Income Tax Officer Ward-4(4), Kolkata V. M/s Pawan Industrial Corporation Pvt. Ltd., Kolkata

ITA 2160/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4870 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 19-07-2013
• Court: TRIBUNAL
• Department Lawyers: RAJAT KR KUREEL
• Assessee Lawyers: S M SURANA
• Keywords: Business income; Depreciation; Earning of tax free income; Speculation loss; Revised return
• Section: 14A

Judgement Text

1 ITA NO.2160/KOL/2013-M/S.PAWAN INDUSTRIAL CORPORATI ON LTD.A.Y.2004-05 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B KOL KATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & SHRI M.B ALAGANESH, AM ] ITA NO.2160/KOL/2013 ASSESSMENT YEAR : 2004-05 I.T.O., WARD-4(4) , -VERSUS- M/S. PAWAN INDUSTRIAL CORPORATION KOLKATA PVT. LTD. KOLKATA (PAN:AABCP7803L) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI RAJAT KR.KUREEL, JCIT FOR THE RESPONDENT: SHRI S.M.SURANA, ADVOCATE DATE OF HEARING : 06.04.2016. DATE OF PRONOUNCEMENT : 11.05.2016. ORDER PER N.V.VASUDEVAN, JM: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 20.03 2013 OF CIT(A) IV, KOLKATA, RELATING TO AY 2004-05. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE READ S AS FOLLOWS: 1) THE LD C.I.T {APPEALS} IS NOT JUSTIFIED IN UPHO LDING THE CLAIM OF THE ASSESSEE IN TREATING INTEREST INCOME OF RS 33,87,126/- AS 'INCO ME FROM OTHER SOURCES' AND NOT 'INCOME FROM BUSINESS' THEREBY TAKING THE ASSESSEE OUT OF THE AMBIT OF EXPLANATION TO SECTION 73. 2} THE LD C.I.T {APPEALS} IS NOT JUSTIFIED IN TREAT ING SHARE TRADING LOSS NOT AS DEEMED SPECULATION U/S73 AND HAS ALLOWED THIS AMOUNT TO BE SET OFF AGAINST INCOME FROM OTHER SOURCES. 3} THE LD C.I.T {APPEALS} IS NOT JUSTIFIED IN ALLOW ING PROPORTIONATE EXPENSES OF RS 1,34,514/- RELATING TO SPECULATION EXPENSES. 3. THERE IS A DELAY OF 25 DAYS IN FILING THIS APPEA L WHICH IS EXPLAINED AS OWING TO ADMINISTRATIVE REASONS. THE EXPLANATION IS ACCEPTED AND THE DELAY IS CONDONED. THE ASSESSEE IS A COMPANY. IT IS ENGAGED IN THE BUSINE SS OF TRADING IN SHARES, GRANTING OF 2 ITA NO.2160/KOL/2013-M/S.PAWAN INDUSTRIAL CORPORATI ON LTD.A.Y.2004-05 LOANS AND ADVANCES. IT DERIVES INCOME FROM THE AFO RESAID BUSINESS BESIDES INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE A SSESSEE FILED RETURN OF INCOME FOR AY 2004-05 DECLARING INCOME OF RS.49,550/-. TH E COMPUTATION OF TOTAL INCOME FILED BY THE ASSESSEE IS AS FOLLOWS: BUSINESS INCOME PROFIT AS PER P/L A/C : RS.7,01,661/- ADD: INADMISSIBLE EXPENSES MISC EXP. FOR AUTHORISED SHARE CAPITAL : RS. 6, 000/- DEPRECIATION ON OFFICE SPACE : RS. 34,884/- OFFICE MAINTENANCE EXPENSES : RS. 5,068/- RS.7,47,613/- LESS: INCOME TAXABLE SEPARATELY RENT : RS.4,03,200/- RS.3,44,413/- LESS : EXEMPT INCOME DIVIDEND - 2,82,125 TAX FREE INTEREST -2,94,975 : RS.5,77,100/- INCOME