Bhavpujya Securities Pvt. Ltd., Ahmedabad V. The ACIT, Circle-3, Ahmedabad

ITA 1713/AHD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9746 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 30-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 12-06-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VILAS V SHINDE
• Assessee Lawyers: S N DIVATIA
• Keywords: Principle of natural justice; Speculation loss; Capital expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE S/SHRI RAJPAL YADAV, JM, & MANISH BORAD, AM. ITA NO.1713/AHD/2015 ASST. YEAR: 2009-10 BHAVPUJYA SECURITIES PVT. LTD., 59, KAMDHENU COMPLEX, PANJRAPOLE, AHMEDABAD. VS. ACIT, CIRCLE-3, AHMEDABAD. APPELLANT RESPONDENT PAN AAACB 6215D APPELLANT BY S. N. DIVATIA, AR RESPONDENT BY VILAS V. SHINDE, DR DATE OF HEARING: 30/11/2015 DATE OF PRONOUNCEMENT: 27/01/2016 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER. THIS APPEAL OF ASSESSEE IS DIRECTED AGAINST THE OR DER OF CIT(A)- 10, AHMEDABAD, DATED 27.03.2015 IN APPEAL NO.CIT(A) - 10/ACIT/CIRCLE-1(3)/85/14-15 FOR ASST. YEAR 2009-10 . ASSESSMENT WAS FRAMED U/S 143(3) OF THE INCOME-TAX ACT. 1961, (HEREINAFTER THE ACT) ON 11.11.2011 BY ACIT, CIRCLE-1(3), AHMEDABAD. GROUNDS OF APPEAL RAISED BY ASSESSEE ARE AS UNDER :- 1.1 THE ORDER PASSED U/S 250 ON 27/03/2015 FOR AY 2 009-10 BY CIT(A)-10, ABAD UPHOLDING THE DISALLOWANCE OF RS.14 ,93,823/- OF LOSS FROM PURCHASE & SALE OF SHARES AS SPECULATI ON LOSS MADE BY AO IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. ITA NO. 1713/AHD/2015 ASST. YEAR 2009-10 2 1.2 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE SUBMISSIONS MADE AND EVIDENCE PRODUCED BY THE APPELLANT WITH REGARD TO T HE IMPUGNED ADDITIONS. 2.1 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN CONFIRMING THAT THE CASE OF THE APPELLANT IS NOT CO VERED BY THE EXPLANATION TO PROVISION OF SECTION 73. 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) OUGHT NOT TO HAVE UPHELD THE SE T OFF OF LOSS ON PURCHASE & SALE OF SHARES AS SPECULATIVE LOSS AP PLYING THE PROVISIONS OF SECTION 73 OF THE ACT. 2.3 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) OUGHT TO HAVE ALLOWED THE LOSS ON SALE OF PURCHASE & SALE OF SHARES APPLYING THE EXPLANATION TO THE PROVISIONS O F SEC.73 OF THE ACT. IT IS, THEREFORE, PRAYED THAT THE DISALLOWANCE OF RS.14,93,823/- UPHELD BY THE CIT(A) MAY KINDLY BE DELETED. 