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2019 (9) TMI 444

..... me chargeable as “Interest on securities" "Income from house property", "Capital gains" and "Income from other sources" and its principal business is not the business of banking or of granting of loans or advances. The assessee company is a Limited Company engaged in the business of purchase and sales of shares during the year under consideration and has also earned income from Rent and Dividend, etc. The assessee is a non-banking financial company (NBFC) and may be categorized as an Investment Company. The losses of earlier years, i.e., assessment years 2008-09 and 2009-10 were claimed by the assessee to be set off against the profit of the year under consideration for the reason that there was no c .....

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..... he Explanation thereto read with the law enshrined in section 154 of The Act, in as much as he has failed to appreciate that the learned Dy. C.I.T. altogether ignored, or had otherwise not considered the replies filed on record in response to the show cause notice u/s 154 of the Act. 2. In this case, the assessment under section 143(3) of the Act was completed on 31.10.2012 at a total income of ₹ 28,10,880/-, after set off of brought forward Business Loss of ₹ 42,50,204/- for assessment years 2008-09 & 2009-10 and Unabsorbed Depreciation of ₹ 49,208/- for assessment years 2008-09 & 2009-10. Further, it had been noticed from the assessment order and case record by the A.O that income from "Non-Speculative Busin .....

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..... r under consideration, i.e., assessment year 2010-11, observing thus: In response to the notice u/s 154 dated 13.01.2016, the assessee company has not submitted any reply till the given period, this shows that the assessee company has nothing to say in this regard, further it is pertinent to mention here that the assessee company has not appealed against the Assessment Order for A.Ys 2008-09 & 2009-10 this shows that the assessee has no objection in treating the business loss for A.Ys 2008-09 & 2009-10 as Speculative losses, therefore assessment order dated 31.10.2012 is accordingly proposed to be revised considering that the assessee company has nothing to say in this regard. 4. The ld. CIT(A) has confirmed the order passed under s .....

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..... or relevant Assessment year. Appellant accepted this finding of the AO and has also not challenged during this appellate proceeding. It is clearly not permissible as per I.T. Act. Therefore, action of AO under section 154 of the I.T. Act 1961 proposing to treat the above mistake and to rectify the same as the mistake that is apparent from record is legally correct. From the perusal of record & Computation of income, it is established that business losses for the AYs 2008-09 & 2009-10 of ₹ 19,03,967/- & ₹ 23,46,237 respectively have been incorrectly set-off from the Business Income of AY 2010-11, even though the same were determined as speculative losses in the relevant Assessment Order. As per section 73 of the I.T A .....

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..... AO vide order passed u/s. 143(3) of the Act. The assessee company is a Limited Company engaged in the business of purchase and sale of shares during the year under consideration and has also earned income from Rent and Dividend, etc. The assessee is a non-banking financial company (NBFC) and may be categorized as an Investment Company. The business of the assessee-company undisputedly remains the same as that in the earlier two assessment years, i.e., purchase and sale of shares. The fact that during the year under consideration, the assessee carried on the business of purchase and sale of shares stands established from the assessee s Directors Report/Annual Report (APB-36), consisting of 30 pages, for the year under consideration. Therein .....

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..... of this section, be deemed to be carrying on a speculation business to the extent to which the business consists of the purchase and sale of such shares 8. Thus, as per the Explanation, if the gross total income of a company does not consist mainly of income chargeable as Interest on securities"', "Income from house property", "Capital gains" and "Income from other sources" and if its principal business is not the business of banking or that of granting of loans or advances, its business of purchase and sale of shares of other companies shall be deemed to be a speculative business. 9. This Explanation has been made applicable w.e.f. 1/4/2015. In the expression the principle business of which is the bu .....

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..... s per which, the business of the assessee company is deemed to be a speculative business. To reiterate, in the earlier two years, the business of the assessee was a speculative business. Ergo, the business of the assessee company in the year under consideration remains the same as that in the earlier two assessment years. 13. In view of the above, we hold that there was no mistake apparent from the record in the original assessment order dated 16/3/2016 and the brought forward losses of ₹ 42,50,204/- had correctly been set off against the speculative business income of ₹ 87,04,503/-, for the year under consideration. 14. Hence, finding merit in the grievance sought to be raised by the assessee, the same is accepted. The order un .....

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