FROM BUSINESS : (-) RS.2,32,687/- INCOME FROM HOUSE PROPERTY GROSS ANNUAL VALUE -4,03,200 LESS:DEDUCTION U/S 24(A) -1,20,960 : RS.2,82,240/- TOTAL INCOME : RS. 49,553/- 4. THE PROFIT AS PER PROFIT AND LOSS ACCOUNT WAS AR RIVED AT BY THE ASSESSEE AFTER CONSIDERING THE FOLLOWING ITEMS OF INCOME. SHARE TRADING INCOME (LOSS) : RS. 43,68,756 ( NEG ATIVE) INTEREST ON LOANS AND ADVANCES :RS.33,87.126 (POS ITIVE) OTHER INTERESTS & DIVIDEND :RS.15,35,222 (POSOIT IVE) INCOME FROM HOUSE PROPERTY : RS. 4,03,200 ( POSIT IVE) INCOME FROM CAPITAL GAIN : NIL INCOME FROM OTHER SOURCES : NIL ACCORDING TO THE A.O. THE ASSESSEE INCURRED LOSS IN SHARE TRADING WAS IN THE NATURE OF SPECULATION LOSS WITHIN THE MEANING OF EXPLANATION TO SEC.73 OF THE INCOME TAX ACT, 1961 (ACT) AND THEREFORE COULD NOT BE SET OFF AGAIN ST THE OTHER ITEMS OF INCOME 3 ITA NO.2160/KOL/2013-M/S.PAWAN INDUSTRIAL CORPORATI ON LTD.A.Y.2004-05 REFERRED TO ABOVE. THE A.O. ACCORDINGLY TREATED LO SS IN SHARE TRADING AMOUNTING TO RS. 43,68,756/- AS DEEMED SPECULATION LOSS. THE AO. FUR THER DISALLOWED A SUM OF RS. 1,34,514/- OUT OF TOTAL EXPENSES CLAIMED BY THE ASS ESSEE IN THE PROFIT AND LOSS ACCOUNT AS ATTRIBUTABLE TO SHARE TRADING BUSINESS AND ALSO DISALLOWED A SUM OF RS. 30,368/- U/S 14A OF THE INCOME-TAX ACT AGAINST EXEMPT DIVIDEND I NCOME AND TAX FREE INTEREST. THUS THE A.O. ASSESSED THE INCOME OF THE ASSESSEE AT RS. 45,83,190/- AND THE DEEMED SPECULATION LOSS IN SHARE TRADING ALONG WITH PROPOR TIONATE EXPENSES TOTALING RS. 45,03,270/- WAS ALLOWED TO CARRY FORWARD TO SET OFF WITH FUTURE SPECULATION PROFITS. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE FI LED AN APPEAL BEFORE LD. CLT(A)- V, KOLKATA WHO HELD THAT THE INTEREST INCOME ON LOANS AND ADVANCES SHOULD BE TREATED AS INCOME FROM OTHER SOURCE AND SO, EXPLANATION TO SEC TION 73 WAS NOT APPLICABLE IN THIS CASE OF THE ASSESSEE. HOWEVER, THE LD. CIT(A) UPHEL D THE DISALLOWANCE MADE BY THE A.O. U/S 14A FOR RS. 30,368/-. THEREAFTER, THE DEPA RTMENT FILED FURTHER APPEAL BEFORE THE HON'BLE ITAT, KOLKATA BENCH AGAINST THE ACTION OF LD. CIT(A). THE HON'BLE IT AT, KOLKATA, VIDE ORDER DATED 29.05.2009, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND RESTORED THE MATTER BACK TO THE TABLE OF A.O. T HE HON 'BLE ITA T, KOLKATA DIRECTED THE A.O. TO WORK OUT THE INCOME OF THE ASSESSEE IN DIFFERENT HEADS BASED ON THE FACTS OF THE CASE AND THEREAFTER DECIDE WHETHER THE ASSES SEES CASE FALLS WITHIN THE PROVISION OF EXPLANATION TO SECTION 73 OF THE ACT OR NOT. 5. IN THE SET ASIDE ASSESSMENT PROCEEDINGS BEFORE T HE AO PURSUANT TO THE ORDER OF THE TRIBUNAL, THE ASSESSEE CLAIMED THAT THE INTERES T INCOME FROM LOANS AND ADVANCES, DIVIDEND INCOME AND OTHER INTEREST INCOME SHOULD BE REGARDED AS INCOME FROM OTHER SOURCES AND THEREFORE EXPLANATION TO SEC.73 WILL NO