9911796707
TMI Blog2016 (3) TMI 631X X X X Extracts X X X X X X X X Extracts X X X X ..... in this appeal is as to whether the Learned AO is justified in treating the share trading loss of Rs. 51,56,183/- as speculation loss by applying the provisions of Explanation to Section 73 of the Act in the facts and circumstances of the case. 3. The brief facts of this issue is that the original assessment was completed in this case u/s 143(3) of the Act on 24.3.2006 assessing the total income at Rs. 91,54,270/- wherein the Learned AO disallowed the share trading loss of Rs. 51,56,183/- , among other additions, as speculation loss as the same was greater than the income disclosed by the assessee under the head 'other sources' by applying the provisions of Explanation to Section 73 of the Act. This action was confirmed by the Learned CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eployed in lending activity of the assessee is Rs. 635.67 lacs as against funds deployed in share trading activity of Rs. 187.24 lacs during the asst year under appeal. He also observed from the comparable chart of funds deployed in share trading and in lending activity that funds deployed in lending activity is more than that deployed in share trading activity. Accordingly he concluded that the principal business of asessee is granting of loans and advances and hence the assessee falls under the exception clause of Explanation to section 73 of the Act. Aggrieved, the revenue is in appeal before us on the following grounds:- "1. That the Ld. CITCA) has, on the facts and circumstances of the case, erred in holding that the loss from share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding that Explanation to section 73 of the Act is not applicable to the assessee. In response to this, the Learned AR vehemently supported the order of the Learned CIT(A) and also took us into the relevant operative portions of various judgements on the impugned issue which were relied upon by the Learned CIT(A) in his order. 5. We have heard the rival submissions and perused the materials available on record. We find that the main objects of the assessee company as per its Memorandum of Association are as under:- "2. To carry on investment business and to purchase, acquire, hold and dispose of or otherwise deal and invest in shares, stocks, debentures, debenture stocks, bonds, obligations and securities issued or guaranteed by any Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee company is to engage itself in lending activities apart from dealing in shares. We find that in the first round of appellate proceedings, the tribunal had set aside to the file of the Learned AO to ascertain whether the principal business of assessee is lending activity. The directions of the tribunal in ITA No. 1370/kol/2006 and CO No. 84/kol/2006 dated 18.3.2010 for Asst Year 2003-04 in the first round is reproduced herein below for the sake of convenience :- "16. After hearing both the parties and perusing the material available on record, we find that the plea now taken before us and the statement showing fund deployment by the assessee company has been placed before us for the first time and the same was not before the lower ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of Explanation to Section 73 of the Act. It would be pertinent to reproduce the Explanation to section 73 of the Act at this juncture :- Section 73 - Losses in Speculation Business Explanation - 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 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 purposes of this section, be deemed to be carrying on a speculation bu ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
