PUJA AGENCIES P. LTD, MUMBAI V. DCIT RG 5(2), MUMBAI

ITA 5688/MUM/2010

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2469 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 03-03-2015
• Assessment Year: 2001-2002
• Appeal Filed On: 13-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Speculation loss
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL,MUMBAI BENCH C, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.5688/MUM/2010 FOR ASSESSMENT YEAR: 2001-02 AND ITA NO.5689/MUM/2010 FOR ASSESSMENT YEAR: 2002-03 M/S PUJA AGENCIES PVT. LTD. 501, GORAGANDHI APARTMENT, 3, LABURNUM ROAD, GAMDEVI, MUMBAI-400007. PAN: AAACP0524H VS. DCIT RANGE 5(2), MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VIJAY MEHTA (AR) REVENUE BY : SHRI S.R. SINGH (DR ) DATE OF HEARING : 06.05.2015 DATE OF PRONOUNCEMENT : 20.07.2016 O R D E R PER PAWAN SINGH, JM: 1. THESE TWO APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER (S) OF CIT (A) DATED 18/05/2010 FOR ASSESSMENT YEAR (AY) 2001-02 & 2002- 03 WERE HEARD TOGETHER AS COMMON GROUNDS OF APPEALS ARE RAISED AND BEING DECI DED BY A COMMON ORDER. 2. FIRST WE ARE TAKING UP THE APPEAL NO. 5688/M/2010 W HEREIN THE FOLLOWING GROUNDS OF APPEAL WAS RAISED BY THE ASSESSEE: GROUND NO. 1: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 9, MUMBAI ER RED IN CONFIRMING THE DECISION OF THE LD. ASSESSING OFFICER THAT THE LOSS INCURRED BY THE APPELLANT FROM PURCHASE AND SALE OF SHARES IS SPECULATIVE LOS S APPLYING THE PROVISIONS OF EXPLANATION 1 TO SECTION 73. THE APPELLANT PRAYS TH AT LOSS ARISING ON ACCOUNT OF SHARE TRANSACTIONS SHOULD BE TREATED AS NORMAL B USINESS LOSS AND NOT AS SPECULATIVE LOSS AS THE APPELLANT FALLS WITHIN THE EXCEPTION PROVIDED IN THE SAID EXPLANATION 1 TO SECTION 73. GROUND NO. 2: 2 ITA NOS. 5688 & 5689/M/2010 M/S PUJA AGENCIES PVT. LTD. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 9, MUMBAI ER RED IN CONFIRMING THE DECISION OF THE LEARNED AO TO APPORTION 70% OF THE EXPENSES INCURRED BY THE APPELLANT COMPANY TOWARDS SHARE BUSINESS CARRIED BY THE APPELLANT COMPANY. THE APPELLANT PRAYS THAT SUCH ALLOCATION TO THE TUN E OF 70% OF TOTAL EXPENSES IS ILLEGAL AND REQUIRES TO BE QUASHED. GROUND NO. 3: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 9, MUMBAI ER RED IN CONFIRMING THE DECISION OF THE LEARNED AO TO CHARGE INTEREST U/S. 220(2) OF THE INCOME-TAX ACT. THE APPELLANT PRAYS THAT INTEREST CHARGED U/S. 220(2) OF RS. 3,73,930/- MAY KINDLY BE DELETED. FURTHER, THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL VIDE APPLICATION DATED 12.08.2014: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED AO AND THE LEARNED CIT(A)-9 ERRED IN ALLOCATING THE IN TEREST EXPENSES TOWARDS SHARE TRADING BUSINESS AT GROSS AMOUNT OF RS. 51,51 ,212/- INSTEAD OF NET AMOUNT OF RS. 34,96,457/- AFTER ADJUSTING THE INTER EST INCOME OF RS. 16,54,755/-. THE APPELLANT PRAYS THAT THE INTEREST ALLOCATION SHOULD BE MADE NET OF INTEREST INCOME. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-COMPA NY, WHICH IS ENGAGED IN THE BUSINESS OF INVESTMENT AND SHARE TRADING, FILED ITS RETURN OF INCOME ON 14.12.2010 DECLARING TOTAL LOSS OF RS. 3,29,63,204/- THE RET URN OF INCOME WAS SELECTED FOR SCRUTINY. IN THE RETURN OF INCOME THE ASSESSEE HAS SHOWN INTEREST INCOME OF RS.48,63,912/-, INCOME FROM VYAJBADLA AND BROKERAG E OF RS. 14,70,119/- AND SHARE TRADING LOSS OF RS. 2,75,64,828/- AND LOSS WA S SET OFF AGAINST THE INCOME FROM VYAJBADLA. DURING THE ASSESSMENT PROCEEDING, T HE ASSESSING OFFICER (AO) OBSERVED THAT THE MAIN INCOME OF THE ASSESSEE IS LO SS FROM DEALING IN SHARE OF OTHER COMPANY. AO SEEK THE EXPLANATION AS TO WHY TH E PROVISION OF EXPLANATION TO SECTION 73 OF THE ACT, REGARDING THE LOSS OF ASS ESSEE FROM DEALING IN SHARE SHOULD NOT BE TREATED AS SPECULATION LOSS. THE ASSE SSEE EXPLAINED TO THE AO THAT THE PROVISIONS OF EXPLANATION TO SECTION 73 ARE NOT APPLICABLE AS THE ASSESSEE IS IN THE BUSINESS OF ADVANCING LOAN. THEREFORE COVERED B Y THE EXCEPTION MENTIONED IN THE SAID EXPLANATION. THE CONTENTION OF THE ASSESSE E WAS NOT ACCEPTED BY AND AO CONCLUDED THAT MAIN SOURCE OF INCOME OF ASSESSEE FROM DEALING IN SHARE, THEREFORE, LOSS OF THE ASSESSEE FROM PURCHASE AND S ALE OF SHARE OF OTHER COMPANY IS TO BE TREATED AS SPECULATION LOSS AND DETERMINED TH E BUSINESS INCOME OF ASSESSEE AT RS. 28,03,975/- AND SPECULATION LOSS AT RS. 3,57,67 ,171/-. THE ASSESSEE CARRIED APPEAL BEFORE THE CIT(A) WHEREIN THE CIT(A) UPHELD THE ORDER OF AO IN ITS ORDER 3 ITA NOS. 5688 & 5689/M/2010 M/S PUJA AGENCIES PVT. LTD. DATED 05.06.2003. THE ASSESSEE FILED 2 ND APPEAL BEFORE THE ITAT, ITAT RESTORED THE ISSUE TO THE FILE OF AO HOLDING THAT THE ISSUE SHOULD BE DECIDED IN ACCORDANCE WITH THE RATIO LAID DOWN BY SPECIAL BENCH OF CALCUT TA TRIBUNAL IN CASE OF DCIT VS. VENKATESHWAR INVESTMENT & FINANCE PVT. LTD. (93 ITD 177) AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE. THE AO WHIL E GIVING EFFECT TO THE ORDER OF ITAT OBSERVED THAT ASSESSEE FILED STATEMENT SHOWING UTILIZATION OF FUNDS FROM AY-1999-2000 TO AY 2003-04. THE PERUSAL OF UTILIZAT