T BE APPLICABLE TO THE ASSESSEE SO AS TO TREAT THE LOSS FROM SHARE TRADING AS SPECULAT IVE IN NATURE HENCE NOT CAPABLE OF BEING SET OFF AGAINST BUSINESS INCOME. THIS CLAIM WAS REJECTED BY THE AO FOR THE REASONS THAT SIMILAR INCOME WAS DECLARED UNDER THE HEAD INCOME FROM BUSINESS IN THE PAST AND ALSO FOR THE REASON THAT THE ASSESSEE IN I TS RETURN OF INCOME HAD CONSIDERED 4 ITA NO.2160/KOL/2013-M/S.PAWAN INDUSTRIAL CORPORATI ON LTD.A.Y.2004-05 INTEREST INCOME AND DIVIDEND INCOME AS INCOME FROM BUSINESS AND WITHOUT FILING A REVISED RETURN OF INCOME THE ASSESSEE CANNOT PLEAD FOR CHANGE OF HEAD OF INCOME. 6. THE AO THEREAFTER DEALT WITH THE QUESTION OF AP PLICABILITY OF THE PROVISION OF EXPLANATION BELOW SECTION 73 IN SO FAR AS THE LOSS FROM SHARE TRADING OF RS.43,68,756/. THE AO OBSERVED FROM THE BALANCE-SHEET DATED 31-03- 2004, THAT THE ASSESSEE HAS INVESTED 89% OF THE WORKING CAPITAL IN THE BUSINESS OF SHARE TRADING WHILE ONLY 11% OF THE WORKING CAPITAL WAS ENGAGED IN OTHER ACTIVIT IES. HE WAS OF THE VIEW THAT THE PRINCIPAL BUSINESS ACTIVITY OF THE ASSESSEE DURING THE YEAR WAS SHARE TRADING, NOT GRANTING OF LOANS AND ADVANCES. HENCE, THE PROVISIO NS OF EXPLANATION TO SECTION 73 OF THE ACT IS CLEARLY APPLICABLE IN THE CASE OF THE AS SESSEE. AS FAR AS EXPLANATION TO SECTION 73 OF THE ACT IS CONCERNED, IT READS THUS:- ' WHERE ANY PART OF THE BUSINESS OF A COMPANY ( [OT HER 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 OTH ER COMPANIES, SUCH COMPANY SHALL, FOR THE PURPOSES OF ALL THE SECTION, BE DEEM ED TO BE CARRYING ON A SPECULATION BUSINESS TO THE EXTENT TO WHICH BUSINES S CONSISTS OF THE PURCHASE AND SALE OF SUCH SHARES.' 7. IT CAN BE SEEN FROM THE ABOVE PROVISIONS THAT T HERE ARE EXCEPTIONS. IF ANY COMPANY SATISFIES ANYONE OF THE FOLLOWING CONDITIONS, THEY ARE OUT OF PURVIEW OF THE AFORESAID PROVISIONS VIZ., (I) GROSS TOTAL INCOME CONSISTS MAINLY OF INCOME AS INTEREST FROM SECURITIES, INCOME FROM HOUSE PROPERTY, CAPITAL GAIN AND INCOME FROM O THER SOURCE. (II) THE PRINCIPAL BUSINESS ACTIVITY OF THE COMPANY IS GRANTING OF LOANS AND ADVANCES. 8. THE AO THEREAFTER ANALYSED THE INCOME/LOSS FROM DIFFERENT SOURCES AND CONCLUDED THAT AS PER THE INCOME CRITERIA, THE GROSS TOTAL IN COME OF THE ASSESSEE DOES NOT CONSIST MAINLY OF INCOME OTHER THAN INCOME FROM BUSINESS. T HE AO THEREAFTER APPLIED THE 5 ITA NO.2160/KOL/2013-M/S.PAWAN INDUSTRIAL CORPORATI ON LTD.A.Y.2004-05 FUNDS DEPLOYMENT CRITERIA TO DETERMINE AS TO WHETHE R THE ASSESSEE WAS IN THE BUSINESS OF GRANTING OF LOANS AND ADVANCES. THE AO FOUND FR OM THE BALANCE SHEET OF THE ASSESSEE AS ON 31-03-2004 THAT OUT OF THE TOTAL AVA ILABLE FUND OF RS. 9,34,49,690/-, THE ASSESSEE DEPLOYED RS. 8,32,14,219/- I.E. 89% OF TOT AL AVAILABLE FUND IN SHARE TRADING AND- RS. 84,02,882/- I.E. 9% OF TOTAL AVAILABLE FUN