2. THE ASSESSEE HAS RAISED VARIOUS GROUNDS BUT THE SOLITARY GRIEVANCE REVOLVES AGAINST THE DECISION OF LD. CIT( A) IN UPHOLDING THE DISALLOWANCE OF RS.14,93,823/- ON LOSS FROM PURCHA SE AND SALE OF SHARES BY TREATING IT AS SPECULATION LOSS AS ASSESS ED BY ASSESSING OFFICER AND NOT COVERING THE CASE OF THE APPLICANT WITHIN THE EXPLANATION TO THE PROVISIONS OF SECTION 73 OF THE I.T. ACT, 1961. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY WHICH FILED ITS RETURN OF INCOME FOR ASST. YEAR 2009-10 ON 19/08/2009 DECLARING LOSS OF RS.8,80,969/-. THE CAS E WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE U/S 143(2) OF TH E ACT WAS ISSUED ON 27.08.2010 AND SERVED UPON THE ASSESSEE. ASSESSI NG OFFICER ITA NO. 1713/AHD/2015 ASST. YEAR 2009-10 3 WHILE GOING THROUGH THE COMPUTATION OF INCOME AND F INANCIAL STATEMENT DURING ASSESSMENT PROCEEDINGS NOTICED THA T ASSESSEE HAS SHOWN LOSS ON TRADING OF SHARES OF RS.14,93,823/- A ND INCOME FROM BROKERAGE AT RS.1,77,164/- AND INTEREST ON LOANS AN D ADVANCES AT RS.9,53,119/-. ASSESSING OFFICER FRAMED ASSESSMENT ORDER BY TREATING THE LOSS ON TRADING OF SHARES AS SPECULATI ON LOSS WHICH COULD BE SET OFF ONLY AGAINST SPECULATION INCOME FOR THE VERY REASON THAT AS PER HIS OBSERVATION ASSESSEE WAS NOT FALLING UNDER THE PROVISIONS OF EXPLANATION TO SECTION 73 OF THE ACT. 4. AGGRIEVED, ASSESSEE WENT IN APPEAL BEFORE THE CI T(A) WHO HAS CONFIRMED THE ADDITION BY OBSERVING AS UNDER :- 4. I HAVE PERUSED THE ASSESSMENT ORDER AND SUBMISS ION OF THE APPELLANT. I HAVE PERUSED THE CASE LAWS RELIED UPON BY THE APPELLANT. AFTER CONSIDERING FACTS OF THE CASE, AND CONTENTION S OF THE APPELLANT AND THE AO, THE ONLY POINT OF DETERMINATION REGARDI NG DISALLOWANCE OF LOSS OF RS.14,93,823/- INCURRED ON SALE AND PURCHAS E OF SHARES AND TREATING THE SAME AS SPECULATION LOSS IS ADJUDICATE D AS FOLLOWS. IN THIS CASE, THE AO DISALLOWED LOSS OF RS.14,93,8 23/- INCURRED ON SALE AND PURCHASE OF SHARES. THE AO HELD THAT TH E CASE OF THE APPELLANT WAS NOT COVERED BY EXCEPTIONS PROVIDED IN EXPLANATION TO SECTION 73 OF THE ACT. HENCE THE LOSS OF RS.14,93,, 823/- WAS TO BE TREATED AS SPECULATION LOSS TO BE SET OFF AGAINST P ROFITS AND GAINS OF SPECULATION BUSINESS. SINCE THE APPELLANT DID NOT H AVE PROFITS & GAINS FROM SPECULATION BUSINESS DURING THE YEAR UNDER CON SIDERATION THE LOSS OF RS.14,93,823/- WAS DISALLOWED WITH THE PERM ISSION TO CARRY IT FORWARD TO NEXT YEAR. DURING APPEAL PROCEEDINGS, THE MAIN CONTENTION OF THE APPELLANT WAS THAT ITS PRINCIPAL BUSINESS WAS THAT OF GRANTING LOANS AND ADVANCES. AS PER THE APPELLANT, THIS WAS EVIDEN CED BY THE FACT THAT INCOME FROM