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TMI Blog2016 (8) TMI 1152X X X X Extracts X X X X X X X X Extracts X X X X ..... umstances is applicable in this case or not ? (iii) Whether in the facts and circumstances of the case, if the answers to the aforesaid questions are in favour of the revenue, the learned Tribunal was justified in law in not interfering with the orders of the learned Commissioner, Income Tax (Appeals) as the assessee's case is covered by explanation to section 73 of the Income Tax Act, 1961 ?" The facts and circumstances of the case are briefly stated as follows:- The original assessment under section 143(3) of the Income Tax Act, 1961 was made on 12th March 2004. A notice thereafter under section 148 was issued and an assessment under section 147/143(3) was made on 28th December, 2006. In an appeal preferred by the assessee the C.I.T.(A) was of the opinion that "it is apparent that the proceeding u/s.147 was initiated merely on change of opinion by the successor A.O. This is not at all permitted in law." In an appeal preferred by the revenue, the learned Tribunal, without anything more, concurred with the opinion expressed by the CIT(A). Mr. Khaitan, learned senior Advocate appearing for the assesseerespondent, submitted that both the CIT(A) and the learned Tribunal set as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power. That was the view taken by this court in Maharaj Kumar Kamal Singh v. CIT [1959] 35 ITR 1 (SC), CIT v. A. Raman and Co. [1968] 67 ITR 11 (SC) and Bankipur Club Ltd. v. CIT [1971] 82 ITR 831 (SC) and we do not believe that the law has since taken a different course. Any observations in Kalyanji Mavji & Co. v. CIT [1976] 102 ITR 287 (SC) suggesting the contrary do not, we say with respect, lay down the correct law." The next judgment cited by Mr. Khaitan is in the case of CIT -vs- Kelvinator of India Ltd., reported in (2002) 256 ITR 1(SC). He drew our attention to the following views appearing at page 15 of the judgment: "It is well settled principle of law that what cannot be done directly cannot be done indirectly. If the Income-tax Officer does not possess the power of review, he cannot be permitted to achieve the said object by taking recourse to initiating a proceeding of reassessment or by way of rectification of mistake. In a case of this nature the Revenue is not without remedy. Section 263 of the Act empowers the Commissioner to review an order which is prejudicial to the Revenue." Lastly, Mr. Khaitan drew our attention to the judgment in the case of CIT -vs- K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per provisions of Explanation to section 73. Further, as per P&L Act, it is found that the a.'s total expenses during the year was of Rs. 1,6617959/-. A portion of such expenses should be attributable to the a.'s activities of purchase and sale of shares. On apportionment of expenses among brokerage income, loss on purchase and sale of shares and other income, the expenses attributable to loss on purchase and sale of shares should be as under: 16617959X8001831 ---------------------- = 67,83,364/- 19602970 Taking into a/c. the proportionate expenses the speculative loss should be of Rs. 147,85,195/- (80,01,831 + 67,83,361) which is not to be allowed to set off against other income but to be carried forward for set off against any future speculation profit. Accordingly total income of the 'a' should be as under: Business Income:- Business loss as computed u/s.143(3)= (-)13,15,218 Add: Speculation loss not to be Set off = (+)1,47,85,195 &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the reduction in value of the share stock held by the assessee company on their own account. This does not mean that this is a loss to the assessee whereby explanation to section 73 applies. Please note that in case of share Broker Company, the explanation to sec.73 is definitely applicable but as it appears from your letter you intend to apply this explanation only to the part activities of the assessee company which is not permissible in law. Your attention is drawn to departmental circular no.264 dated 24th July, 1976 reported in 110 ITR (1977) statute page 21 & 32. This circular clearly indicates that the entire purchase and sale of shares has to be considered while considering explanation to section 73. On this submission reliance is placed on the decision of Calcutta High Court in case of CIT -Vs- Arvind Investment Ltd. reported in 192 ITR, Page 365. Please note that in case of the assessee company the entire business operation comprises of share purchase and sale and income derived therefrom has to be considered in totality on the same principle. In view of the facts stated above and in view of the details furnished to you for the entire share purchase and sale amount a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Kelvinator India Ltd., reported in 256 ITR(supra), Mr.Khaitan has relied upon two sentences out of the context. Those two sentences are preceded by the following sentence. "Thus when the Assessing Officer or Tribunal has considered the matter in detail and the view taken is a possible view the order cannot be changed by way of exercising jurisdiction of rectification of mistake". It is not in dispute that originally the assessee had made a misrepresentation of fact which misled the assessing officer in believing that the loss was suffered in the course of share broking business. Whereas the truth is that loss was suffered in sale and purchase of shares which had no connection with the business of the assessee as a share broker. The last judgment, in the case of Kelvinator India Ltd., reported in (2010) 320 ITR(supra), the question for consideration was whether the concept of change of opinion stood obliterated with effect from April 1, 1989 after substitution of section 147 of the Income Tax Act, 1961 by the Direct Tax Laws (Amendment) Act, 1987. That question was answered in the negative by the Apex Court. Far from helping the assessee, the judgment, in our view, militate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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