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2015 (5) TMI 887

Treatment of the loss on share trading - the specified income under Explanation to section 73 Held that:- In the admitted facts of the case, the assessee has income from advisory charges and brokerage at ₹ 121.81 lacs and ₹ 14.93 lacs respectively. Its other incomes are rent; dividend; and capital gains (long-term), at ₹ 6.39 lacs, ₹ 3.41 lacs and ₹ 19.68 lacs respectively. Quite plainly, the assessee's GTI, whichever way one may reckon it, cannot be considered as c .....

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cation of the commission expenditure by the A.O. has been clarified. No infirmity therein, which found confirmation with the ld. CIT(A), was brought to our notice during hearing, so that we have no reason to disturb the same. We decide accordingly. We may also clarify that in finally computing the loss on speculation business, the A.O. has also considered the said expenses as well as the dividend relatable to the speculation business, and which aspects have not been impugned by the assessee. We .....

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warranting no adjudication, the only issue raised in the instant appeal, i.e., per the effective grounds #2 & #3, is the validity or otherwise in law of the treatment of the loss on share trading, the specified income under Explanation to section 73 of the Act, with assessee also challenging the quantum of the loss so assessed. The primary figures are not disputed, being in fact furnished by the assessee itself, or otherwise borne out of its records. The dispute, in the main, as delineated b .....

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ot;Income from house property", "Capital gains" and "Income from other sources", or a company the principal business of which is the business of trading in shares or banking or the granting of loans and advances) consists in the purchase and sale of shares of other companies, such company shall, for the purposes of this section, be deemed to be carrying on a speculation business to the extent to which the business consists of the purchase and sale of such shares.' Un .....

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icability of the said Explanation and, thus, the provision itself, is to be determined, is in the negative, signifying a loss under the relevant head/s of income or of the specified income/s. The assessee's contention is that the negative income being decidedly less than a positive one, it cannot by any means be considered as a positive equivalent to the negative figure, and the ratio (of the different specified incomes in the gross total income), worked out accordingly. 3.2 The issue thus i .....

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on 73, falling under Chapter VI. The matter could be looked upon from another angle as well. The whole import of section 73, as afore-noted, is whether income from purchase and sale of shares is to be regarded as speculative or non-speculative business income; different consequences attending the two classifications. Per contra, the loss from the purchase and sale of shares is not to be set off against any other income for the purpose of the applicability of section 73. To what effect therefore .....

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e provision is to determine as to whether the loss arising from the business of purchase and sale of shares (of the specified company) is to be regarded as normal business loss or of a speculative business, so that it would be available for set off only against profit, if any, of another speculative business and, further, to the extent unabsorbed thus, carry forward for such set off for a restricted period of four years as against the normative time period of seven years. The only implication th .....

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ile admitting of inter source adjustment of income for any head of income, would exclude negative incomes, so computed for any head of income. How could, one may ask, it, i.e., a loss, which is only a negative income, be compared with a positive one? This also follows from the requirement of the section that the gross total income, i.e., a positive sum, is to be examined for its' constituents, i.e., in terms of the incomes falling under different heads of income, comprising it. A set off of .....

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islative intent behind a provision, it is well settled, is to be the foundational basis for any interpretative exercise [refer: Padmasundara Rao (Decd.) and Others vs. State of Tamil Nadu and Others [2002] 255 ITR 147 (SC); CIT vs. Baby Marine Exports [2007] 290 ITR 323 (SC)], and has guided our said interpretation. 3.3 In the admitted facts of the case, the assessee has income from advisory charges and brokerage at ₹ 121.81 lacs and ₹ 14.93 lacs respectively. Its other incomes are r .....

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In so deciding, we also endorse the reliance by the Revenue on the decisions by the hon'ble high courts and tribunal, as cited in their orders, viz. Eastern Aviation & Industries Ltd. vs. CIT [1994] 208 ITR 1023 (Cal); CIT vs. Parkview Properties (P.) Ltd. [2003] 261 ITR 473 (Cal); JRD Securities Pvt. Ltd. vs. ACIT (in ITA No. 4943 of 2002 dated 26.10.2005); Associated Capital Market Mgnt. Pvt. Ltd. Vs. Jt. CIT (in ITA No. 1103/Mum/2001); and Prudential Construction Co. Ltd. Vs. Asst. C .....

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We decide accordingly. 5. The assessee's fourth and final ground of appeal is in relation to the assessment of the rental income of ₹ 6,39,473/- as 'income from other sources'. As conceded to by the ld. AR during hearing, this matter stands covered against the assessee by the order by the tribunal in the assessee's own case for the immediately preceding year, i.e., A.Y. 2003- 04, with the ld. CIT(A) in fact stating, i.e., vide the relevant para (5.1) of his order, that the .....

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