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TMI Blog2010 (11) TMI 716X X X X Extracts X X X X X X X X Extracts X X X X ..... of interest income, genuineness of loss from share transactions, deemed speculation loss and charge of interest under section 234B. 2. We first take up the ground relating to genuineness of loss from share transactions which is common in both the appeals. The assessee in assessment year 2002-03 had claimed aggregate loss of Rs.2,30,47,482/- from share transactions which consisted of loss of Rs.82,69,632/- from delivery based transactions and Rs.1,47,77,850/- from non delivery based transactions. In assessment year 2003-04 the loss claimed was only from delivery based transactions amounting to Rs.12,27,248/-. During the assessment proceedings the AO asked the assessee to file challan-wise details of share trading along with contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that some of the bills of share transactions placed in the paper book related to assessment year 2001-02 and not for these years. 2.2 We have perused the records and considered the rival contentions carefully. The dispute is regarding genuineness of loss from share transactions, both delivery based and non delivery based, claim by the assessee. These cases related to Ketan Parekh group which had been subject matter of JPC probe. The same issue had arisen in assessment year 2001-02 in which similar loss had been disallowed as non genuine. The appeal for assessment year 2001-02 had already been decided by the tribunal in ITA No.7279/M/2007. The tribunal in the order noted that the AO had disallowed the claim only on the ground of obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year in which these had taken place irrespective of the fact whether the amounts have been received in the subsequent year or the assessee for the purpose of accounting was following a different system in conformity with the system followed by the stock exchanges. Therefore while examining the genuineness of transactions, these aspects are also required to looked into. As identical issue in assessment year 2001-02 has been restored by the tribunal to the file of AO we set aside the order of CIT(A) for these years also and restore the matter to the file of AO for passing a fresh order after necessary examination in the light of observations made above and in the order of tribunal in assessment year 2001-02 and after allowing opportunity of h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arisen from FDRs kept with bank for giving bank guarantee to the stock exchanges. The assessee claimed that the deposits were for the purpose of business and therefore interest income should be treated as business income. The AO however rejected the claim and assessed the interest income as income from other sources. In appeal CIT(A) observed that the assessee was not in the business of finance. The assessee was a dealer in shares and there was no direct nexus between the interest income and the business activities of the assessee. CIT(A) accordingly confirmed the order of AO treating the interest income as income from other sources. Aggrieved by the said decision the assessee is in appeal before the Tribunal. 4.1 Before us the Lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es below. 4.2 We have perused the records and considered the matter carefully. The dispute is regarding nature of interest income received by the assessee from the FDRs pledged with the banks for issue of bank guarantee to the stock exchange in connection with the trading business of the assessee. The assessee had been debarred by SEBI for share transactions business in 2001 due to allegations of irregularities and manipulations. The case of the assessee is that the order of SEBI had been challenged. The license of the assessee had been cancelled only in the year 2005 and the order canceling the license had also been challenged by the assessee which was dismissed by SAT much later and the order of SAT was also confirmed by the Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of shares by the lenders for non payment of dues. The assessee as mentioned earlier had been debarred from share trading. The AO treated the business loss as speculation loss applying the provisions of Explanation to section 73 and did not adjust the same against the interest income declared by the assessee and allowed the loss to be carried forward. In appeal CIT(A) confirmed the order of AO aggrieved by which the assessee is in appeal before the tribunal. 5.1 Before us the Learned AR for the assessee submitted that in case interest income of Rs.39,50,810/- was treated as income from other sources the gross total income of the assessee would mainly consist of income under the head 'other sources' and in that case Explanation to se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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