TMI Blog2002 (9) TMI 253X X X X Extracts X X X X X X X X Extracts X X X X ..... 1997-98 on 25-11-1997 declaring a loss of Rs. 65,79,600. This case was selected for scrutiny and, accordingly, the Assessing Officer completed the assessment under section 143(3) vide order dated 28-2-2000. The Assessing Officer computed the speculation loss at Rs. 69,20,855. The assessee had suffered loss mainly on account of purchase and sale of shares. Dividend income of Rs. 3,41,257 was also received by the assessee in the preceding year. The Assessing Officer considering the fact that the loss suffered by the assessee was mainly on account of purchase and sale of shares, invoked Explanation to section 73 of the Act and assessed speculation loss at Rs. 69,20,855 which was allowed to be carried forward and set off against speculation pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity of Explanation to section 73, the loss suffered by the assessee in dealing of shares is also to be taken into account in ascertaining as to whether the assessee's gross total income consists mainly from granting of loans and advances. It was pointed out that the assessee has substantial loss on account of trading in shares and has income of Rs. 3,41,257 only from dividends. It was, accordingly, pleaded that the decision of the CIT(A) may be reversed and that of the Assessing Officer restored. 5. The learned counsel for the assessee, on the other hand, sought to support the order of the CIT(A). My attention was also invited to the decision of the Supreme Court in the case of CIT v. Distributors (Baroda) (P.) Ltd [1972] 83 ITR 377, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess 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 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 deemed to be carrying on a speculation business to the extent to which the business consists of the purchase and sale of such shares." 6. It is pertinent to mention that prior to 1-4-1988, the Explanation was applicable to companies other than investment company, as defined in clause (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness of which is of granting of loans and advances. In order to determine as to whether the company falls within the excluded category under Explanation to section 73, it will be relevant to find out the gross total income of the assessee. Gross total income is defined under section 80(B) which reads as under: "(5)'gross total income' means the total income computed in accordance with the provisions of this Act, before making any deduction under this Chapter." The learned counsel for the assessee as pointed out earlier contended that the above definition is applicable for the limited purpose of Chapter VIA. In my view, since the gross total income is not defined anywhere in the Act, therefore, the definition under section 80B would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation to section 73. As per P/L Account, the business loss is disclosed at Rs. 65,82,698. This is after adjustment of dividend income of Rs. 3,41,257. Penalty of Rs. 1,600 and ITAT fee of Rs. 1,500 has been adjusted as disallowable and the net loss disclosed in the return of income is Rs. 65,79,600. No deduction under Chapter VIA has been claimed. Therefore, the gross total income of the assessee is loss of Rs. 65,79,600. The loss on sale of shares is Rs. 69,20,855. In the case of Eastern Aviation Industries Ltd. v. CIT [1994] 208 ITR 1023, their Lordships of the Calcutta High Court have held that the words "income or profits and gains' should be understood as including losses also in so far as profits and gains represent positive income, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 79413 Previous year Rs. 39,122) 3,41,257 Interest (Gross) (Tax deducted at source Rs. 100 Previous year Rs. 101) 11,880 Closing stock of shares 52,90,396 56,43,533 Expenditure Opening stock of shares 36,47,903 Purchase of shares 16,43,434 Other expenses 69,34,894 --------- 1,22,26,231 ------------ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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