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TMI Blog2018 (9) TMI 2104X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer to consider the applicability of Explanation to section 73 of the Act so as to consider the deemed speculation loss from trading of shares amounting to Rs.35,95,624/- and disallowing set off of deemed speculation loss from trading of shares out of the business income of the assessee amounting to Rs.13,57,647/-. 3. The Ld. AR submitted that during the course of hearing , it was conveyed that revision proceedings under section 263 was initiated based on the recommendations of the Assessing Officer. It was submitted that since the Commissioner of Income tax had initiated action on the proposal by the Assessing Officer, the initiation was not in accordance with section 263(1) of the Act. The Ld. AR relied on the decision of 1TAT Mumbai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this purpose, the Ld. AR relied on the decision of 1TAT, Mumbai bench in the case of Fiduciary Shares & Stock Private Ltd vs ACIT (159 1TD 554) . Thus, according to the Ld. AR, there was no error in the assessment since assessing authority had taken one of the possible views and hence, the action under section 263 was not warranted. 3.3 The Ld. AR submitted that it is settled law that it is always open to the CIT under the provisions of section 263 to make a detailed enquiry with regard to any issue that may seem doubtful, but while passing the order under section 263, he has to make a clear and firm decision that the order passed by the Assessing Officer is either erroneous or is prejudicial to the interests of the Revenue but neither ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce (No. 2) Act, 2014 which is applicable form assessment year 2015-16, the assessee cannot be granted set off of deemed speculation loss from trading of shares out of the business income of the assessee. The contention of the Ld. AR is that insertion of the amendment in Explanation to section 73 of the Act by the Finance (No. 2) Act, 2014 is curative and classificatory in nature. Therefore, the loss incurred in trading of shares by the assessee shall not be treated as deemed speculation loss and it is a normal business loss. Hence, the same could be adjusted with the business income of the assessee. We find force in this argument of the Ld. AR as this issue was considered by the ITAT, Mumbai Bench in the case of Fiduciary Shares & Stocks Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01-04-1977, which were delivery based, were not treated as speculative transactions and hence the loss arising from such transactions was allowed to be adjusted against the income of the year under consideration. After the insertion of Explanation to section 73 of the Act, companies other than investment companies or finance companies carrying on business of purchase and sale of shares, then the loss from such business would be treated as speculation business loss. Therefore, by virtue of the insertion of Explanation to section 73 of the Act, if companies whose principal business is of purchase and sale of shares suffer losses from share trading, then such loss from share trading is to be treated as speculative business loss. The intent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 73 of the Act by the Finance (No. 2) Act. 2014, is curative and classificatory in nature. If the amendment is applied prospectively from assessment year 2015-16, a piquant situation would arise that an assessee who has earned profit from purchase and sale of shares in assessment year 2015-16 would be treated as normal business profit and not speculation business profit in view of the exception carried out by the amendment in Explanation to section 73 of the Act. In these circumstances, speculation business loss incurred by trading in shares in earlier years will not be allowed to be setoff against such profit from purchase and sale of shares to such companies in assessment year 2015-16. For this reason also, the amendment inserted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to this view, we take support from the judgment of the Supreme Court in the case of CIT vs. Alom Extrusions Ltd. (319 ITR 306) wherein Their Lordships were considering the amendment made by the Finance Act, 2003 by omitting the second proviso to section 43B of the Act w.e.f. 01/04/2004 and bringing about uniformity in the first proviso by equating tax, duty cess and fees with contribution to welfare funds viz. Provident Fund, etc. The Supreme Court held that the aforesaid amendment in section 43B of the Act by Finance Act, 2003 is curative in nature and would therefore apply retrospectively w.e.f. 01/04/1988. 5.2 In the present case, the principle business of the assessee is trading in shares. Hence, deemed speculative loss from trading ..... X X X X Extracts X X X X X X X X Extracts X X X X
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