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2018 (7) TMI 876

s at ₹ 2.74 crores has been taken into account to arrive at income from business. - Thus, the basic premises on the part of the Revenue that the respondent assessee's income mainly consisted of income from business is factually incorrect. Once it is found as a fact in the order dated 17th September, 1998 of the Tribunal that the assessee's income mainly consisted of income from other sources as it forms 91.68% of its total income, then in the absence of any challenge to the finding of fact, it cannot be a subject of inquiry. - Once the finding of fact has not been challenged, it must follow that Section 73 of the Act which introduces a deeming fiction to define a speculation business will not apply as the bracketed portion in .....

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arding the applicability of the Explanation to Section 73 of the Act. The assessment year is 198990. In the assessment, the following income was brought to tax: (a) Income from Business : ₹ 87,784/ (b) Income from other sources : ₹ 9,66,013/ (c) Gross total income : ₹ 10,53,697/ (d) Percentage of (b) to (c) : ₹ 91.68% Whereas the assessing officer held that the assessee was hit by the explanation to Section 73 of the Act, the CIT(Appeals) held otherwise. Referring to the orders of the Tribunal reported in Shree Swamy Samarth Cement Depot Vs. 4th ITO (32 ITD 806) and Himalaya Co. Ltd. Vs. CIT (30 ITD 139)(Cal.), he accepted the assessee's contention and held that it was an investment company. 3. Before the Tribuna .....

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so as to fall in the exclusion provided is Section 73 of the Act. The assessee contends otherwise. Therefore, it would be appropriate to first reproduce the Explanation to Section 73 of the Act, which reads as under : "Explanation - Where any part of the business of a company [(other than a company whose gross total income consists mainly of income which is chargeable under the heads Interest on securities , Income from house property , Capital gains and Income from other sources ], or a company [the principal business of which is the business of trading in shares or banking] or the granting of loans and advances) consists in the purchase and sale of shares of other companies, such company shall, for the purposes of this section, be de .....

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ollowing : (a) Income from Business ₹ 87,684/ (b) Income from other sources ₹ 9,66,013/It further records that the above is the result of the various transactions which have been referred to therein as under : "3.4 ….. However, the above is the result of following transactions : a) Profit from trading in yarn ₹ 84,802 b) Profit from trading in steel ₹ 7,174 c) Service charges received shown as business income ₹ 2,24,94,436 d) Commission income shown as business income ₹ 24,31,560 e) Loss in trading of shares ₹ 2,74,09,727 f) Dividend / interest ₹ 11,40,097 This working evidences that the loss on trading in shares at ₹ 2.74 crores has been taken into account to arrive at incom .....

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out an exception so far as main income is from Income from other sources . Thus, in our view, the question has proposed for our consideration stands concluded by the decision of this Court in Darshan Securities Pvt. Ltd. (supra). 11. In fact, Mr. Malhotra very fairly states that if the Revenue's submission that the assessee's income mainly consists of business income is not accepted, then on the basis of the principles laid down in Darshan Securities Pvt. Ltd. (supra), the question would have to be answered in the affirmative i.e. in favour of the respondent assessee and against the appellant Revenue. 12. It is a settled position as held by the Calcutta High Court in Eastern Aviation and Industries Ltd. Vs. CIT, 208 ITR 1023 and Ary .....

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