TMI Blog2010 (12) TMI 1213X X X X Extracts X X X X X X X X Extracts X X X X ..... tal gain, without appreciating the facts of the case and the material brought on record by the Assessing Officer. 1.2 In doing so, the Ld. CIT(A) has erred in law and on facts in not appreciating that taking into account the substantial nature of transactions and he magnitude of purchases and sales of shares, the said purchases and sales of shares were carried out by the assessee company with the motive of earning profit and the said shares were not held by the assessee as investment; and therefore the AO was justified in treating the said profit on sale of shares as the profit from speculation business. 2. Briefly the facts of the case are that the AO by invoking the provisions of section 73 of the IT Act and treating the short t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of provisions of explanation to section 73 does not arise. At the assessment stage, it was submitted by the assessee that (i) provisions of Explanation to Section 73 does not apply to a case of profit on sale and purchase of shares, (ii) it does not apply to a case of purchase and sale of shares of independent and unconnected company. The learned Counsel for the assessee has relied on the decision of Kruti Marketing Ltd. Vs ACIT 118 Taxman 194 (Ahd.) (Mag.) wherein it is held that if the shares are held as investment, profits or gains arising on the sale thereof, has to be treated as short term capital gain and explanation to section 73 has no application whatsoever under such circumstances. The learned Counsel for the assessee has furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration as investment. Once the shares are held as investments, any gain or loss suffered on account of sale of the same shall be taxed under the head, capital-gain and not under the head business income . This view is fortified by the binding decision of ITAT, Ahmedabad in the case of Kruti Marketing as discussed above. I, therefore, hold that the profit on sale of shares amounting to ₹ 10,74,,720/- has to be treated as short-term/longterm capital-gain and taxed as such. Hence, the addition made by the AO on this count of ₹ 9,13,093/- is hereby deleted. This ground of appeal is allowed. 5. On consideration of the rival submissions, we are of the view that the departmental appeal has no merit and the same is liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch in the nature of capital loss, therefore, there is no justification in treating the same as speculation loss. The learned DR however, submitted that section 73 as per assessee talks of the loss but it covers profit of business also. However, we do not agree with the contention of the learned DR because the provisions of section 73 of the IT Act are applicable to losses in speculation business and the explanation is also relevant to the same. But, in the case of the assessee on sale of shares the assessee has declared income. The AO without passing any speaking order merely applied the explanation to section 73 of the IT Act in order to disallow the claim of the assessee which is not warranted under the law. The learned CIT(A) on proper ..... X X X X Extracts X X X X X X X X Extracts X X X X
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