treated as composite business. Similar view has been taken by Hon’ble Delhi High Court in the case of CIT vs. DLF Commercial Developers Ltd. (2013 (7) TMI 334 - DELHI HIGH COURT ). In the case of CIT vs. Baljit Securities P. Ltd. (2014 (6) TMI 475 - CALCUTTA HIGH COURT), it was held that in the case of an assessee who was a share broker dealing and buying shares for himself and also dealing in derivatives, the assessee shall be deemed to be carrying on speculative business and therefore, entire transactions carried out by the said assessee were within the umbrella of speculation transactions, and there was no bar in setting off the losses arising out of derivatives from the income arising out of buying and selling of shares. Similar view has been taken by another Coordinate Bench of the Tribunal in the case of Majestic Exports (2015 (7) TMI 936 - ITAT CHENNAI ). It is further noted by us that the assessee’s stand of treating the whole business as composite business has always been accepted by the revenue in earlier as well as subsequent years. Thus, keeping in view clear position of law as discussed above and history of the case, we find that for the purpose of setting off of losses, the whole business should be treated as one business. Both the parties agreed before us that the provisions of explanation to section 73 are applicable and therefore, it is directed that AO shall treat the entire business as speculative and shall assess the income as income from speculative business and shall grant the benefit of set off and carry forward of losses accordingly. Disallowance made u/s 14A - Held that:- Similar issue came up in appeal before the Tribunal in assessee’s own case for A.Y. 2007-08 wherein Hon’ble Tribunal decided the issue in its favour as held that no disallowance is called for when no actual expenditure has been incurred by the assessee for earning dividend income.
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