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| The Tax Publishers2020 TaxPub(DT) 2092 (Kol-Trib) : (2020) 180 ITD 0001 INCOME TAX ACT, 1961
Section 73, Expln.
Assessee-company had treated entire activity of purchase and sale of shares, which comprised of both delivery based and non-delivery based trading as one composite business and accordingly claimed set off of loss incurred in delivery based trading against profit derived from derivative trading. As per settled position aggregation of share trading loss and profit form derivatives transaction was to be done before application of Explanation to section 73 and since there was surplus profit on such aggregation, explanation to section 73 was not applicable.
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Loss - Speculation loss - Applicability of Expln. to section 73 - Assessee treated entire activity of purchase and sale of shares, which comprised of both delivery based and non-delivery based trading as one composite business --- There was surplus profit on such aggregation
Assessee-company mainly engaged in dealing in shares and securities on behalf of the clients, i.e., broking activities and also involved in hedging and arbitrage business incurred loss in dealing in shares amounting to Rs. 1.71 crores which was claimed as regular business in respect of delivery based transactions. AO noticed that assessee had no income other than under the head income from business and profession. AO, therefore, treated the above loss in respect of delivery based transactions of purchase and sale of shares as speculation loss as envisaged under Expln. to section 73 and accordingly, made disallowance. Held: Assessee-company had treated entire activity of purchase and sale of shares, which comprised of both delivery based and non-delivery based trading as one composite business and accordingly claimed set off of the loss incurred in delivery based trading against profit derived from derivative trading. As per settled position aggregation of share trading loss and profit form derivatives transaction was to be done before application of Explanation to section 73 and since there was surplus profit on such aggregation, Explanation to section 73 was not applicable.
DistinguishedPaharpur Cooling Tower Ltd. v. CIT (2011) 198 Taxman 83 (Cal.) : 2011 TaxPub(DT) 1370 (Cal-Trib) and SPFL Securities Ltd. v. Dy. CIT (2006) 6 SOT 562 (Del-Trib) : 2006 TaxPub(DT) 767 (Del-Trib).
REFERRED : Paharpur Cooling Tower Ltd. v. CIT (2011) 198 Taxman 83 (Cal.) : 2011 TaxPub(DT) 1370 (Cal-Trib); Lohia Securities Ltd. v. Dy. CIT (2016) 157 ITD 265 (Kol.-Trib.) : 2015 TaxPub(DT) 5235 (Kol-Trib); SPFL Securities Ltd. v. Dy. CIT (2006) 6 SOT 562 (Delhi) : 2006 TaxPub(DT) 0767 (Del-Trib); BLK Securities (P.) Ltd. v. ITO (2009) 27 SOT 142 (Delhi) : 2009 TaxPub(DT) 0999 (Del-Trib); Somani Stock Broking (P.) Ltd. v. ACIT [IT Appeal No. 1914 (Kol.) of 2004]; CIT v. DLF Commercial Developers Ltd. (2013) 218 Taxman 45 (Delhi) : 2013 TaxPub(DT) 2199 (Del-HC); Dy. CIT v. Baljit Securities(P.) Ltd. (2015) 68 SOT 82 (Kol.-Trib.) (URO); Asstt. CIT v. Concord Commercials (P.) Ltd. (2005) 95 ITD 117 (Mum.) (SB) : 2005 TaxPub(DT) 1278 (Mum-Trib)
FAVOUR : In assessee's favour.
A.Y. : 2009-10
IN THE ITAT, KOLKATA 'D' BENCH (THIRD MEMBER)
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