INTEREST ON LOANS AND ADVANCES WAS MORE THAN ITA NO. 1713/AHD/2015 ASST. YEAR 2009-10 4 INCOME FROM OTHER ACTIVITIES. FURTHER, THE CAPITAL EMPLOYED IN THE BUSINESS OF LOANS AND ADVANCES WAS 54.88% WHICH WAS MORE THAN THE CAPITAL EMPLOYED IN ANY OTHER BUSINESS. BASED O N THIS, THE APPELLANT CONTENDED THAT ITS CASE WAS COVERED BY ON E OF THE TWO EXCEPTIONS PROVIDED BY EXPLANATION TO SECTION 73 I. E. BUSINESS OF THE APPELLANT WAS GRANTING LOANS AND ADVANCES. HENCE TH E LOSS OF RS.14,93,823/- WAS NOT TO BE TREATED AS SPECULATION LOSS : EXPLANATION TO SC.73 OF THE ACT READS AS FOLLOWS : [EXPLANATION.WHERE ANY PART OF THE BUSINESS OF A C OMPANY ( [OTHER THAN A COMPANY WHOSE GROSS TOTAL INCOME CONSISTS MAINLY OF INCOME WHICH IS CHARGEABLE UNDER THE HEADS INTEREST ON SECURITIES, INCOME F ROM 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 SHAR ES OF OTHER COMPANIES, SUCH COMPANY SHALL, FOR THE PURPOSES OF THIS SECTION, BE DEEMED TO BE CARRYING ON A SPECULATION BUSINESS 44 TO THE EXTENT TO WHICH THE BUSINESS CONSISTS OF TH E PURCHASE AND SALE OF SUCH SHARES.] AFTER CONSIDERING RIVAL SUBMISSIONS, I AM INCLINED TO AGREE WITH THE AO THAT THE CASE OF THE APPELLANT IS NOT COVERED BY THE EXCEPTIONS PROVIDED BY EXPLANATION TO SEC.73 OF THE ACT DUE TO THE FOLLOWING REASONS :- I) FIRST AND FOREMOST AS PER MEMORANDUM OF ASSOCIAT ION AND ARTICLES OF ASSOCIATION COPY OF WHICH WAS FURNISHED DURING APPEAL PROCEEDINGS, THE MAIN OBJECTS OF THE COMPANY ARE TO DEAL IN SHARES, STOCKS, BONDS, ETC., TO PROVIDE PAC KAGE OF INVESTMENT SERVICES AND TO RENDER PROFOLIO MANAGEME NT SERVICES TO GRANT LOANS AND ADVANCES IS NOT INCLUDED IN THE MAIN OBJECTS OF THE COMPANY. TO LEND AND ADVANCE MONEY OR GIVE C REDIT IS MENTIONED ONLY AT SL.NO.15 IN OBJECTS INCIDENTAL OR ANCILLARY. FURTHER UNDER OTHER OBJECTS SL.NO.35 MENTIONS THE O BJECT AS TO CARRY ON AND UNDERTAKE THE BUSINESS OF FINANCE AND TRADING. THUS GRANTING OF LOANS AND ADVANCING IS AT BEST AN ANCILLARY OR INCIDENTAL OBJECT AND NOT THE MAIN OBJECT OF THE CO MPANY. ITA NO. 1713/AHD/2015 ASST. YEAR 2009-10 5 HENCE, GRANTING LOANS AND ADVANCES IS NOT THE PRINC IPAL BUSINESS OF THE APPELLANT. II) THE SALES TURNOVER OF SHARES DURING THE YEARS W AS APPROXIMATELY RS.1.07 CRORES WHILE THE PURCHASE TUR NOVER OF SHARES WAS APPROXIMATELY RS.1.27 CRORES. THE TOTAL OUTSTANDING AS ON 31.3.09 UNDER LOANS & ADVANCES WAS APPROXIMAT ELY RS.103 CRORES. THE OUTSTANDING UNDER THIS HEAD AS O N 31.03.2008 WAS APPROXIMATELY RS.1.14 CRORES. THIS S HOWS THAT