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TMI Blog1988 (10) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... ure and has to be allowed as Short Term Capital Loss. Though we find that the assessee has taken several grounds of appeal in an argumentative manner, this is the only grievance of the assessee. 3. The assessee has income form securities, house property as well as share dealing. He is also a partner in the firm known a M/s H.T. Nanavati whose business is dealing in shares. The assessee disclosed short-term capital loss of Rs. 17,850 on the sale of shares. The ITO found that the assessee had incurred this loss on sale of shares of three companies. These shares were acquired during the year and sold within few days at a loss. The ITO asked the assessee to produce evidence that the assessee actually got delivery of the shares from the seller ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would have entitled to capital loss. In fact it is rather strange that in one of the cases the final call money was paid prior to the allotment of the share by the limited company. It is also seen that the transactions were entered into by the firm in which the appellant is a partner. As the cash book of the said firm has not been produced to certify that the investment was not speculation, it has got to be accepted that the entire transaction may be an after-thought of the appellant. This has been done in order to deflate the income of the appellant. Thus the entire transaction was speculation. In my opinion the ITO has rightly disallowed the loss of Rs. 17,850 in the case of the appellant." The assessee, aggrieved by the above order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ridhi Holding & Traders Ltd., they cannot be termed as speculative activity. The assessee made an application for purchase of 500 shares and for this purpose paid Rs. 5 per share by cheques and thereafter these shares were allotted to the assessee by the companies. The 1st and Final Call Money/ Allotment money on these shares was also paid by the assessee by cheques. Therefore, after the allotment of these shares in the name of the assessee there is no settlement at all and the transaction cannot be considered as a speculative transaction. As regards the third transaction with regard to 100 shares of Gujarat State Fertilisers Company Ltd., he submitted that the assessee paid the amount by cheque through broker. There was no allotment of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the assessee has preferred to purchase a loss, and therefore the assessee would not be entitled to set off this loss. 7. We have considered the rival submissions, From the details of loss on shares given by the assessee mentioned above, it is clear that the acquisition of 500 shares each in DMR Trading & Investments Ltd., and Ridhi Holdings and Traders Ltd., is not at all a speculative transaction at all. The assessee has acquired these shares after making proper application and after making payment of the application money of Rs. 5 per share by cheque and it is only thereafter these shares were allotted to the assessee. At the time of allotment, the assessee has paid first and final call money/allotment money of Rs. 5 per share agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 28 clearly shows that in order to constitute "speculative business" within the terms of the Explanation, a single transaction would not be sufficient. There was nothing on record to show that it was a systematic or organised course of activity or conduct on the part of the assessee company and not to fulfil its contracts and to settle the same with the other parties thereto, with the result that even according to ordinary notions and common sense principles, it could not be said that a transaction of the nature of the transaction in the present case amounts to "speculation business." Therefore, In any event the transaction in this case did not amount to speculation business for the purpose of Expln. 2 to s. 28 and therefore, s. 73(1) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed set-off of the loss in this transaction against its other income. But, as there was no actual delivery of the goods, the ITO as well as the AAC held that the transaction was a speculative transaction and the loss should be regarded as a speculative loss. On appeal, the Tribunal accepted the contention of the assessee and held that though the transaction was a speculative transaction, the loss was not speculative." 11. Therefore, respectfully following the said decision, we are of the opinion that even if it is a speculative transaction, it is not a speculative business of the assessee in view of the provisions of s. 28 of Expln. 2 to s. 28, and provisions of s. 73(1) are not attracted. We are therefore, of the opinion that the le ..... X X X X Extracts X X X X X X X X Extracts X X X X
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