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2013 (6) TMI 795 - ITAT DELHI

2013 (6) TMI 795 - ITAT DELHI - TMI - I.T.A.No. 3537/Del/2012 - Dated:- 28-6-2013 - SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER Appellant by: Shri Tarun Seem, Sr.DR Respondent by : S/Shri K. Sampath & Raj Kumar O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER This appeal has been preferred by the revenue against the order of CIT(A)-XIX, New Delhi dated 09.04.2012 in Appeal No.273/2011-12 for AY 2009-10. 2. Ground no.4 of the revenue is general in nature wh .....

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se in directing the Assessing Officer to set off brought forward business losses and depreciation against the interest earned by the assessee on bank deposits. 3. Briefly stated the facts giving rise to this appeal are that the case was taken up for scrutiny and notices u/s 143(2) and 142(1) of the Income Tax Act, 1961 (for short the Act), along with questionnaire, were issued and served on the assessee. The Assessing Officer completed the assessment at total income of ₹ 90,34,530/- as aga .....

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ed in favour of the assessee on the issue of interest earned on bank deposits by treating the same as income from business or profession and also on the issue of speculative losses on account of purchase and sale of shares. The Commissioner of Income Tax(A) held that the income earned by the assessee on bank deposits is chargeable under the head of income from business and profession and loss on sale and purchase of sale of shares, not being a speculative loss, deserve to be treated as business .....

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peal are decided in favour of the assessee. From a bare reading of the impugned order, we observe that the Commissioner of Income Tax(A) has followed the judgment of ITAT in ITA No. 103/Del/2011 (supra) with following observations and findings:- 11.2 After careful consideration of the facts and legal position, the exceptions provided in Explanation to S.73 are applicable to the facts of the case. Hence, the loss arising on account of trading of shares cannot be considered as loss from speculatio .....

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t year 2007-08 by observing as under: "7. In the light of the aforesaid precedent, we are of the considered opinion, that the Ld. Commissioner of Income Tax (Appeals) is correct in holding that Explanation to section 73 is not applicable, as assessee's case falls in the exceptions provided in Explanation to section 73 of the Act. Accordingly, we do not find any infirmity or illegality in the order of the Ld. Commissioner of Income Tax (Appeals), hence, we uphold the same. 8. In the resu .....

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was correct in holding that Explanation to Section 73 of the Act was not applicable as the assessee s case falls in the exception provided in Explanation to Section 73 of the Act. The operative part of the order reads as under:- 6. We have heard the rival contentions in light of the material produced and precedent relied upon. We can gainfully here refer the provisions of Section 73 :- Explanation-Where any part of the business of a company[other than a company whose gross total income consists .....

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sale of such shares.] 6.1 The assessee s main contention is that since the business of the assessee is granting of loans, the exceptions provided in Explanation to Section 73 are applicable to the facts of the case. In this regard, the Special Bench decision in the case of DCIT vs. Venkateswar (Supra) supports the case of the assessee. In this regard, the Special Bench has opined as under:- The Explanation to section 73 is in the nature of deeming provisions and as such to be strictly construed .....

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ovisions of Explanation to Section 73 were not attracted to the case and, accordingly, the loss incurred in the business of purchase and sale of shares was not to be treated as speculative loss within the meaning of Explanation to Section 73. To decide as to whether the case of an assessee falls in exceptions provided in Explanation to Section 73 of the Act or not and to decide as to whether the principal business of the assessee is that of granting loans and advances, the decisive factor is the .....

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peals) is correct in holding that Explanation to section 73 is not applicable, as assessee s case falls in the exceptions provided in Explanation to section 73 of the Act. Accordingly, we do not find any infirmity or illegality in the order of the Ld. Commissioner of Income Tax (Appeals), hence, we uphold the same. 7. At this juncture, we also find it just and proper to consider the ratio of the judgment of ITAT H Bench in assessee s own appeal in ITA No. 5464/Del/2011 wherein it has been held t .....

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on. 8. After careful consideration of the facts and legal position, the exceptions provided in Explanation to Section 73 of the Act are also applicable to the facts of the case. Accordingly, the loss arising on account of trading of shares cannot be considered as loss from speculative business. In this regard, we hold that the revenue authorities are bound to follow the rule of consistency and the Assessing Officer cannot take a different stand from the previous years if there is any change of f .....

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