NO NEW LOANS WERE ADVANCED DURING THE YEAR CONSIDER ATION INFACT, THE LOANS HAVE BEEN RECEIVED BACK. IN ABSOL UTE TERMS, THE LOANS TURNOVER AT RS.1.03 CRORES IS MUCH LESS T HAN THE COMBINED SALES & PURCHASES TURNOVER OF SHARES AT RS .2.34 CRORES. THIS AMPLY PROVES THAT THE GRANTING LOANS A ND ADVANCES IS NOT THE MAIN OR PRINCIPAL ACTIVITY OF THE APPELL ANT. THE APPELLANT RELIED ON SEVERAL JUDGMENTS IN SUPPOR T OF ITS CONTENTION. THE SAME ARE DISCUSSED BELOW 1) JUDGMENT OF HONBLE ITAT, AHMEDABAD IN PUNJAB LE ASE FINANCING LTD. VS. ITO 119 TTJ 395 (AHD) THE RATIO OF THE ABOVE JUDGMENT IS NOT APPLICABLE T O THE PRESENT CASE SINCE AS THE FACTS ARE DIFFERENT. THE ASSESSEE IN THE ABOVE CASE IS A NON-BANKING FINANCIAL COMPAN Y. THE APPELLANT IN THE PRESENT CASE DEALS IN SALE AND PUR CHASE OF SHARES AND SECURITIES. 2) JUDGMENT OF HONBLE ITAT, KOLKATA IN DCIT VS. VENKATESHWAR INVESTMENT & FINANCE PVT. LTD. 92 TTJ 1129 (SB) AGAIN THE FACTS OF THIS CASE ARE DIFFERENT SINCE IN THIS CASE THE ASSESSEE HAD STARTED THE BUSINESS OF SHARES FOR THE FIRST TIME DURING THE YEAR UNDER CONSIDERATION. IN EARLIE R YEARS, THE ASSESSEE WAS PURELY INTO BUSINESS OF MONEY LENDING AND LEASING. IN VIEW OF THIS, THE RATIO OF JUDGMENT OF THIS CASE IS NOT APPLICABLE TO THE PRESENT CASE. 3) JUDGMENT OF HONBLE ITAT, DELHI IN ITO VS. BIJAL PAPER TRADERS & INVESTMENTS LTD. (2010) 38 SOT 378 (DEL). ITA NO. 1713/AHD/2015 ASST. YEAR 2009-10 6 IN THIS CASE THE APPELLANT WAS INTO BUSINESS OF TRA DING IN PAPER, SHARES, FINANCING AND REAL ESTATE. THE APPEL LANT IN THE PRESENT CASE DEALS IN SHARES AND SECURITIES. FACTS BEING DIFFERENT THE RATIO OF THE JUDGMENT IN THE ABOVE CA SE IS NOT APPLICABLE TO THE PRESENT CASE. IN VIEW OF DISCUSSION ABOVE, I HOLD THAT THE AO WAS JUSTIFIED IN HOLDING THAT THE CASE OF THE APPELLANT IS NOT COVER ED BY EXCEPTIONS PROVIDED IN EXPLANATION TO SEC.73. THEREFORE, I HOL D THAT THE AO WAS JUSTIFIED IN TREATING LOSS OF RS.14,93,823/- AS SPE CULATION LOSS AND DISALLOWING THE SAME. ACCORDINGLY, THE ADDITION OF RS.14,93,823/- IS UPHELD AND THE SAME IS CONFIRMED. THIS GROUND OF AP PEAL IS DISMISSED. 5. AGGRIEVED, THE ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL. 6. THE LD. AR SUBMITTED THAT PRINCIPAL ACTIVITY OF THE ASSESSEE COMPANY IS GRANTING LOANS AND ADVANCES AND ALSO REF ERRED TO THE DETAILS SHOWING PERCENTAGE OF LOANS AND ADVANCES GR ANTED DURING THE LAST FOUR YEARS AND ALSO SUBMITTED THAT DURING THE YEAR UNDER APPEAL THE ASSESSEE COMPANY HAD GRANTED LOANS AND ADVANCES