TMI Blog2015 (12) TMI 349X X X X Extracts X X X X X X X X Extracts X X X X ..... inancial Company, the assessee company was to be considered as a company, the principal business of which was granting of loans and advances and Chapter III-B of RBI Act will have an over riding effect. It is observed that if the assessee company has principal business of granting loans and advances then explanation to Section 73 is not applicable as held in the case of Narain Properties Ltd. vs. ACIT (2013 (4) TMI 189 - ALLAHABAD HIGH COURT ) and ACIT vs. Tanna Electro Mechanics (P) Ltd. (2005 (10) TMI 425 - ITAT MUMBAI ). Thus the AO was not justified in treating the loss in the purchase and sale of shares as speculation loss. Hence, considering the order of the ld. CIT(A) and our deliberations on the issue, we find no reason to inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchase and sale of securities business had been prepared by the assessee company. The AO vide letter dated 6-07-2007 asked for assessee to furnish the details of separate trading account for trading in scrips for physical trading, F O transactions and day-trading. The AO observed that the assessee has vide letter dated 16-08-2007 furnished scripwise trading statement for delivery based transactions. As per the details submitted by the assessee, it is observed by the AO that the assessee during the year under consideration has sold 50,000 shares of M/s. Polymetch Engineering (P) Ltd. worth ₹ 50,00,000/- at a sale price of ₹ 5,00,000/- and declared loss of ₹ 45,00,000/- from this transaction. Further the assessee had purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oss of ₹ 54,20,000/- disallowed by the AO u/s 73 (1) of the Act by observing as under:- 3.1 I have duly considered the submissions of the appellant .. 3.2 The AO had place reliance on the decision of CIT vs. Intermetal Trade Ltd. (258 ITR 536) but the facts were distinguishable. In the cited case, the main business was that of trading I metals and shares. Thus the underlying issue for contemplation in both the cases was entirely different. The reasons on the basis of which the Hon'ble M.P. High Court ruled that the principal business of the assessee company was not of granting loans and advances did not incidentally help in the instance case to prove that the main business of the appellant was of granting of loans and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Barkha Investment Trading Company vs. CIT (281 ITR 316) that once the company was registered with the Reserve Bank of India and kept the registration alive as NBFC, the assessee company was to be considered as a company, the principal business of which was granting of loans and advances and Chapter III-B of RBI Act will have an override effect. If the principal business was of granting loan and advances, then explanation to Section 73 was not applicable as held in the case of Narain Properties Ltd. vs. ACIT (11 SOT 1, Lucknow ITAT ) and ACIT vs. Tanna Electro Mechanics (P) Ltd. (7 SOT 121). I therefore, hold that the was not justified in treating the loss of ₹ 54,20,000/- in the purchase and sale of shares as speculation lo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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