ION FUND FOR AY 2001-02 REVEALS THAT ASSESSEE UTILIZED FOUND OF RS. 1,41,65 ,901/- TOWARDS THE LOAN AND ADVANCES AND AMOUNT OF RS. 3,56,35,905/- IN RESPECT OF SHARES AND CONCLUDED THAT IN THE YEAR UNDER CONSIDERATION UTILIZATION OF FUND S IN RESPECT OF SHARE IS MORE THAN THE LOAN AND ADVANCES AND HOLD THAT NO CHANGES CALL ED FOR IN THE ASSESSMENT ORDER PASSED ON 20.01.2003 U/S. 143(3) OF THE ACT IN ITS ORDER DATED 15.12.2008. AGAINST THE ORDER DATED 15.12.2008, THE ASSESSEE FILED AN A PPEAL BEFORE THE CIT(A). THE CIT(A) WHILE DISCUSSING THE ISSUE, IF THE LOSS OF T HE ASSESSEE FROM TRADING IN SHARE CAN BE TREATED AS SPECULATION LOSS IN ACCORDANCE WI TH RATIO LAID DOWN IN THE CASE OF VENKATESHWAR INVESTMENT & FINANCE PVT. LTD.(SUPRA) DECIDED BY ITAT, CALCUTTA ON 01.12.2004 WHEREIN IT WAS HELD THAT EXPLANATION TO SECTION 73 WILL NOT BE APPLICABLE TO: 1. A COMPANY WHOSE GROSS TOTAL INCOME CONSISTS MAIN LY FOR INCOME WHICH IS CHARGEABLE UNDER THE HEADS INTEREST ON SECURITIES , INCOME FROM HOUSE PROPERTY. CAPITAL GAINS AND INCOME FROM OTHER S OURCES. 2. A COMPANY THE PRINCIPLE OF WHICH IS THE BUSINE SS OF BANKING OR THE GRATING OF LOANS AND ADVANCES. WHILE CONSIDERING THE ISSUE, THE CIT(A) OBSERVED TH AT THE FOLLOWING FACTORS SHOULD BE TAKEN INTO CONSIDERATION BY DECIDING THE ISSUE: 1) OBJECT AS PER MEMORANDUM OF ARTICLE OF ASSOCIATION 2) PAST HISTORY OF THE COMPANY 3) CURRENT DEPLOYMENT CAPITAL OF THE COMPANY. 4) BREAKUP OF INCOME EARNED 5) NATURE OF ACTIVITY OF THE COMPANY. AND FURTHER OBSERVED THAT IN THE SAID CASE IT WAS CLARIFIED THAT THIS QUESTION CANNOT BE DECIDED BY TAKING INTO CONSIDERATION INCOME OR L OSS EARN IN A PARTICULAR YEAR. INCOME FROM BUSINESS ON GIVING ADVANCES AND LOANS M AY BE LESS IN A PARTICULAR YEAR THAT COMPARED WITH LOSS FROM TRADING IN SHARE; IT WAS HELD THAT NATURE OF 4 ITA NOS. 5688 & 5689/M/2010 M/S PUJA AGENCIES PVT. LTD. ACTIVITIES OF THE COMPANY DURING THE RELEVANT PERIO D AS WELL AS IN THE PAST OR SUBSEQUENT YEAR SHOULD BE TAKEN INTO CONSIDERATION FOR DECIDING THE ISSUE. 4. THE LD. CIT (A) FURTHER OBSERVED THAT IF THE RATIO OF SPECIAL BENCH OF ITAT, CALCUTTA IN CASE OF VENKATESHWAR INVESTMENT & FINAN CE PVT. LTD.