TO THE TUNE OF RS.1,02,72,219/- WHICH IS 54.83% OF THE TOTAL CA PITAL EMPLOYED AND, THEREFORE, AS THE ASSESSEES PRINCIPAL BUSINES S IS MONEY LENDING THE CASE OF THE ASSESSEE WILL FALL IN THE EXPLANATI ON TO SECTION 73 OF THE ACT AND LOSS FROM TRADING OF SHARES SHOULD NOT BE TREATED AS SPECULATION LOSS. 7. ON THE OTHER HAND, LD. DR SUPPORTED THE ORDERS O F LOWER AUTHORITIES. ITA NO. 1713/AHD/2015 ASST. YEAR 2009-10 7 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. TO EXAMINE THE ASPECT THAT WHETHER ASSES SEE IS COVERED IN THE EXPLANATION TO SECTION 73 OF THE ACT LET US GO THROUGH THE PROVISIONS OF SECTION 73 OF THE ACT FOR DEALING THE ISSUE. SEC. 73. (1) ANY LOSS, COMPUTED IN RESPECT OF A SPECULATION BUSINESS CARRIED ON BY THE ASSESSEE, SHALL NOT BE SET OFF EXCEPT AGAINST PROFI TS AND GAINS, IF ANY, OF ANOTHER SPECULATION BUSINESS. (2) WHERE FOR ANY ASSESSMENT YEAR ANY LOSS COMPUTED IN RESPECT OF A SPECULATION BUSINESS HAS NOT BEEN WHOLLY SET OFF UNDER SUB-SECTION (1), SO MUCH OF THE LOSS AS IS NOT SO SET OFF OR THE WHOLE LOSS WHERE THE ASSESSEE HAD NO INCOME FROM ANY OTHER SPECULATION BUSINESS, SHALL, SUBJECT TO THE OTHER PROVISIONS OF THIS CHAP TER, BE CARRIED FORWARD TO THE FOLLOWING ASSESSMENT YEAR, AND ( I ) IT SHALL BE SET OFF AGAINST THE PROFITS AND GAINS , IF ANY, OF ANY SPECULATION BUSINESS CARRIED ON BY HIM ASSESSABLE FOR THAT ASSESSMENT YE AR; AND ( II ) IF THE LOSS CANNOT BE WHOLLY SO SET OFF, THE AMOU NT OF LOSS NOT SO SET OFF SHALL BE CARRIED FORWARD TO THE FOLLOWING ASSESSMENT YEAR AN D SO ON. (3) IN RESPECT OF ALLOWANCE ON ACCOUNT OF DEPRECIAT ION OR CAPITAL EXPENDITURE ON SCIENTIFIC RESEARCH, THE PROVISIONS OF SUB-SECTION (2) OF SECTION 72 SHALL APPLY IN RELATION TO SPECULATION BUSINESS AS THEY APPLY IN RELATION TO A NY OTHER BUSINESS. (4) NO LOSS SHALL BE CARRIED FORWARD UNDER THIS SEC TION FOR MORE THAN [FOUR] ASSESSMENT YEARS IMMEDIATELY SUCCEEDING THE ASSESSMENT YEAR FO R WHICH THE LOSS WAS FIRST COMPUTED. [ EXPLANATION. WHERE ANY PART OF THE BUSINESS OF A COMPANY ([OTHE R THAN A COMPANY WHOSE GROSS TOTAL INCOME CONSISTS MAINLY OF INCOME WHICH IS CHARGEABLE UNDER THE HEADS INTEREST ON SECURITIES, INCOME FROM HOUSE PROPER TY, 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.] 