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Typhoon Financial Services Pvt Ltd Versus The Income Tax Officer, Ward-8 (1) , Ahmedabad

2015 (6) TMI 449 - ITAT AHMEDABAD

Loss on the sale of shares - treating as speculation loss - Held that:- The undisputed facts in the case in hand is that the assessee is engaged in the business of financing and substantial income has been derived from interest. The assessee claimed loss on sale of shares of ₹ 15,50,000/-. The Assessing Officer treated the same as speculation loss and allowed it to be carried forward and to be adjusted against future speculation profit only.

It is undisputed fact that the princ .....

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erefore, the impugned order is hereby set aside and the Assessing Officer is directed not to treat the loss as speculation loss. - Decided in favour of assessee. - ITA No. 514/Ahd/2012 - Dated:- 29-5-2015 - G D Agarwal, VP (AZ) And Kul Bharat, JM,JJ. For the Appellant : Shri G C Pipara, AR For the Respondent : Shri Nimesh Yadav, Sr. DR ORDER Per Shri Kul Bharat, Judicial Member : This appeal by the Assessee is directed against the order of the Ld.Commissioner of Income Tax(Appeals)-XIV, Ahmedaba .....

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sions of the Act. 2. The learned CIT(A) has erred in not considering/appreciating the fact that the appellant company is an NBFC, which is specially excluded from the purview of Explanation to Section 73 of the Act. Therefore, the impugned loss of ₹ 15,50,000/- requires to be set-off against profit from business/other sources/capital gain. 3. The learned CIT(A) has further erred in not considering the various decisions relied upon by the appellant including the decision of the Hon'ble .....

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red to as "the Act") was framed vide order dated 17/12/2010, thereby the Assessing Officer (AO in short) treated the loss on the sale of shares as speculation loss and to be carried forward and to be adjusted against future speculation profit only. Against the said assessment order, the assessee filed an appeal before the ld.CIT(A), who after considering the submissions of the assessee, dismissed the appeal. Against this, the assessee is further in appeal before us. 3. The only effecti .....

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in the business of non-banking finance company for advancing loans, etc. He submitted that the ld.CIT(A) grossly erred in applying the provisions of Explanation to Section 73(1) of the Act. 3.1. On the contrary, ld.Sr.DR supported the orders of the authorities below. 4. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. The contention of the ld.counsel for the assessee is that the ld.CIT(A) erred in applying the pro .....

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ion (1), so much of the loss as is not so set off or the whole loss where the assessee had no income from any other speculation business shall, subject to the other provisions of this Chapter, be carried forward to the following assessment year, and- (i) it shall be set off against the profits and gains, if any, of any speculation business carried on by him assessable for that assessment year; and (ii) if the loss cannot be wholly so set off, the amount of loss not so set off shall be carried fo .....

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t of the business of a company [other than a company whose gross total income consists mainly of income which is chargeable under the heads "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 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 sha .....

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incipal business of which is the business of banking or the granting of loans and advances are excluded from deeming provision created by the Explanation. The ld.CIT(A) has decided the issue by observing as under:- "2.3 Decision: I have carefully perused the assessment order and the submissions given by the appellant. The A. O. has disallowed loss of ₹ 15,50,000/- on purchase and sale of shares by applying the Explanation to sub-section 4 of Section 73 of the Act. It has been held by .....

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dum and articles of association of the appellant company. In order to clearly understand the issue involved explanation to sub-section 4 of section 73 is reproduced hereunder: "Where any part of the business of a company (Other than a company whose gross total income consists mainly of income which is chargeable under the heads "Interest on securities", "Income from house property", "capital gain" and "Income from other sources") or(a company the prin .....

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ded to the companies whose gross total income consists mainly of income under the head Interest on securities, interest from house property, capital gain and income from other sources. In second category, the companies which are in the business of banking or granting of loans and advances have been included for the purpose of deeming to be carrying on the speculation business. The use of word 'or' between the comas clearly changes the categories which have been mentioned in the explanati .....

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