TMI Blog1990 (4) TMI 288X X X X Extracts X X X X X X X X Extracts X X X X ..... sment year involved is 1978-79 for which the relevant period of account is the year ended on 3-6-1977. 3. The facts found by the Tribunal are as under: The assessee is a limited company. The assessment year involved in the case is 1978-79. The company during the relevant assessment year was engaged in dealing in paper, coal, chemicals, etc., and it was also engaged in coal handling. In the assessment for the assessment year under reference, the ITO made an addition of ₹ 1,20.632 with the following observation: Loss on share dealing to be considered later vide Explanation to section 73 of the IT Act, 1961 as speculation loss: Rs. Rs. Openi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n investment company or a banking or a financing company) consists in the purchase and sale of shares, such company for the purpose of this section be deemed to be carrying on a speculation business to the extent to which the business consists of the purchase and sale of shares. There is no doubt that the fiction embodied in the Explanation is only 'for the purpose of this section' that is, where losses are incurred in shares and are sought to be set off against other income. The ITO has worked out the loss at ₹ 1,20,632 exclusive of apportionment to the extent of ₹ 70.000 out of administrative expenses and interest charged to profits and loss account which is reproduced below: Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oth purchase and sale of shares in a particular year. Even though there was no purchase of shares during the year, there was certainly sale of shares, may be bonus shares. The loss having arisen as a result of share dealings partakes the character of speculation loss by virtue of Explanation 73(4). The Tribunal in further appeal held as follows: In our opinion CIT (Appeals) came to a wrong conclusion because he misread the Explanation to section 73. In order to attract the Explanation it is necessary that there must be 'purchase and sale of shares'. As embodied in the Explanation, the CIT (Appeals) was wrong in his assumption that in order to attract the Explanation the business of the company is to consist either in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing assessment year. It is also further provided that such carried forward loss in speculation business shall be set off against profits and gains of any speculation business of the subsequent assessment year. No loss shall be carried forward under this section for more than succeeding eight assessment years. There is an Explanation to section 73 which provides as follows: Explanation: Where any part of the business of a company (other than an investment company, as defined in clause (1) of section 109, 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 dee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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