9. FROM THE PERUSAL OF THE EXPLANATION TO SECTION 7 3 THE CONDITIONS IN WHICH THE COMPANY WILL GET BENEFIT UNDER THE PRO VISIONS SHOULD EITHER BE ONE OF THE FOLLOWING :- (A) GROSS TOTAL INCOME OF THE COMPANY CONSISTS MAIN LY ON INCOME WHICH IS CHARGEABLE UNDER THE HEAD INTEREST ON SECU RITIES, ITA NO. 1713/AHD/2015 ASST. YEAR 2009-10 8 INCOME FROM HOUSE PROPERTY, CAPITAL GAINS AND INCOM E FROM OTHER SOURCES. (B) PRINCIPAL BUSINESS OF THE COMPANY IS THE BUSINE SS OF BANKING OR THE GRANTING OF LOANS AND ADVANCES. 10. IF THE BUSINESS OF THE COMPANY FULFILLS ANY ONE OF THE CONDITIONS MENTIONED ABOVE THEN THE BUSINESS OF PURCHASE AND S ALE OF SHARES SHALL NOT BE TREATED AS A SPECULATION BUSINESS. LET US EXAMINE THE FACTS OF THE CASE OF ASSESSEE IN THE LIGHT OF ABOVE CONDITIONS. (A) IN THE COMPUTATION OF INCOME ASSESSEE IS HAVING INCOME UNDER TWO HEADS, FIRST UNDER PROFITS AND GAINS OF BUSINES S SHOWING A LOSS OF RS.18,34,088/- AND INTEREST INCOME OF RS. 9,53,119 /- WHICH CERTAINLY SHOWS THAT GROSS TOTAL INCOME OF THE ASSESSEE MAINL Y CONSISTS OF INCOME FROM PROFITS AND GAINS FROM BUSINESS AS A FI GURE OF LOSS IS OF RS.18,34,088/-. THEREFORE, ASSESSEE COMPANY DOES NO T FULFILL THE CONDITION NO.1 AS MENTIONED ABOVE. (B) THE SECOND CONDITION REFERS TO THE PRINCIPAL BU SINESS RUN BY ASSESSEE. ON EXAMINATION OF MEMORANDUM OF ASSOCIATI ON THE MAIN OBJECT OF THE COMPANY TO BE PERSUED ON ITS INCORPOR ATION (A) THE MAIN OBJECTS OF THE COMPANY TO BE PURSUED O N ITS INCORPORATION ARE 1. TO DEAL AS PRINCIPAL AND/OR AGENTS IN SHARES, ST OCKS, BONDS, SECURITIES, UNITS, DEBENTURES, FIXED DEPOSITS AND FINANCIAL INS TRUMENTS AND TO CARRY ON THE BUSINESS AS SHARE AND STOCK BROKERS. 2. TO PROVIDE A PACKAGE OF INVESTMENT/MERCHANT BANK ING SERVICES BY ACTING AS MANAGERS, BROKERS AND/OR ADVISORS TO PUBLIC/RIGH T ISSUE OR PRIVATE PLACEMENT OR SALES OF SECURITIES AND TO ACT AS ISSU E HOUSE/REGISTRAR UNDERWRITERS AND SUB-UNDERWRITERS AND TRANSFER AGEN TS AND TO RENDER SERVICES FOR MOBILIZATION OF RESOURCES BY WAY OF SH ARES, DEBENTURES, BONDS, DEPOSIT SCHEMES AND LOAN SYNDICATION. ITA NO. 1713/AHD/2015 ASST. YEAR 2009-10 9 3. TO RENDER PORTFOLIO MANAGEMENT SERVICE BY INVEST MENT IN SHARES, DEBENTURES, STOCKS, DEBENTURE-STOCKS, BONDS, COMPAN Y DEPOSITS, GOVERNMENT SECURITIES, GOVERNMENT LOANS, NATIONAL S AVINGS AND POST OFFICE SAVINGS SCHEMES. UNITS AND TO PASS ON THE BE NEFIT OF PORTFOLIO INVESTMENT TO INVESTORS AND DIVIDEND, INTEREST, BON US. FROM GOING THROUGH THE MAIN OBJECTS OF THE COMPANY WE FIND THAT ASSESSEES MAIN BUSINESS IS OF DEALING IN SHARES, S TOCKS, BONDS ETC. WHEREAS UNDER HEAD OF OBJECTS INCIDENTAL OR ANCILLA RY TO THE MAIN OBJECT THERE ARE 41 TYPES OF ACTIVITIES AND SIMILAR LY UNDER THE HEAD OF OTHER OBJECTS THERE ARE 43 TYPES OF ACTIVITIES WHIC H CAN BE CARRIED ON BY THE ASSESSEE. 