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TMI Blog2018 (4) TMI 570X X X X Extracts X X X X X X X X Extracts X X X X ..... aling in shares and securities. He has filed his return of income 29.9.2008 declaring total income at Rs. 2,23,500/-. On scrutiny of the accounts, it revealed to the AO that the assessee has shown commission receipt of Rs. 29,56,544/- whereas commission receipts as per Form No.16A are Rs. 70,49,320/-. There was a difference of Rs. 40,92,776/-. The ld.AO sought explanation of the assessee. Assessee contended that he has claimed the following expenditure: Expenditure incurred during A.Y.2008-09 but not shown in RoI: (a) Commission paid to agents : Rs.18,21,373/- (b) Service Tax Paid : Rs. 7,66,553/- (c) Commission paid to clients : Rs. 14,833/- (d) Loss from trading in shares : Rs.14,92,839/- Total : Rs.40,95,598/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e set off against income from 'profits and gains of business or profession' u/s. 73 of the IT Act. Further, the bills produced by the assessee on 13.12.2010 in favour of his above claim shows that the contracts for purchase or sale of shares have been settled on the very same date without actual delivery or transfer of such shares, which are clearly speculative transactions u/s. 43(5) of IT Act. On the contrary, the actual business of the assessee is of brokering/commission on purchase and sale of shares/securities/derivatives etc and not of speculation." 3. On appeal, the ld.CIT(A) deleted disallowance except from item no.(d). Under this head out of Rs. 14,92,839/-, the ld.CIT(A) has confirmed loss to the extent of Rs. 5,91,594/- and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on has been paid as is apparent from the data submitted to the AO and undersigned. Hence, it is not a case where no expenditure has been recorded in the books. So far as AO's contention that the commission payment ranges from 3 to 6% whereas the commission receipt is only in the range of 0.1 to 0.2%, I am in agreement with the contention of the AR that, the appellant had received commission from his principals on the gross turnover, whereas the commission payment was made to the individual sub-brokers on the broking business carried out through them. It is an accepted fact that, the range of commission received by the main dealer from their principals are always less in view of the huge turnover involved. Whereas, the retail sub-dealers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in nature. In this regard, on verification of the documents forming part of the written submission, it is seen that, the appellant had claimed three types of losses; (a) loss of transactions in F&O; (b) loss in transactions where the delivery of the shares were taken and given (c) loss due to denial of transactions entered on the direction of the clients. The AO had made a blanket observation that such claims are not allowable due to its speculative nature. On the other hand, it can be said that the transactions entered into F&O trade are business in nature in view of the exemptions provided in section 43. Therefore, as the issue is squarely covered by statute, the claim of appellant of losses from F&O transactions, are treated as business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... position of law on the issues. He made disallowance in a sweeping manner. For example, first expenditure claimed by the assessee was of a commission payment amounting to Rs. 18,21,373/-. This claim of the assessee was disallowed by the AO simply for reasons that rate of commission paid by the assessee is higher than the commission earned by the assessee. In other words, the assessee has paid commission at the rate of 3% to 6% whereas he has received in the range of 0.12% to 0.2%. The AO failed to comprehend that receipt as well as payment of commission could be in two different situations; how the receipt at a lower rate would justify the disallowance of commission payment at an higher rate. His order is without any logic. Similar is the po ..... X X X X Extracts X X X X X X X X Extracts X X X X
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