TMI Blog2015 (1) TMI 235X X X X Extracts X X X X X X X X Extracts X X X X ..... ving business income greater than the income from other sources or capital gain income and hence the income earned by it on account of sale and purchase of shares is to be treated as income earned from speculative transactions as per the provisions of explanation to section 73 - Also such a situation, both the profits as well as losses incurred on account of trading in shares become speculative transactions – Decided in favour of assessee. - MA No.40/Ahd/2014, I.T.A. No. 2305/Ahd/2012 - - - Dated:- 15-10-2014 - Shri N. S. Saini And Shri Kul Bharat,JJ. For the Petitioner : Ms. Urvashi Shodhan, A.R. For the Respondent : Shri V. K. Singh, Sr.D.R. ORDER Per Shri Kul Bharat, Judicial Member :- This miscellaneous applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;ble ITAT, there is an error apparent from the record. 2. The Hon'ble Tribunal while adjudicating the impugned appeal in Para 8 on page 6 of the order after reproducing the order of ld.CIT(A) noted:- 'We find force in the contention of the ld.Sr.D.R. that the ld.CIT(A) has not examined whether the transactions effected in shares resulted into business loss or capital loss. Therefore, we are of the view that this matter be restored back to the file of ld.CIT(A) to decide this issue afresh after examining whether the transaction in shares resulted into business loss or capital loss after examining the same, decide the issue of netting off as per law. We order accordingly. Thus, this ground of Revenue's appeal is allowed for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld.CIT(A) on pages 14 15 after appreciating the fact that for the sake of convenience the applicant treated profit and loss suffered on sale of shares separately, had held that provisions of explanation below section 73 were not applicable to the facts of the case. It is submitted that this cogent detailed order of ld.CIT(A) for A.Y. 2004/05 was not challenged by Revenue before Hon'ble ITAT. AR of the applicant relied on the finding of ld.CIT(A) that when the applicant offered profit/loss earned on share transaction as business income and when net result of this activity results in profit the question of invoking explanation to section 73 will not arise. It was further submitted that even otherwise the applicant having busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hare transactions. And the net result of the same is profit for the year. It was, therefore, requested no to treated the loss in sale of shares at ₹ 82,37,695 as speculative loss. 5.3. I have considered the reply of the assessee. Explanation to section 73 says as under:- Where any part of the business of company (other than a company whose gross total income consists mainly of income which is chargeable under the head interest on securities , income from house property , capital gains and income from other sources , or a company the principal business of which is the business of banking or the granting of loans and advances) consists in the purchase and sale of shares of other companies such company shall for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss from a speculation business for the purposes of the Explanation. But, that the profit which arises from a transaction involving the actual delivery of shares would not constitute a profit for the purposes of sub-ss. (1) and (2) of s. 73 in respect of which a set off can be granted. To accept the submission of the Revenue would be to introduce a restriction into the scope and ambit of the deeming fiction which is created by the Explanation to s. 73, which is not contemplated by Parliament. Once a deeming fiction is created by law, it must be given full and free effect, of course, in relation to the ambit within which it is intended to operate. The deeming fiction created by the Explanation to s. 73 defines when an assessee is to be dee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing a business involving actual delivery of shares. No such restriction is found in the Explanation. To impose one is a legislative function. In other words, once the assessee is carrying on a speculation business and the profits and gains have arisen from that business during the course of the assessment year, the assessee is entitled to set off the losses carried forward from a speculation business arising out of a previous assessment year. 3.4. It appears that while disposing of the appeal, the judgement of Bombay High Court in the case of Lokmat Newspapers (P) Ltd. Has inadvertently escaped attention of this Tribunal, non-consideration of the same amounts to error apparent from record. Therefore, respectfully following the judgement ..... X X X X Extracts X X X X X X X X Extracts X X X X
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