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TMI Blog2016 (3) TMI 864X X X X Extracts X X X X X X X X Extracts X X X X ..... tion transactions as non-speculative transactions (instead of speculative transaction) for the purpose of section 73 and thus, not allowing set off of speculation loss against speculative income arising from such transactions. 2. That the learned CIT (A) has erred in law and on facts in considering the sale amount of future & option transactions as profit without giving the benefit of expenses incurred thereto. 3. That the learned CIT (A) erred in not considering the ground related to initiation of penalty proceeding u/s 271 (1)(c) as the assessee had neither concealed the particulars of income nor submitted any inaccurate particulars of income. The revenue in its appeal (i.e. ITA No.3425/Mum/2012) has raised the following grounds : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... planation to Section 73 in case assessee engaged in business of share-trading is covered in favour of assessee by the decision of ITAT Kolkata bench in the case of Baljit Securities (P) Ltd., 68 SOT 82, wherein it was held that in case of assessee engaged in the business of share trading, the activity of purchase and sale of delivery based shares and purchase and sale of non-delivery based shares i.e. derivatives. And incurred loss on delivery based purchase and sale of shares and earned profit on non delivery based sale and purchase of shares, the entire transaction carried out by the assessee is within the umbrella of speculation transaction and, therefore, there was no bar in setting off loss arose out of derivative, from income arose ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of shares and securities, following the judicial pronouncements as discussed above, we direct the AO to allow set off loss on purchases and sale of shares against profit from business income, before invoking Explanation to Section 73 of IT Act. We direct accordingly. 8. The grievance of the revenue in its appeal relates to deleting disallowance of expenditure incurred in earning tax free income. The AO found that the assessee had earned dividend income which is not liable to tax. He further found that the assessee has incurred interest expenditure of Rs. 5,74,23,200/-. Since the disallowance offered by the assessee under section 14A was not as per rule 8D, by applying the provisions of Rule 8D, the AO worked out the proportionate dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecurities (P) Ltd (supra), the shares held as stock-in-trade should not be taken into account while working the disallowance of expenses incurred on earning the tax free income. The Hon'ble Kokata High Court in the case of Baljit Securities (P) Ltd., 368 ITR 470, had also held as under :- "6.It would, thus, appear that where an assessee, being the company, besides dealing in other things also deals in purchase and sale of shares of other companies, the assessee shall be deemed to be carrying on a speculation business. The assessee, in the present case, principally is a share broker, as already indicated. The assessee is also in the business of buying and selling of shares for self where actual delivery is taken and given and also in buyin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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