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Deputy Commissioner of Income Tax, Circle-9, Kolkata Versus M/s. Ritona Vinimay Pvt Ltd

2015 (7) TMI 909 - ITAT KOLKATA

Disallowance of speculation loss by invoking the provisions of Explanation to Sec. 73 - CIT(A) deleting the addition - Held that:- Assessee filed complete details of deployment of fund during last three years including the position of income and turnover of the assessee in different business. At this stage it is not possible to verify these details because this is being filed now for the first time before us. We find that the AO has only verified the deployment of funds for last three years and .....

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on 73 of the Act, wherein the AO will first determine the principal business of the assessee. For this, the AO will find out the deployment of funds in shares and in other business. The AO will also find out the profit or loss from shares and also in other business. The AO will also find out the turnover of the assessee in all the business and then compare the same on comparative basis. He has to give a finding qua the principal business of the assessee and then decide the issue - Decided in fav .....

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ua the nexus of expenditure with exempted income. Hence, we confirm the order of the CIT(A) and this issue of appeal of Revenue is dismissed. - Decided against revenue. - ITA No. 359/Kol/2012 - Dated:- 30-4-2015 - Mahavir Singh, JM And B. P. Jain, AM,JJ. For the Appellant : Shri K L Kanak, JCIT For the Respondent : Shri V N Purohit, FCA ORDER Per Shri Mahavir Singh,JM. This appeal by revenue is arising out of order of CIT(A)-VIII, Kolkata in Appeal No. 144/CIT(A)-VIII/Kol/10-11 dated 16.12.2011. .....

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nd in law, whether the Ld. CIT(A) is justified in deleting the addition made by the A.O. to the tune of ₹ 1,05,10,702/- on account of ' speculation loss' and to treat the principal business of the assessee is granting of loan & advances even though the deployment of fund invested in share trading business is higher than the business of granting of loans and advances? 2. That on the facts and circumstances of the case and in law, whether the Ld. CIT(A) is justified to treat the .....

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was made between its group companies so as to merely to manipulate or reduce the taxable income?" 3. Briefly stated facts are that the assessee as per assessment order is engaged in the business of share trading as well as granting of loans. The assessee has earned dividend income, interest income against loans and advances. The AO noted that the assessee is engaged primarily in the business of trading in shares of other companies and suffered losses to the tune of ₹ 1,05,10,702/- in .....

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rom other sources other than share dealing and income to the extent of 16.90% is from share trading in AY 2007-08. The income from trading in shares comes to 51.15% as against income from other than share trading at 48.55%. Similarly, in the present AY i.e. AY 2008-09, the investment in shares is to the extent of 14.51% as against the investment in other activities or other business at 85.49% of the total net worth. He narrated the facts relating to AY 2008-09, which reads as under: "c) In .....

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e main area of investment of the company is not in share dealings." The AO was not convinced with the explanation of the assessee and he noted the deployment of funds as on 31.03.2005, 31.03.2006 and 31.03.2007 as under: Year (as on) Total Fund available Fund utilized in loan & advances % Utilized out of total fund Fund utilized in Investment in share as well as stock-intrade (%) Utilized out of total fund 1 31.03.2005 10,19,45,912/- 1,71,54,948 16.82 8,38,99,060 82.29 2 31.03.2006 12,9 .....

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who simply relying on the submissions of the assessee deleted the disallowance vide para 5.2(ii) and (vii) as under: "5.2(ii) As per the Ld. AR there was no purchase of shares in this year. Only the old stock was mostly disposed of and so far as the shares of M/s. Hospet Ispat Ltd. are concerned, the entire stock, brought forward from the earlier year, was fully sold off to increase the deployment of funds in making loans and advances on interest. Due to this reason the loans and advances h .....

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he business loss of ₹ 1,05,10,702/- incurred in the transaction of the shares." Aggrieved, revenue is now in appeal before us. 4. We have heard Ld. Sr. DR and gone through facts and circumstances of the case. Ld. Sr. DR relied on the assessment order. On the other hand, Ld. Counsel for the assessee filed complete details of deployment of fund during last three years including the position of income and turnover of the assessee in different business. At this stage it is not possible to .....

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is issue needs re-examination. In term of the above, we set aside this issue to the file of the AO for fresh examination of this issue in terms of the Explanation to section 73 of the Act, wherein the AO will first determine the principal business of the assessee. For this, the AO will find out the deployment of funds in shares and in other business. The AO will also find out the profit or loss from shares and also in other business. The AO will also find out the turnover of the assessee in all .....

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t income by invoking the provisions of section 14A of the Act. For this, revenue has raised following ground no. 4: "4. That on the facts and circumstances of the case and in law, Ld. CIT(A) has erred in deleting the addition made u/s. 14A even though the addition has only relevancy in respect of expenses to earn an income which do not forming the part of taxable income irrespective of status of assessee, nature of income or sours or head of income" 6. We have heard rival submissions a .....

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