TMI Blog2013 (9) TMI 798X X X X Extracts X X X X X X X X Extracts X X X X ..... n not be allowed to set off of the capital gain computed under section 50 of the Act on the ground that said short term capital gain on sale of asset is capital gain and it is not a business income. In the first appeal, ld CIT(A) has held that capital gain arising u/s.50 of the Act should not be treated differently than the other capital gain. Ld CIT(A) has held that provisions of section 45 do not specify the capital gains arrived at u/s.50 to be treated differently. Thus, for all the purposes of Income tax Act, 1961, the capital gains arising u/s.50 of the Act have to be treated as capital gains only in quite normal sense and not otherwise. In view thereof, ld CIT(A) has treated the said short term capital gain computed u/s.50 of the Act as normal capital gain and has held that income of the assessee from capital gain and house property is more than the loss arrived at by the AO on trading of shares. Therefore, said share loss cannot be treated as speculation loss in view of exception to Explanation of Section 73 of the Act. Since ld CIT(A) has treated the capital gain computed u/s.50 of the Act as normal capital gain, he has also held that the unabsorbed business loss cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot allowing unabsorbed business loss to be set off against income for the year. 2. The AO erred in levying interest u/s.234B of the I.T.Act. 4. The relevant facts giving rise to these appeals are that assessee is a Private Limited Company and is engaged in the business of trading in shares, giving loans and advances and property development. For the assessment year under consideration, assessee filed return of income on 30.10.2004 declaring total income at Rs.Nil. 5. Assessee has shown following incomes for the assessment year under consideration: (i) Sale of shares securities Rs. 9,81,993 (ii) Rent Income Rs. 4,96,155 (iii) Interest income Rs. 7,74,028 (iv) Income from joint venture Rs. 9,28,046 (v) Profit on sale of office premises Rs.1,58,88,033 6. During the course of assessment proceedings, the AO asked the assessee to explain as to why the loss on account of diminution of shares/loss on account of sales of shares should not be treated as speculation loss as per provisions of Explanation to Section 73 of the Act. Assessee stated that its princ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that provisions of Explanation to Section 73 of the Act is not applicable. Consequently, ld CIT(A) has treated the said share loss of Rs.32,43,945 as business loss of the assessment year under consideration and directed the AO to allow the same to be set off against other income under the head of the current year. Ld CIT(A) held that unabsorbed brought forward loss cannot be allowed against assessee s other income under other head in the current year. 11. In view of above, assessee as well as department are in appeal before the Tribunal. 12. In the appeal filed by the assessee, as may be observed from the grounds of appeal, the only issue involved is as to whether short term capital gain computed under section 50 of the Act could be set off against brought forward business loss. 13. During the course of hearing, ld A.R. submitted that short term capital gain u/s.50 of the Act is nothing but business income and to substantiate his above submission, he placed reliance on the decision of ITAT in the case of J.K. Chemicals vs ACIT (I.T.A. No.8206 and 8618/Bom/89) dated 1.11.1993, wherein, the Tribunal held that computation of short term capital gain/loss has to be computed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the decision of Special Bench ITAT (Bangalore) in the case of M/s. Nandi Steels Ltd. vs ACIT, 17 Taxmann.93(Bang)(SB)/(2012) 13 ITR (Trib) 494 (SB) wherein, Tribunal has held that capital gain arising to the assessee on sale of land used for business purposes cannot be set off against carry forward business loss, ld A.R. submitted that ITAT Bangalore (SB) had not considered the character of receipt on sale of land which was used for business purposes as the same was not argued before it. He further submitted that Special Bench relied on the decision of Hon ble Supreme Court in the case of CIT vs. Express Newspaper Ltd, 53 ITR 250(SC). Ld A.R. submitted that the case of Special Bench, if read in entirety, it cannot be made applicable to the case of the assessee and rather cases cited by him are applicable, and are relevant. Ld A.R. relying on the decision of Hon ble Supreme Court in the case of Goodyear India Ltd. v. State of Haryana, 188 ITR 402(SC) and also the decision in the case of Commissioner of Income-tax v. Sun Engineering Works P. Ltd., 198 ITR 297 (SC) submitted that Hon ble apex Court has held that the judgment must be read as a whole and the observations from the jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 45 do not specify the capital gains arrived at u/s.50 to be treated differently. Thus, for all the purposes of Income tax Act, 1961, the capital gains arising u/s.50 of the Act have to be treated as capital gains only in quite normal sense and not otherwise. In view thereof, ld CIT(A) has treated the said short term capital gain computed u/s.50 of the Act as normal capital gain and has held that income of the assessee from capital gain and house property is more than the loss arrived at by the AO on trading of shares. Therefore, said share loss cannot be treated as speculation loss in view of exception to Explanation of Section 73 of the Act. Since ld CIT(A) has treated the capital gain computed u/s.50 of the Act as normal capital gain, he has also held that the unabsorbed business loss cannot be allowed to be set off against capital gain computed u/s.50 of the Act. 17. On consideration of the cases cited by ld A.R., we observe that the Tribunal in the case of J.K. Chemicals Ltd (supra) which was decided by the Tribunal vide order dated1.11.1993, the case of Digital Electronics Ltd(supra) which was decided by order dated 20.10.2010 and also the decision of ITAT Vishakhapatnam Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal decided the issue against the assessee. 18. Keeping in view of above decisions cited by ld A.R. and also the decision of Special Bench in the case of Nandi Steel Ltd (supra) relied by ld D.R., which is subsequent to the decisions relied by ld A.R., and also keeping in view the principle that the decision of Special Bench prevails over the decisions of Division Benches, we hold that capital gain even though computed u/s.50 of the Act, cannot be treated differently and same is to be considered as capital gain and consequently, brought forward business loss could not be set off against capital gain that has arisen to the assessee in the assessment year under consideration on account of sale of its premises at Pune. Hence, we uphold the order of ld CIT(A) by rejecting grounds of appeal taken by assessee in its appeal. 19. Now coming to grounds of appeal taken by department, as to whether the share loss is to be considered as speculation loss or business loss of the assessee, we hold that in view of the fact that the short term capital gain computed u/s.50 of the Act has been held by us as capital gain of the assessee and admittedly, the income of the assessee from capita ..... X X X X Extracts X X X X X X X X Extracts X X X X
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