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TMI Blog2016 (8) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... e business of share broker and own trading of shares. It had filed its return of income on 29-11-2000 declaring net loss of Rs. 17,01,560/-. In the assessment order, the AO held that Explanation to section 73 of the I.T. Act was applicable to the assessee and treated the assessee's share trading business as speculative business. The AO bifurcated the income and expenses relating to the speculative share transactions and the normal business of share brokerage. In other words, the AO redrew the profit and loss account for business of its own trading in shares and had worked out the profit at Rs. 1,00,505/-. The AO had also worked out the net profit of Rs. 1,69,153/- in respect of brokerage business. The assessee filed an appeal before the CIT(A) who confirmed the same and on further appeal the Tribunal also dismissed the appeal filed by the assessee. In the meantime the AO initiated penalty proceedings u/s.271(1)(c) of the Act and levied penalty of Rs. 53,590/- u/s.271(1)(c) of the I.T. Act for furnishing inaccurate particulars of its income. While doing so, the AO held that the assessee had claimed set off of speculative loss against the income from normal brokerage business in shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el for the assessee submitted that the AO levied penalty u/s.271(1)(c) of the Act on the ground that assessee has furnished inaccurate particulars of its income and thereby concealed the income to the extent of Rs. 1,69,154/- for A.Y. 2000-01, Rs. 99,946/- for A.Y. 2002-03, Rs. 4,61,431/- for A.Y. 2003-04 and Rs. 4,66,402/- for A.Y. 2004-05. 8. Referring to pages 164 and 165 of the paper book the Ld. Counsel for the assessee drew the attention of the Bench to Schedules 9 and 10 which form part of the audited accounts as on 31-03-2004. He submitted that the assessee has given details of brokerage on said share broker activities and commission and other income the total of which is Rs. 23,82,244.73. Similarly in Schedule 10 the assessee has given details of income from share trading activity disclosing loss of Rs. 1,26,561.95. This shows that the assessee has maintained proper accounts without which all these details could not have been prepared. Referring to page 155 of the paper book the Ld. Counsel for the assessee drew the attention of the Bench to the income from brokerage and other income and income from share trading. He submitted that it is a fact that the assessee has combi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent to the Explanation to section 73 of the Act to clarify the real intention behind the insertion thereof by removing the obvious hardship caused to various assessees whose main business is trading in shares. The amendment has removed the anomaly and brought the ambit of Explanation to 73 of the Act in line with the intention of the legislature by placing the companies whose principal business is trading in shares as part of the expenses to Explanation to section 73 of the Act. It was because such companies were not the companies for whom the Explanation was inserted. 11. Referring to the decision of the Mumbai Bench of the Tribunal in the case of Fiduciary Shares & Stock Pvt. Ltd. Vs. ACIT vide ITA No.321/Mum/2012 order dated 13-05-2016 he submitted that the Tribunal in the said decision at para 5.6.3 of the order has held that the insertion of the amendment in the Explanation to section 73 of the Act by Finance (No.2) Act 2014 is curative and clarificatory in nature and this amendment has to be applied retrospectively from the date of the insertion to Explanation to section 73 of the Act. He accordingly submitted that the order of the CIT(A) be set aside and the AO be directed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the amendment brought in by the Finance (No.2) Act 2014 w.e.f. A.Y. 2015-16 is retrospective in nature and once the same is held as retrospective in nature the Explanation to section 73 is not applicable to the assessee company and therefore the very basis on which penalty has been levied does not survive. 15. We find merit in the above submission of the Ld. Counsel for the assessee. From the various details furnished in the paper book we find the assessee has given full details of income from share trading activity and income from brokerage activity for all the years. The AO has allocated the expenses to the above income and therefore some element of estimation is definitely there while computing the income. The Delhi Bench of the Tribunal in the case of S.R.J. Securities Ltd. (Supra) in somewhat similar circumstance has held that where quantum of loss on account of purchase and sale of shares was undisputed and addition was made treating the said loss as speculative loss no penalty can be levied u/s.271(1)(c) of the I.T Act. The relevant observation of the Tribunal at para 5 of the order reads as under : "5. We have considered the rival submissions. A perusal of the computati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) stands deleted." 16. The Mumbai 'F' Bench of the Tribunal in the case of Fiduciary Shares & Stock Pvt. Ltd. (Supra) relying on various decisions has held that the amendment inserted in Explanation to section 73 of the Act by Finance (No.2) Act 2014 w.e.f. 01-04-2015 is clarificatory in nature and therefore operates retrospectively from 01-04-1977 from which date the Explanation to section 73 was placed on the statute. The relevant observation of the Tribunal at Para 5.6.11 of the order reads as under : "5.6.11 In our humble view, drawing support from the judicial pronouncements cited at paras 5.6.3 to 5.6.9 of this order (supra) we are of the considered opinion and hold that the amendment inserted in Explanation to section 73 of the Act by Finance (No. 2) Act, 2014 w.e.f. 01.04.2015 is clarificatory in nature and would therefore operate retrospectively from 01.04.1977 from which date the Explanation to section 73 was placed on the statute since this amendment to section 73 of the Act '.... or a company the principal business of which is the business of trading in shares .....' brings in the assessee whose principal business is trading of shares. Therefore, the loss i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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