D IN LOANS AND ADVANCES. THE AO; THEREFORE CONCLUDED THAT THE ASSESSEE HAS INVESTED MORE FUND IN SHARE TRADING ACTIVITIES THAN GRANTING OF LOANS AND ADVANCES. THE AO ALSO F OUND THAT DEPLOYMENT OF FUND IN THE IMMEDIATELY PRECEDING AND SUCCEEDING YEARS WAS ALSO MORE IN SHARE TRADING COMPARED TO LOANS AND ADVANCES. THE AO THEREFORE CO NCLUDED THAT THE PRINCIPAL BUSINESS ACTIVITY OF THE ASSESSEE FOR THREE CONSECU TIVE YEARS WAS SHARE TRADING, NOT GRANTING OF LOANS AND ADVANCES. THE AO THEREFORE CO NCLUDED THAT THE ASSESSEE DOES NOT FALL WITHIN ANY OF THE EXCEPTIONS OF EXPLANATIO N TO SEC.73 OF THE ACT. HE THEREFORE HELD THAT THE SHARE TRADING ACTIVITIES SHOULD BE TR EATED AS DEEMED SPECULATION BUSINESS AND GROSS LOSS INCURRED IN SHARE TRADING OF RS. 43, 68,756/- SHOULD BE CONSIDERED AS DEEMED SPECULATION LOSS. FURTHER, THE EXPENDITURE A TTRIBUTABLE TO SHARE TRADING LOSS ALSO CAN NOT BE ALLOWED TO SET OFF WITH OTHER BUSIN ESS PROFITS. THE AMOUNT OF SUCH EXPENDITURE ATTRIBUTABLE TO SHARE TRADING LOSS IS D ETERMINED AS FOLLOWS :-- SELLING, ADMINISTRATIVE & OTHER EXPENSES ------------------------~_------------------------- X SHARE TRADING LOSS PROFIT AS PER P/L A/C + SHARE TRADING LOSS 1,91,363 ------------------------------ X 43,68,756 = 1,64,8 82/- 7,01,661 + 43,68,756 THE AO FURTHER DISALLOWED AN AMOUNT OF RS. 30,368/- AS DISALLOWANCE U/S 14A OF THE ACT, AND THE REMAINING SUM OF RS.1,34,514/- (1,64,8 82 - 30,368= RS.1,34,514) WAS ALSO CONSIDERED AS EXPENSES ATTRIBUTABLE TO SHARE T RADING ACTIVITY . THEREFORE, THE GROSS SHARE TRADING LOSS OF RS. 43,68,756/- AND THE PROPO RTIONATE EXPENSES ATTRIBUTABLE TO SHARE TRADING ACTIVITIES I.E RS. 1,34,514/- TOGETHE R TOTALING RS. 45,03,270/- WAS TREATED AS NET LOSS IN SHARE TRADING. SUCH LOSS WAS ALSO T REATED AS DEEMED SPECULATION LOSS AS 6 ITA NO.2160/KOL/2013-M/S.PAWAN INDUSTRIAL CORPORATI ON LTD.A.Y.2004-05 PER THE PROVISION OF EXPLANATION BELOW SECTION 73 O F THE ACT AND WAS ALLOWED TO CARRY FORWARD TO NEXT YEAR. THE TOTAL INCOME OF THE ASSES SEE WAS COMPUTED AS UNDER:- BUSINESS INCOME PROFIT AS PER P/L A/C : RS.7,01,661/- ADD: INADMISSIBLE EXPENSES MISC EXP. FOR AUTHORISED SHARE CAPITAL : RS. 6, 000/- DEPRECIATION ON OFFICE SPACE : RS. 34,884/- OFFICE MAINTENANCE EXPENSES : RS. 5,068/- DISALLOWANCE U/S 14A : RS. 30,368/- DEEMED SPECULATION LOSS : RS.45,03,270/- RS.52,81,251/- LESS: INCOME TAXABLE SEPARATELY RENT : RS.4,03,200/- RS.48,78,051/- LESS : EXEMPT INCOME DIVIDEND - 2,82,125 TAX FREE INTEREST -2,94,975 : RS.5,77,100/- INCOME FROM BUSINESS : RS.43,00,951/- INCOME FROM HOUSE PROPERTY GROSS ANNUAL VALUE -4,03,200 LESS:DEDUCTION U/S 24(A) -1,20,960 : RS.2,82,240/- TOTAL INCOME : RS45,83,191/- 9. ON APPEAL BY THE ASSESSEE, THE CIT(A) HELD THAT INTEREST INCOME AND DIVIDEND INCOME WAS TO BE ASSESSED UNDER THE HEAD INCOME FR OM OTHER SOURCES. AS A CONSEQUENCE THE DEEMING PROVISIONS OF EXPLANATION T O SEC.73 OF THE ACT BECAME INAPPLICABLE TO THE SHARE TRADING LOSS INCURRED BY THE ASSESSEE. CONSEQUENTLY THE INCOME OF THE ASSESSEE WAS DETERMINED BY SETTING OF F THE LOSS FROM SHARE TRADING AGAINST INTEREST INCOME AND DIVIDEND INCOME. THE A O HAD DISALLOWED PROPORTIONATE EXPENSES OF RS.1,34,514/- ATTRIBUTABLE TO TRADING I N SHARES. THIS ADDITION WAS ALSO DELETED BY CIT(A) FOR THE REASON THAT SHARE TRADING LOSS WAS CONSIDERED AS A NORMAL LOSS AND NOT SPECULATIVE LOSS. 10. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVE NUE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 7 ITA NO.2160/KOL/2013-M/S.PAWAN INDUSTRIAL CORPORATI ON LTD.A.Y.2004-05 11. WE HAVE HEARD THE SUBMISSIONS OF THE LEARNED D R WHO RELIED ON THE ORDER OF THE AO. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE CIT(A) AND FURTHER SUBMITTED THAT EVEN ASSUMING THAT THE INTER EST INCOME AND DIVIDEND INCOME HAVE TO BE CONSIDERED AS BUSINESS INCOME, THE SHAR E TRADING LOSS AND INCOME FROM INTEREST ON LOANS AND ADVANCES AND DIVIDEND INCOME HAVE TO BE ADJUSTED FIRST TO ARRIVE AT THE INCOME UNDER THE HEAD INCOME FROM BUSINESS B EFORE APPLYING THE PROVISIONS OF EXPLANATION TO SEC.73 OF THE ACT. IF THAT IS DONE THEN THE INCOME FROM BUSINESS WOULD BE ONLY RS.2,02,289/-, AS PER THE FOLLOWING COMPUTA TION: INCOME FROM BUSINESS (INTEREST ON LOANS AND ADVANCE S & DIVIDEND INCOME) RS.43,00,951 LESS: SHARE TRADING LOSS RS.45,03,270 RS.2,02,289 THE INCOME UNDER THE HEAD INCOME FROM HOUSE PROPER TY WAS RS.2,80,240/- WHICH IS MUCH HIGHER THAN THE INCOME UNDER THE HEAD INCO ME FROM BUSINESS. THEREFORE THE EXPLANATION TO SEC.73 OF THE ACT WILL NOT BE AT TRACTED AND THE RELIEF GIVEN BY THE CIT(A) HAS TO BE SUSTAINED. IN THIS REGARD HE RELI ED ON THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. MIDDLETO N INVESTMENTS & TRADING CO.LTD. ITA NO. 196 OF 1999 DATED 15.1.2014. 12. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE R IVAL SUBMISSIONS. THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF MIDDLETON INVEST MENT & TRADING CO. LTD. (SUPRA) HAD TO DEAL WITH A CASE WHERE THE INCOME OF AN ASSE SSEE FROM BUSINESS OF GRANTING LOANS AND ADVANCES WAS RS.2,10,218/-, SHORT TERM CA PITAL GAIN ON SALE OF SHARES RS.6,425 AND INCOME FROM OTHER SOURCES OF RS.10,13, 798. THE ASSESSEE INCURRED A LOSS OF RS.10,83,091 IN SHARE TRADING. THE ASSESSE E CONTENDED THAT ITS INCOME FROM BUSINESS WAS RS.8,72,972 AFTER ADJUSTING LOSS OF RS.10,83,091 IN SHARE TRADING AND INCOME FROM BUSINESS OF RS.2,10,218/- AND SINCE INC OME FROM OTHER SOURCES WAS MORE THAN INCOME UNDER THE HEAD INCOME FROM BUSINESS, EX PLANATION TO SEC.73 WILL NOT BE 8 ITA NO.2160/KOL/2013-M/S.PAWAN INDUSTRIAL CORPORATI ON LTD.A.Y.2004-05 ATTRACTED TO TREAT THE LOSS IN SHARE TRADING AS SPE CULATIVE LOSS. THE HONBLE CALCUTTA HIGH COURT UPHELD THE ORDER OF THE TRIBUNAL ACCEPTI NG THE CONTENTION OF THE ASSESSEE. THE HONBLE CALCUTTA HIGH COURT IN COMING TO THE AB OVE CONCLUSION, FOLLOWED THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF CIT VS. DARSHAN SECURITIES 341 ITR 556 (BOM) WHEREIN IT WAS HELD THAT EXPLANAT ION TO S. 73 IS DESIGNED TO DEFINE A SITUATION WHERE A COMPANY IS DEEMED TO CARRY ON S PECULATION BUSINESS. IT IS ONLY THEREAFTER THAT SUB-S. (1) OF S. 73 CAN APPLY. APP LYING THE PROVISIONS OF S. 73(1) TO DETERMINE WHETHER A COMPANY IS CARRYING ON SPECULAT ION BUSINESS WOULD REVERSE THE ORDER OF APPLICATION. OBVIOUSLY, IN COMPUTING THE G ROSS TOTAL INCOME THE NORMAL PROVISIONS OF THE ACT MUST BE APPLIED AND IT IS ONL Y THEREAFTER, THAT IT HAS TO BE DETERMINED AS TO WHETHER THE GROSS TOTAL INCOME SO COMPUTED CONSISTS MAINLY OF INCOME WHICH IS CHARGEABLE UNDER THE HEADS REFERRED TO IN THE EXPLANATION. THE HONBLE BOMBAY HIGH COURT FOUND THAT ON THE FACTS B EFORE IT THE ASSESSEE HAD BOTH THE INCOME FROM SERVICE CHARGES IN THE AMOUNT OF RS . 2.25 CRORES AND THE LOSS IN SHARE TRADING OF RS. 2.23 CRORES, AND OBSERVED THAT BOTH WOULD HAVE TO BE TAKEN INTO ACCOUNT IN COMPUTING THE INCOME UNDER THE HEAD OF BUSINESS, BOTH BEING SOURCES UNDER THE SAME HEAD. ASSESSEE HAD A DIVIDEND INCOME OF RS. 4 .7 LACS (INCOME FROM OTHER SOURCES). THE HONBLE BOMBAY HIGH COURT HELD THAT THE TRIBUNAL WAS THEREFORE JUSTIFIED IN COMING TO THE CONCLUSION THAT THE ASSE SSEE FELL WITHIN THE PURVIEW OF THE EXCEPTION CARVED OUT IN THE EXPLANATION TO S. 73 AN D THAT CONSEQUENTLY THE ASSESSEE WOULD NOT BE DEEMED TO BE CARRYING ON A SPECULATION BUSINESS FOR THE PURPOSE OF S. 73(1). 13. WE ARE OF THE VIEW THAT IN THE LIGHT OF THE AF ORESAID DECISION OF THE HONBLE BOMBAY HIGH COURT, THE ORDER OF THE CIT(A) HAS TO B E UPHELD AND EVEN ASSUMING THE INTEREST INCOME AND DIVIDEND INCOME HAS TO BE HELD TO BE ONE FROM BUSINESS, STILL THE SET OFF AS DONE BY THE ASSESSEE HAS TO BE ALLOWED A ND IT IS ONLY THEREAFTER THAT THE APPLICABILITY OF EXCEPTION TO EXPLANTION TO SECTION 73 OF THE ACT, HAVE TO BE EXPLORED. IN THE LIGHT OF THE ABOVE CONCLUSION, WE FIND NO ME RIT IN THE APPEAL BY THE REVENUE. 9 ITA NO.2160/KOL/2013-M/S.PAWAN INDUSTRIAL CORPORATI ON LTD.A.Y.2004-05 14. IN THE RESULT, APPEAL BY THE REVENUE IS DISMIS SED. O RDER PRONOUNCED IN THE COURT ON 11.05.2016. SD/- SD/- [M.BALAGANESH ] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 11.05.2016. [RG PS] COPY OF THE ORDER FORWARDED TO: 1.M/S. PAWAN INDUSTRIAL CORPORATION PVT. LTD., 21E, B.R.B.BOSE ROAD, 3 RD FLOOR, KOLKATA-700001. 2. I.T.O.WARD-4(4), KOLKATA. 3. CIT(A)-IV, KOLKATA 4. CIT-II, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, ASST. REGISTRAR, ITAT, KOLKATA BENCHES