TMI Blog2019 (9) TMI 444X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to section 73 as 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. 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 had correctly been set off against the speculative business income for the year under consideration. - ITA No.507/LKW/2017 - - - Dated:- 6-9-2019 - Shri. A. D. Jain, Vice President And Shri T. S. Kapoor, Accountant Member For the Appellant : Shri Rakesh Garg, Advocate For the Respondent : Shri Ajay Kumar, D.R. ORDER PER A. D. JAIN, V.P.: This is assessee s appeal against the order of the ld. CIT(A)-II, Kanpur, dated 23/5/2017 for the assessment year 2010-11, taking the following grounds of appeal: (1) Learned C.I.T.(A) has altogether failed to appreciate that there was no mistake in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 23,46,237/-), which had originally been set off against the business income of ₹ 87,04,503/-, for the year 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 section 154 of the Act, observing, inter alia, that: A speculative business loss cannot be adjusted against the normal business income of the appellant even though they are from sale/purchase of shares. Appellant has accepted the contention of the AO who treated the said activity as sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the business income was speculative in nature or there are two views applicable on such a situation and set of, facts. Appellant has not been able to demonstrate that speculative losses can be set of against regular business income. 5. Heard. As per the operative portion of the notice issued to the assessee under section 154 of the Act, as reproduced hereinabove, As per section 73 of the IT Act, 1961 Speculative losses can be set off against future speculative income only. The question is, whether this is correct. 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 change in the nature of the business of the assessee company. The set off of the loss claimed by the assessee was allowed by the 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 Inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es) consists in the purchase and sale of shares of other companies, such company shall, for the purposes 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 business of trading in shares or banking , the phrase trading in shares or has been inserted over the erstwhile Explanation. 10. Section 73(1) of the Act states: 73(1) Any loss, computed in respect of a speculation business carried on by the assessee, shall not be set off except against pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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