(SUPRA) IS APPLIED TO THE CASE OF ASSESSEE, IT CANNOT BE SAID THAT ASSESSEE IS IN THE BUSINESS OF GRANTING LOANS AND ADVANCES AND FURTHER OBSERVED TH AT MOST OF THE ADVANCES GIVEN BY ASSESSEE TO THE RELATED CONCERN IN WHICH THE ASS ESSEE IS A SHAREHOLDER COMPANY AND DIRECTORS. GIVING LOANS AND ADVANCES ONLY TO TH OSE CONCERNS CANNOT BE CALLED AS BUSINESS ADVANCES. THE CIT(A) FURTHER OBSERVED T HAT AS PER TAX AUDIT REPORT, THE ASSESSEE-COMPANY IS STATED TO BE IN INVESTMENT ONLY AND THE AUDIT REPORT NOWHERE MENTIONED THAT ASSESSEE CARRIED OUT THE BUS INESS OF GIVING LOANS AND ADVANCES. THE TRANSACTION OF GIVING LOANS AND ADVAN CES ARE VERY FEW AND IN SOME OF THE CASES, THE LOAN INCLUDES STAFF LOAN IN THE C URRENT YEAR. AS PER MEMORANDUM OF ASSOCIATION, MAIN BUSINESS OF ASSESSEE IS NOT OF GIVING LOANS AND ADVANCES AND CONCLUDED THAT ASSESSEE-COMPANY IS NOT IN THE BUSIN ESS OF GIVING LOANS AND ADVANCES AND ASSESSEE IS NOT COVERED BY THE EXCEPTI ON PROVIDED TO THE EXPLANATION TO SECTION 73 OF INCOME-TAX ACT, AND UPHELD THE FIN DING OF AO. AGGRIEVED BY THE ORDER OF CIT (A) THIS APPEAL IS FILED BEFORE US. 5. GROUND NO.1 RAISED IS THE PRESENT APPEAL IS, IF THE LOSS INCURRED BY THE APPELLANT FROM PURCHASE AND SALE OF SHARES IS SPECULATIVE LOS S APPLYING THE PROVISIONS OF EXPLANATION 1 TO SECTION 73. WE HAVE HEARD THE LD A UTHORISED REPRESENTATIVE (AR) OF THE ASSESSEE AND DEPARTMENTAL REPRESENTATIV E (DR) FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AR OF THE ASSESSEE HAS ARGUED THAT THAT THE CIT (A) ERRED IN CONFIRMING THE ACTION OF AO AN D CONSIDERED THE BUSINESS LOSS AS A SPECULATION LOSS. AND FURTHER ARGUED THAT ASSE SSEE FALLS WITHIN THE EXCEPTION AS PROVIDED UNDER EXPLANATION TO THE PROVISO OF SECTIO N 73. THE ASSESSEE HAS GRANTED LOAN TO THE RELATED CONCERN AND THE INTEREST INCOME RECEIVED FROM LOAN GIVEN TO SISTER CONCERN HAS BEEN OFFERED AT THE BUSINESS INC OME BY THE ASSESSEE, WHICH HAS BEEN ACCEPTED BY THE DEPARTMENT CONSISTENTLY FOR AL L THE YEARS. THERE IS NO LEGAL BAR THAT ONE MUST DEAL ONLY WITH OUTSIDER. IT CANNO T BE SAID THAT GRANTING OF LOAN TO SISTER CONCERN IS NOT BUSINESS ACTIVITIES WHEN INTE REST INCOME FROM THE SAME IS TREATED AS BUSINESS INCOME. THE LD CIT(A) HAS ONLY PICKUP THE CLOSING BALANCE AS ON 31 ST OF MARCH 2001 AND NOT CONSIDERED THE LOANS WHICH W ERE GIVEN AND SQUARED 5 ITA NOS. 5688 & 5689/M/2010 M/S PUJA AGENCIES PVT. LTD. OFF DURING THE YEAR. THE ASSESSEE HAD 132 CUMULATIV E LOAN TRANSACTION DURING THE YEAR, HAS IT CANNOT BE SAID THAT DURING THE YEAR AS SESSEE HAD GIVEN LOAN IS TO ONLY 10 PERSONS. THE ASSESSEE SUBMITTED THAT A CHART HAS BEEN FILED, WHICH SHOWS THE CUMULATIVE AMOUNT IN SHARE TRANSACTION IS MUCH LOWE R THAN CUMULATIVE AMOUNT OF LOANS AND ADVANCES. IN ANY CASE, NO SINGLE YEAR CAN BE TAKEN TO DETERMINE THE FACT AS TO WHAT IS THE PRINCIPAL BUSINESS OF THE ASSESSE E. IT IS FURTHER ARGUED THAT PRECEDED AND SUCCEEDING YEAR HAS ALSO TO BE TAKEN I NTO CONSIDERATION WHILE CONCLUDING AS TO WHAT IS THE PRINCIPAL BUSINESS OF THE ASSESSEE. IF OVERALL VIEW IS TAKEN FOR A NUMBER OF YEARS. IT IS CLEARLY EVIDENT THAT PRINCIPAL BUSINESS OF ASSESSEE IS GRANTING OF LOANS AND ADVANCES. THE ASSESSEE-COM PANY HAS NOT TRADED IN SHARE OF GROUP COMPANIES AND RELIED UPON THE ORDER OF CO- ORDINATE BENCH OF MUMBAI TRIBUNAL IN ACIT VS TANNA ELECTRO MECHANICS (P.) LT D. [2006] 7 SOT 121(MUM). THE INCOME FROM VYAJBADLA TRANSACTION IS INTEREST FROM LOAN AND IS INCLUDABLE IN CHARGEABLE INTEREST. LD AR FOR ASSESS EE FURTHER RELIED ON ORDER OF DELHI TRIBUNAL IN TULIP STAR HOTEL VS ITO (124 TTJ 173 DEL). LD DR FOR THE REVENUE ARGUED THAT NONE OF THE CLAUSE OF MEMORANDU M OF ASSOCIATION OF ASSESSEE DEALS WITH THE FINANCING BY THE ASSESSEE-C OMPANY. THE LOANS GIVEN BY THE ASSESSEE TO THE PERSONS WHO WERE A DIRECTOR OF THE ASSESSEE-COMPANY AND MAJORITY OF THE LOAN WERE INVESTED IN ONE OF THE COMPANY AND THE EXCEPTION OF THE EXPLANATION TO SECTION 73 IS NOT APPLICABLE FOR ASS ESSEE. DR FURTHER ARGUED THAT NO BASIS FOR ALLOCATION WAS GIVEN BY THE ASSESSEE AND THE ORDER OF AO AND CIT (A) BE CONFIRMED AND THE ORDER OF AUTHORITY BELOW DOES NO T REQUIRE ANY INTERFERENCE AT THE END OF THIS TRIBUNAL. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS OF THE PAR TIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE CIT (A) WHILE DEALING WITH THIS GROUND HAS OBSERVED THAT THE ADVANCES ARE NOT GIVEN AS A PART OF BUSINESS AN D MOST OF THE ADVANCES ARE GIVEN BY THE ASSESSEE TO THE RELATED CONCERN IN WHI CH SHAREHOLDER OF THE ASSESSEE- COMPANY ARE DIRECTOR. WE FIND THAT THERE IS NO BAR UNDER THE LAW TO ADVANCE THE LOAN TO THE RELATED CONCERN UNDER THE LAW FOR BUSIN ESS EXPEDIENCY. ADMITTEDLY THE ASSESSEE IS ENGAGED IN THE BUSINESS OF VYAJBADLA AN D DURING THE YEAR UNDER CONSIDERATION EARNED INCOME FROM SUCH ACTIVITIES. D URING THE YEAR, THERE ARE 132 LOAN TRANSACTIONS, TRANSACTED BY ASSESSEE. THOUGH T HE NOTING IN THE TAX AUDIT REPORT IS NOT THE DETERMINING CRITERIA FOR DETERMINING THE BUSINESS OF ASSESSEE. WE HAVE ALSO SEEN THAT CLAUSE 8 OF THE TAX AUDIT REPORT DAT ED 28/09/2001, WHEREIN THE 6 ITA NOS. 5688 & 5689/M/2010 M/S PUJA AGENCIES PVT. LTD. AUDITOR OF THE ASSESSEE HAS REFERRED ABOUT GRANTING LOANS, SECURED AND UNSECURED, ADVANCES TO COMPANY FIRMS AND OTHERS PARTIES. THOUG H THE ASSESSEE CLAIMED THAT CLAUSE 11 OF THE MEMORANDUM OF ASSOCIATION, ONE OF THE OBJECTS OF ASSESSEE IS TO CARRY ON THE BUSINESS OF FINANCER AND TO EXECUTE AL L KIND OF FINANCIAL AND OTHER OPERATIONS. HOWEVER THE COPY OF MOA IS NOT AVAILAB LE ON RECORD. THUS, WE ARE UNABLE TO COMMENT ON THE MEMORANDUM OF ASSOCIATION THE MAIN BUSINESS OF ASSESSEE IS OF GIVING LOANS AND ADVANCES. THE CO-OR DINATE BENCH OF ITAT, MUMBAI AS WELL AS DELHI TRIBUNAL HAD ALREADY DECLARED VYAJ BADLA INCOME AS INCOME EARNED IN COURSE OF GRANTING LOANS AND ADVANCES. I N ACIT VS. TANNA ELECTRO MECHANICS (P.) LTD. [2006] 7 SOT 121(MUM) (SUPRA) I T WAS HELD: T HAT ASSESSEE-COMPANY ENGAGED IN BUSINESS OF LEASING , GIVING LOANS AND ADVANCES AND DERIVING SERVICE CHARGES FROM PREMISES AND ALSO ENGAGED IN BUSINESS OF PURCHASE AND SALE OF SHARES/SECURITIES- IT SUFFERED CERTAIN LOSS FROM SHARE DEALINGS AND CLAIMED SAME TO BE SET OFF AGAINST ITS OTHER INCOME ASSESSING OFFICER HELD THAT SINCE ASSESSEE'S INCOME FROM OTHER ACTIVITIES EXCEEDED ITS INCOME DURING YEAR CONSIDERATION IN TE RMS OF EXPLANATION TO SECTION 73, ASSESSEES LOSS FROM SHARE DEALINGS WAS A SPECULATION LOSS WHICH COULD NOT BE SET OFF AGAINST ITS OTHER INCOME- ASSE SSEE ALSO DERIVED INCOME FROM VYAJBADLA TRANSACTIONS AND AFTER SAID INCOME WAS ADDED TO ASSESSEE'S INCOME FROM INTEREST, INTEREST INCOME OF ASSESSEE W AS GREATER THAN ITS OTHER INCOME. WHETHER SINCE INTEREST INCOME OF ASSESSEE WAS GREATER THAN OTHER INCOME OF ASSESSEE, LOSS IN QUESTION WAS OUTSIDE PU RVIEW OF PROVISIONS OF EXPLANATION TO SECTION 73 AND FURTHER DELHI TRIBUNAL IN CASE OF TULIP STAR H OTELS LTD. VS. ITO REPORTED VIDE 308 ITR 410 (DEL.) WHEREIN WHILE DISCUSSING THE ESS ENCE OF VYAJBADLA TRANSACTION IT WAS HELD : THAT VYAJBADLA INCOME IS NOTHING BUT INTERES T INCOME AND FURTHER HELD THAT ESSENCE OF VYAJBADLA TRANSACTION IS NOT PURCHASE AN D SALE OF SHARE BUT TO PROVIDE FINANCE TO SMOOTHLY CARRY ON THE TRANSACTIO N ON THE SETTLEMENT DATE IN RESPECT OF PERSONS WHO WERE IN AN OVER-BOUGHT OR OV ER-SOLD POSITION. IN SUCH A SITUATION EVEN AFTER DELIVERY TAKEN, IT WOULD BE ON LY A SECURITY FOR FINANCE PROVIDED BY THE ASSESSEE AND THE ASSESSEE NEVER ANY INTENTION TO PURCHASE OF SHARE SUBSEQUENTLY SOLD THEM AND THE CO-ORDINATE BE NCH HELD THAT THE INCOME FOR PROVIDING FINANCE TO ONE OF THE CONTRACTING PAR TY FOR A SHORT PERIOD FOR CARRYING ALL THE TRANSACTION TO THE NEXT SETTLEMENT PERIOD AND THE INCOME FROM SUCH LOAN WILL BE INTEREST FREE LOAN, INCLUDIBLE IN THE CHARGEABLE INTEREST. WITH THE ABOVE OBSERVATION, WE MAY DRAW OUR INFEREN CE THAT PRINCIPAL BUSINESS OF ASSESSEE IS OF GRANTING OF LOANS AND ADVANCES AN D IT FALLS WITHIN THE EXCEPTION AS PROVIDED UNDER EXPLANATION TO SECTION 73 OF THE ACT . THE PURCHASE AND SALE OF SHARE BY THE ASSESSEE IS NOT SPECULATION LOSS AND T HE LOSS SUFFERED ON ACCOUNT OF 7 ITA NOS. 5688 & 5689/M/2010 M/S PUJA AGENCIES PVT. LTD. PURCHASE AND SALE OF THE SHARE IS BUSINESS LOSS. TH US, THE GROUND NO. 1 RAISED IN THE PRESENT APPEAL IS ALLOWED. 7. GROUND NO. 2 IS, IF CIT (A) ERRED IN CONFIRMING THE DECISION OF THE AO TO APPORTION 70% OF THE EXPENSES INCURRED BY THE ASSES SEE COMPANY TOWARDS BUSINESS OF SHARE. AS WE HAVE ALREADY ALLOWED. GROU ND NUMBER 1 IN FAVOUR OF ASSESSEE, THUS THIS GROUND HAS BECOME INFRUCTUOUS. AS WE HAVE HOLD THAT THE LOSS FROM ACTIVITY OF SHARE TRANSACTION IS BUSINESS LOSS AND NOT SPECULATIVE LOSS OF THE ASSESSEE, AND THERE WOULD BE NO NEED FOR LOCATING E XPENDITURE TOWARDS SPECULATION BUSINESS WOULD NOT ARISE. 8. GROUND NO 3 IS WITH REGARD TO INTEREST LEVIED UNDER SECTION 220 (2) OF THE ACT. LD AR OF THE ASSESSEE ARGUED THAT LEARNED CIT APPEALS WRONGLY APPLIED THE ACTION OF THE ASSESSING OFFICER IN CHARGE INTEREST UNDER SECT ION 220 (2) OF THE ACT. IT WAS ARGUED THAT INTEREST UNDER SECTION 220 (2) OF THE A CT HAS TO BE LEVIED IN RESPECT OF DEMAND NOTICE RAISED AS PER FRESH ASSESSMENT ORDER. LD AR FOR ASSESSEE RELIED UPON THE DECISION OF TRIBUNAL IN M/S. NARAD INVESTM ENTS AND TRADING PRIVATE LIMITED VERSUS DCIT IN ITA NO. 3360/M/2010, DATED 1 9 OCTOBER 2011. DR FOR REVENUE RELIED UPON THE ORDER OF AUTHORITIES BELOW. 9. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES. THE PROVISIONS OF SECTION 220 (2) OF THE ACT ARE CONSEQUENTIAL IN NATURE. WE DIRE CT THE AO TO CALCULATE THE INTEREST IN ACCORDANCE WITH LAW AND THE DECISION OF M/S. NARAD INVESTMENTS AND TRADING PRIVATE LIMITED VERSUS DCIT (SUPRA). IN THE RESULT, BOTH THE APPEAL FILED BY THE ASSES SEE IS ALLOWED. ITA NO 5689/M/2010 FOR AY-2002-03 10. THE ISSUES INVOLVED IN THIS APPEAL IS IDENTICAL WIT H THE ISSUE IN ITA NO. 5689/M/2010, THOUGH QUANTUM MAY DIFFER, THEREFORE, ON SIMILAR LINES AND SIMILAR REASONS, THE PRESENT APPEAL FILED BY THE ASSESSEE F OR ASSESSMENT YEAR 2002-03 IS ALSO ALLOWED. 11. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSESS EE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JULY, 2016. SD/- SD/- (G.S.PANNU) (PAWA N SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 20/07/2016 S.K.PS 8 ITA NOS. 5688 & 5689/M/2010 M/S PUJA AGENCIES PVT. LTD. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / (ASSTT.REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. !'# / GUARD FILE. $ //TRUE COPY/