11. LD. AR REFERRED TO ITEM NO.15 OF PART-B OF MEMO RANDUM OF ASSOCIATION AS WELL AS ACTIVITIES MENTIONED AT POIN T NO.35 UNDER THE HEAD OTHER OBJECTS OF THE MEMORANDUM OF ASSOCIATION WHEREIN THE COMPANY CAN DO THE ACTIVITIES OF LOANS AND ADVANCES . 12. IN OUR VIEW THE SECOND CONDITION OF THE EXPLANA TION TO SECTION 73 REFERS TO THE PRINCIPAL BUSINESS WHICH IS CARRIE D ON BY THE ASSESSEE AND IN THE CASE UNDER APPEAL THE PRINCIPAL BUSINESS OF THE ASSESSEE IS OF PURCHASE AND SALE OF SHARES AND THE BUSINESS OF EARNING INTEREST ON LOANS AND ADVANCES IS COVERED U NDER THE ANCILLARY AND OTHER OBJECTS AND MORE SO EVER IN THE COMPUTATI ON OF INCOME ASSESSEE IS SHOWING THE INTEREST INCOME UNDER THE H EAD INCOME FROM OTHER SOURCES AND NOT UNDER THE HEAD INCOME FROM BU SINESS OR PROFESSION BECAUSE ASSESSEE IS NOT RUNNING A NON-BA NKING FINANCIAL COMPANY (NBFC) NOR ITS MAIN OBJECT WAS OF FINANCE A ND EARNING OF INCOME FROM GIVING LOANS ELSE INTEREST INCOME FROM SUCH LOANS AND ITA NO. 1713/AHD/2015 ASST. YEAR 2009-10 10 ADVANCES SHOULD HAVE FIGURED UNDER THE HEAD PROFITS AND GAINS OF BUSINESS. THEREFORE, ASSESSEES BUSINESS DOES NOT F ULFILL THE CONDITION NO.2 OF EXPLANATION TO SEC.73 OF THE ACT. 13. FURTHER THERE HAS BEEN AN AMENDMENT MADE BY FIN ANCE ACT, 2015 W.E.F. 1.4.2015 WHERE AT THE PLACE OF PRINCIP AL BUSINESS FO WHICH IS BANKING HAS BEEN SUBSTITUTED BY PRINCIPAL BUSINESS OF WHICH THE BUSINESS IS OF TRADING IN SHARES OR BANKING. T HIS AMENDMENT ITSELF CONVEYS THAT BUSINESS OF TRADING IN SHARES W AS NOT INCLUDED IN THE EXPLANATION TO SEC.73 OF THE ACT AND ASSESSEES BUSINESS IS MAINLY OF TRADING IN SHARES AS REFLECTED FROM THE M AIN OBJECTS OF THE MEMORANDUM OF ASSOCIATION AND THE AUDITED FINANCIAL STATEMENTS. WE ARE, THEREFORE, OF THE VIEW THAT ASSESSEES BUSI NESS IS NOT COVERED UNDER THE EXPLANATION TO SECTION 73 OF THE ACT AND WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) AN D WE UPHOLD THE SAME. THE APPEAL OF ASSESSEE IS DISMISSED. 14. IN THE RESULT, THE APPEAL OF ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JANUARY, 2016 SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 27/01/2016 MAHATA/- ITA NO. 1713/AHD/2015 ASST. YEAR 2009-10 11 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: 22/01/2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 27/01/2016 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 27/1/2016 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: