M/s. A K Capital Markets Ltd., New Delhi V. DCIT, New Delhi

ITA 6859/DEL/2014

• Counselvise Citation: 685920114 RSA 2014
• Duration Of Justice: 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC 1
• Assessment Year: 2006-2007
• Appeal Filed On: 19-12-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SARABHJIT SINGH
• Keywords: Business income; Search and seizure; Opportunity of being heard; Speculation loss
• Section: 72(1); 133A; 153A; 14A; 43(5); 56; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC - 1 , NEW DELHI BEFORE SH. N. K. SAINI, A CCOUNTANT MEMBER ITA NO. 6859/DEL/2014 : ASSTT. YEAR : 2006 - 07 A. K. CAPITAL MARKETS LTD., 609 , 6 TH FLOOR, ANTRIKSH BHAWAN, 22, KASTURBA GANDHI MARG, CONNAUGHT PLACE, NEW DELHI - 110001 VS DCIT, CENTRAL CIRCLE - 2, NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. A A DCA9960D ASSESSEE BY : SH. VED JAIN, ADV. REVENUE BY : SH. SARABHJIT SINGH , DR DATE OF HEARING : 16 .09 .2015 DATE OF PRONOUNCEMENT : 04 .12 .2015 ORDER THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 14.11 .2014 OF LD. CIT(A) - XXXI , NEW DELHI . 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] IS BAD BOTH IN THE EYE OF LAW AND ON FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN IGNORING THE FACT THAT THE ORDER PASSED BY THE LEARNED AO UNDER SECTION 153A IS BAD AND LIABLE TO BE QUASHED AS THE SAME HAS BEEN FRAMED CONSEQUENT TO A ITA NO . 6859 /DEL /2014 A.K. CAPITAL MARKETS LTD. 2 SEARCH WHICH ITSELF WAS UNLAWFUL AND INVALID IN THE EYE OF LAW. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN IGNORING THE FACT THAT THE PROCEEDINGS INITIATED INCLUDING THE NOTICE ISSUED UNDER SECTION 153A AND THE ASSESSMENT FRAMED UNDER SECTION 153A/143(3) ARE IN VIOLAT ION OF THE STATUTORY CONDITIONS OF THE ACT AND THE PROCEDURE PRESCRIBED UNDER THE LAW AND AS SUCH THE SAME IS BAD IN THE EYE OF LAW AND LIABLE TO BE QUASHED. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ADDITION DESPITE THE FACT THAT THE PROCEEDINGS INITIATED UNDER SECTION 153A AND THE ASSESSMENT FRAMED IN CONSEQUENCE THEREOF ARE BAD IN LAW IN THE ABSENCE OF ANY INCRIMINATING MATERIAL BELONGING TO THE ASSESSEE BEING FOUND DURING THE COURSE OF THE SEARCH. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN PASSING THE ORDER WITHOUT GIVING ASSESSEE A PROPER AND ADEQUATE OPPORTUNITY OF BEING HEARD. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN MAKING THE VARIOUS ADDITIONS WITHOUT THERE BEING ANY INCRIMINATING MATERIAL BEING FOUND DURING THE COURSE OF THE SEARCH. 7(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A ) HAS ERRED BOTH ON FACTS AND IN LAW IN ITA NO . 6859 /DEL /2014 A.K. CAPITAL MARKETS LTD. 3 CONFIRMING THE ACTION OF AO IN NOT ALLOWING THE SET OFF OF RS. 3,93,08,929/ - BEING LOSS ON ACCOUNT OF TRADING IN FUTURES AND OPTIONS/DERIVATIVES AGAINST OTHER INCOME. (II) THAT THE ABOVE SAID LOSS HAS NOT BEEN ALLOW ED TO BE SET OFF BY TREATING THE LOSS IN DERIVATIVES AS SPECULATION LOSS IN TOTAL DISREGARD TO THE PROVISO TO SECTION 43(5) OF THE INCOME TAX ACT. 8(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CO NFIRMING THE ACTION OF THE AO IN MAKING DISALLOWANCE OF AN AMOUNT OF RS. 14,64,859/ - INVOKING THE PROVISIONS OF SECTION 14A READ WITH RULE 8D. (II) THAT THE DISALLOWANCE HAS BEEN CONFIRMED DESPITE THE FACT THAT RULE 8D IS NOT APPLICABLE IN THE YEAR UNDER CONSIDERATION. 9. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE GROUNDS OF APPEAL. 3. GROUND NOS. 1 TO 6, 8(I) & 8(II) WERE NOT PRESSED, SO THESE GROUNDS ARE DISMISSED AS NOT PRESSED. THE GROUND NO. 9 IS GENERAL IN NATURE. 4. NOW THE ON LY ISSUE AGITATED BY THE ASSESSEE VIDE GROUND NOS. 7(I) & (II) RELATES TO THE CONFIRMATION OF THE ACTION OF THE AO IS NOT ALLOWING THE SET OFF OF RS.3,93,08,929/ - BEING LOSS ON ACCOUNT OF TRADING IN FUTURES AND OPTIONS/DERIVATIVES AGAINST OTHER INCOME. ITA NO . 6859 /DEL /2014 A.K. CAPITAL MARKETS LTD. 4 5. FACTS OF THE CASE IN BRIEF ARE THAT A SEARCH AND SEIZURE OPERATIONS WERE CARRIED OUT U/S 132 AND SURVEY WAS CONDUCTED U/S 133A OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) IN THE CASE OF M/S A.K. CAPITAL SERVICES LTD. , ITS GROUP COMPAN IES , DIRECTORS OF SUCH COMPANIES AN D THEIR RELATIVES ON 26.04.2007, T HE ASSESSEE BELONGED TO THE SAID GROUP . D URING THE COURSE OF ABOVE SAID OPERATION S, SUBSTANTIAL DOCUMENTS WERE SEIZED AND IMPOUNDED. THE ASSESSEE FILED THE RETURN OF INCOME ON 29.11.2006 SHOWING TOTAL LOSS AT RS.3,93,08,929/ - FROM BUSINESS AND PROFESSION. THE SAID LOSS WAS ON ACCOUNT OF DERIVATIVE TRADING. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASKED THE ASSESSEE TO EXPLAIN AS TO WHY LOSS OF RS.3,93,08,929/ - ON SHARE TRADING IN FUTURE AND OPTIONS/DERIVATIVES (IN WHICH THERE WAS NO ACTUAL DELIVERY OF SHARES) MAY NOT BE DISALLOWED FOR BEING SPECULATIVE AS NO DELIVERY TAKES PLACE IN FUTURE AND OPTIONS/DERIVATIVES A S SUCH LOSS WAS NOT ADMISSIBLE IN VIEW OF THE PROVISIONS OF SECTION 43(5) AND 73 OF THE ACT . THE ASSESSEE SUBMITTED THAT IT WAS COVERED UNDER PROVISO (C) TO SECTION 43(5) OF THE ACT AND IT WAS BUSINESS LOSS AS PER THE ACT WHICH WAS CLEA RLY ALLOWABLE. THE AO HOWEVER DID NOT FIND MERIT IN THE SUBMISSION OF THE ASSESSEE AND O BSERVED AS UNDER: THE ARGUMENT WAS EXAMINED BUT IS NOT SATISFACTORY. THE CASE OF THE ASSESSEE IS SQUARELY COVERED UNDER PROVISIONS OF SECTION 43(5) AND 73 OF INCOME TAX ACT, 1961. IT IS SEEN FROM BALANCE SHEET THAT STOCK OF SHARES AS ON 31.03.2005 WAS RS . 9,21,500/ - . FURTHER STOCK AS ON 31.03.2006 WAS ALSO RS. 9,21,500/ - . IT MEANS THAT THE ASSESSEE WAS PLAYING IN FUTURE AND ITA NO . 6859 /DEL /2014 A.K. CAPITAL MARKETS LTD. 5 OPTIONS/DERIVATIVES WITHOUT HAVING STOCK AND BOOKED A LOSS OF RS.3,93,08,929/ - . IT WAS PURELY SPECULATIVE TRANSACTIONS AS THE ASSESSE E HAS NOTHING TO DELIVER AS IT HAD VIRTUALLY NO STOCK. THE ASSESSEE S CASE IS NOT COVERED BY CLAUSE (D) TO SECTION 43(5) OF INCOME TAX ACT, 1961. IF THE ASSESSEE HAD SUFFICIENT STOCK SO AS TO ENABLE HIM TO PLAY IN DERIVATIVES, THERE IS FAIR POSSIBILITY THA T HE MAY NOT BOOK LOSS AS SMALL LOSS IN DERIVATIVE WILL YIELD HIM SUBSTANTIAL GAIN IN SHARE/COMMODITY MARKET IF HE HAD STOCK. THEREFORE, IT IS QUITE CLEAR THAT THE ASSESSEE WAS DEALING IN DERIVATIVES WITHOUT HAVING SUFFICIENT STOCK. THIS IS CLEARLY A SPECU LATIVE TRANSACTION. THEREFORE, IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, SPECULATIVE LOSS OF RS.3,93,08,929/ - IS DISALLOWED. THE SAME CANNOT BE ALLOWED AGAINST BUSINESS INCOME. 6 . BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A ) AND SUBMITTED THAT THE ISSUE IS COVERED BY PROVISO TO SECTION 43(5) OF THE ACT WHEREIN CERTAIN KINDS OF TRANSACTION S HAVE BEEN HELD TO BE NON - SPECULATIVE IN SPITE OF THE R E BEING NO ACTUAL DELIVERY OF GOODS. IT WAS STATED THAT CLAUSE (D) OF PROVISO TO SEC TION 43(5) OF THE ACT COVERS TRADING IN DERIVATIVES CARRIED OUT IN A RECOGNIZED STOCK EXCHANGE WHICH WOULD NOT BE DEEMED TO BE A SPECULATIVE TRANSACTION. IT WAS FURTHER STATED THAT THE TRADING SHOULD BE CARRIED OUT ELECTRONICALLY ON SCREEN BASED SYSTEM THR OUGH STOCK BROKER AND THE TRADING SHOULD BE SUPPORTED BY A TIME STAMP CONTRACT NOTE ISSUED BY SUCH BROKER INDICATING IN THE CONTRACT NOTE, THE UNIQUE CLIENT IDENTITY NUMBER AND PERMANENT ACCOUNT NUMBER. IT WAS STATED THAT THE ASSESSEE FULFILLED ALL THE REQ UIREMENTS AND THEREFORE, THE LOSS ARISING OUT OF TRADING IN FUTURE AND ITA NO . 6859 /DEL /2014 A.K. CAPITAL MARKETS LTD. 6 OPTIONS/DERIVATIVES SHOULD NOT BE TREATED AS A SPECULATIVE LOSS. THE AO WAS ALSO PRESENT BEFORE THE LD. CIT(A) AND SUBMITTED THAT THE CASE OF THE ASSESSEE WAS COVERED BY EXPLANATION TO SECTION 73 OF THE ACT WHICH PROVIDES THAT WHERE ANY PART OF BUSINESS OF A COMPANY CONSISTED OF PURCHASE AND SALE OF SHARES OF OTHER COMPANIES, SUCH COMPANY SHOULD BE DEEMED TO BE CARRYING ON A SPECULATION BUSINESS TO THE EXTENT OF SUCH SHARE TRADING AND SI NCE THE ASSESSEE WAS HOLDING IN FUTURE OPTIONS/DERIVATIVES WITHOUT ACTUAL DELIVERY OF THE STOCK, THEREFORE, IT WAS DULY SPECULATIVE TRANSACTION. THE RELIANCE WAS PLACED ON THE JUDGMENT OF THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT, DELHI - IV VS DLF COM MERCIAL DEVELOPERS LTD. (2013) 35 TAXMANN.COM 280 (DEL). THE ASSESSEE IN ITS REJOINDER REITERATED THE SUBMISSION THAT THE ISSUE WAS COVERED BY CLAUSE (D) OF PROVISO TO SECTION 43(5) OF THE ACT AND NOT BY EXPLANATION TO SECTION 73 OF THE ACT. 7 . THE LD. C IT(A) AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES CONFIRMED THE ACTION OF THE AO BY OBSERVING IN PARA 3.6 OF THE IMPUGNED ORDER AS UNDER: THE FACTS OF THE CASE SHOW THAT THE APPELLANT WAS INVOLVED IN TRADING IN FUTURES AND OPTIONS/DERIVATIVES. IT HAD INCURRED A LOSS OF RS.3,93,08,929/ - . IT IS A COMPANY WHOSE INCOME MAINLY CONSISTS OF INCOME CHARGEABLE UNDER THE HEADS INTEREST OF SECURITIES AND BUSINESS OF TRADING IN SHARES ETC. THE INCOME DETAILS APPEARING IN P & L A/C SHOW THAT IT HAS INCOME FR OM INTEREST INCOME, DIVIDEND INCOME AND INCOME FROM SHARE TRADING AND BROKERAGE INCOME. THE APPELLANT S CASE IS ITA NO . 6859 /DEL /2014 A.K. CAPITAL MARKETS LTD. 7 COVERED BY EXPLANATION TO SECTION 73 OF THE ACT. HENCE, THE LOSS BOOKED BY THE ASSESSEE FROM TRADING IN FUTURES AND OPTIONS/DERIVATIVES TO THE E XTENT OF RS.3,93,08,929/ - , HAS BEEN RIGHTLY TREATED AS LOSS FROM SPECULATIVE BUSINESS. THE RATIO OF HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT, DELHI - IV VS DLF COMMERCIAL DEVELOPERS LTD. (2013) 35 TAXMANN.COM 280 (DEL.) IS DIRECTLY APPLICABLE TO THE APPELLANT S CASE. THE RELEVANT GROUND IS THEREFORE DISMISSED. 8. NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSION MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE LOSS INCURRED BY THE ASSESSEE WAS MAINLY FROM DERIVATIVES AND NOT FROM THE SHARES. THEREFORE, THE EXPLANATION TO SECTION 73 OF THE ACT WAS NOT APPLICABLE. IT WAS FURTHER SUBMITTED THAT THE LD. CIT(A) HAD NOT EXAMINED THE BASIC CONDITION FOR APPLYING EXPLANATION TO SECTION 73 OF THE ACT WHICH IS APPLICABLE TO A COMPANY OTHER THAN THE COMPANY WHOSE GROSS TOTAL INCOME IS MAINLY FROM INCOME FROM HOUSE PROPERTY, CAPITAL GAIN OR INCOME FROM OTHER SOURCES. BUT THE LOSS FROM THE PURCHASE OF SALE OF SHARES OF OTHER COMPANIES SHALL NOT BE DEEMED TO BE A SPECULATIVE BUSINESS. IT WAS CONTENDED THAT THE ASSESSEE HAD EARNED INCOME OF RS.14,64,859/ - BY WAY OF DIVIDEND AND RS.39,236/ - AS INTEREST INCOME WHICH WERE DULY REFLECTED IN THE PROFIT AND LOSS ACCOUNT. A REFERENCE WAS MADE TO PAGE NO. 8 OF THE A SSESSEE S PAPER BOOK. IT WAS FURTHER CONTENDED THAT THE INCOME OF THE ASSESSEE CONSISTED MAINLY OF DIVIDEND AND INTEREST WHICH WAS CHARGEABLE UNDER THE HEAD INCOME FROM OTHER SOURCES . IT WAS ALSO CONTENDED THAT THE ITA NO . 6859 /DEL /2014 A.K. CAPITAL MARKETS LTD. 8 GROSS TOTAL INCOME FOR THE PURPOSE OF A SCERTAINING ITS CONSTITUENT CAN ONLY BE COMPRISED OF THE POSITIVE INCOME. IT WAS ACCORDINGLY SUBMITTED THAT SINCE THE ASSESSEE HAD EARNED INCOME FROM OTHER SOURCES ONLY , T HEREFORE, THE LOSS INCURRED AND TO BE CARRY FORWARD , CANNOT BE CONSIDERED TO BE A S PECULATIVE LOSS. THE RELIANCE WAS PLACED ON THE JUDGMENT OF THE HON BLE BOMBAY HI GH COURT IN THE CASE OF CIT, CITY - 4 VS M/S HSBC SECURITIES & CAPITAL MARKETS INDIA PVT. LTD. (2012) 23 TAXMANN.COM 377 (BOM) AND THE DECISION OF THE ITAT MUMBAI BENCH IN THE C ASE OF SEA GLIMPSE INVESTMENTS PVT. LTD. VS ITO IN ITA NO. 7480/MUM/2010 ORDER DATED 08.04.2015 , COPIES OF THESE ORDERS WERE FURNISHED WHICH ARE PLACED ON RECORD. 9. IN HIS RIVAL SUBMISSIONS THE LD. DR REITERATED THE OBSERVATIONS OF THE LD. CIT(A) MADE IN PARA 3.6 OF THE IMPUGNED ORDER AND STRONGLY SUPPORTED THE ORDER PASSED BY THE AUTHORITIES BELOW . 10. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, THE ONLY CONT ROVERSY TO BE RESOLVE D IS THAT AS TO WHETHER THE PROVISIONS CONTAINED IN EXPLANATION TO SECTION 73 OF THE ACT ARE APPLICABLE TO THE FACTS OF THE P RESENT CASE OR NOT . THE PROVISION OF EXPLANATION TO SECTION 73 OF THE ACT READS AS UNDER: EXPLANATION. - WHER E ANY PART OF THE BUSINESS OF A COMPANY ( OTHER THAN A COMPANY WHOSE GROSS TOTAL INCOME CONSISTS ITA NO . 6859 /DEL /2014 A.K. CAPITAL MARKETS LTD. 9 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 O N A SPECULATION BUSINESS TO THE EXTENT TO WHICH THE BUSINESS CONSISTS OF THE PURCHASE AND SALE OF SUCH SHARES.] 11. A BARE READING OF THE ABOVE P ROVISIONS CLARIFIES THAT WHERE ANY PART OF THE BUSINESS OF A COMPANY OTHER THAN THE INVESTMENT COMPANY OR BA NKING COMPANY OR FINANCE COMPANY RELATES TO THE PURCHASE AND SALE OF SHARES, SUCH COMPANY SHALL FOR THE PURPOSE OF THESE SECTIONS BE DEEMED TO BE CARRYING ON A SPECULATIVE BUSINESS TO THE EXTENT TO WHICH THE BUSINESS CONSISTS OF PURCHASE AND SALE OF SHARES . THE EXPLANATION ALSO TALKS ABOUT THE INCOME WHICH IS CHARGEABLE UNDER DIFFERENT HEADS I.E. INTEREST ON SECURITIES, INCOME FROM HOUSE PROPERTY, CAPITAL GAINS AND INCOME FROM OTHER SOURCES. IF THE INCOME OF THE COMPANY IS UNDER THE AFORESAID HEAD S OR ANY O F THOSE HEADS , ONLY THEN THESE PROVISION ARE NOT APPLICABLE. IN OTHER WORDS IF ONLY INCOME WHICH IS INCLUDED IN GROSS TOTAL INCOME FALLS UNDER ANY OF THE AFORESAID HEAD OR UNDER ALL THE AFORESAID SPECIFIED HEADS THEN THE ASSESSEE WILL FALL WITHIN THE PURVI EW OF THE EXCEPTION CARVED OUT IN THE EXPLANATION TO SECTION 73 OF THE ACT AND CONSEQUENTLY THE ASSESSEE COULD NOT DEEMED TO BE CARRYING ON A SPECULATIVE BUSINESS FOR THE PURPOSE OF SECTION 73(1) OF THE ACT. IN THE ITA NO . 6859 /DEL /2014 A.K. CAPITAL MARKETS LTD. 10 PRESENT CASE, THE AO HIMSELF ADMITTED IN PARA 5 OF THE ASSESSMENT ORDER THAT THE ONLY POSITIVE INCOME EARNED BY THE ASSESSEE WAS RS.14,64,859/ - ON ACCOUNT OF THE DIVIDEND WHICH WAS CLAIMED AS EXEMPT. IN THE PRESENT CASE, THE ASSESSEE ALTHOUGH HAD DECLARED LOSS OF RS.3,93, 08, 929/ - UNDER THE HEAD I NCOME FROM BUSINESS AND PROFESSION BUT THE POSITIVE INCOME OF THE ASSESSEE WAS RS.14,64,859/ - ON ACCOUNT OF DIVIDEND RECEIVED. THE AO DISALLOWED THE SAID AMOUNT OF RS.14,64,859/ - BY INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT R.W. RULE 8D OF THE INCO ME TAX RULES, 1962. IT IS ALSO NOTICED FROM THE COPY OF PROFIT AND LOSS ACCOUNT PLACED AT PAGE NO. 8 OF THE ASSESSEE S PAPER BOOK THAT AN INTEREST INCOME OF RS.39,236/ - WAS RECEIVED BY THE ASSESSEE. THE SAID INCOME FALLS UNDER THE HEAD INCOME FROM OTHER S OURCES , AS PER THE PROVISIONS OF SEC TION 56 OF THE ACT WHICH DEFINES THE INCOME FROM OTHER SOURCES AND READ AS UNDER: 56. INCOME FROM OTHER SOURCES. - (1) INCOME OF EVERY KIND WHICH IS NOT TO BE EXCLUDED FROM THE TOTAL INCOME UNDER THIS ACT SHALL BE CHARGEABLE TO INCOME - TAX UNDER THE HEAD INCOME FROM OTHER SOURCES , IF IT IS NOT CHARGEABLE TO INCOME - TAX UNDER ANY OF THE HEADS SPECIFIED IN SECTION 14, ITEMS A TO E. (2) IN PARTICULAR, AND WITHOUT PREJUDICE TO THE GENERALITY OF THE PROVISIONS OF SUB - S ECTION (1), THE FOLLOWING INCOMES, SHALL BE CHARGEABLE TO INCOME - TAX UNDER THE HEAD INCOME FROM OTHER SOURCES , NAMELY : (I) DIVIDENDS ; ITA NO . 6859 /DEL /2014 A.K. CAPITAL MARKETS LTD. 11 (IA) INCOME REFERRED TO IN SUB - CLAUSE (VI II) OF CLAUSE (24) OF SECTION2 ; (IB) INCOME REFERRED TO IN SUB - CLAUSE ( IX) OF CLAUSE (24) OF SECTION2 ; (IC) INCOME REFERRED TO IN SUB - CLAUSE (X) OF CLAUSE (24) OF SECTION 2, IF SUCH INCOME IS NOT CHARGEABLE TO INCOME - TAX UNDER THE HEAD PROFITS AND G AINS OF BUSINESS OR PROFESSION ; (ID) INCOME BY WAY OF INTEREST ON SECURITIES, IF THE INCOME IS NOT CHARGEABLE TO INCOME - TAX UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION ; (II) INCOME FROM MACHINERY, PLANT OR FURNITURE BELONGING TO THE ASSESSEE AND LET ON HIRE, IF THE INCOME IS NOT CHARGEABLE TO INCOME - TAX UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION ; (III) WHERE AN ASSESSEE LETS ON HIRE MACHINERY, PLANT OR FURNITURE BELONGING TO HIM AND ALSO BUILDINGS, AND THE LETTING OF THE BUILDINGS IS INSEPARABLE FROM THE LETTING OF THE SAID MACHINERY, PLANT OR F URNITURE, THE INCOME FROM SUCH LETTING, IF IT IS NOT CHARGEABLE TO INCOME - TAX UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION ; (IV) INCOME REFERRED TO IN SUB - CLAUSE (XI) OF CLAUSE (24) OF SECTION 2, IF SUCH INCOME IS NOT CHARGEABLE TO INCOME - TAX UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION OR UNDER THE HEAD SALARIES ; .. .. .. ITA NO . 6859 /DEL /2014 A.K. CAPITAL MARKETS LTD. 12 12. FROM THE ABOVE , IT IS CLEAR THAT THE DIVIDEND INCOME AND INTEREST INCOME COMES UNDER THE DEFINITION OF INCOME F ROM OTHER SOURCES AS PER THE PROVISIONS OF SECTION 56 OF THE ACT. IN THE PRESENT CASE, T HE ASSESSEE IS HAVING THE INCOME ONLY UNDER THE HEAD INCOME FROM OTHER SOURCES . A S REGARDS TO THE LOSS ON ACCOUNT OF SHARE TRADING IS CONCERNED THE SAME IS NOT TO BE CONSIDERED WHILE COMPUTING THE GROSS TOTAL INCOME , IF THE SAID LOSS IS TO BE CONSIDERED AS INCOME OF THE ASSESSEE THEN IT WILL BE ADJUSTABLE U/S 72 OF THE ACT WHICH IS EXACTLY PROHIBITED BY THE PROVISIONS OF SECTION 73 OF THE ACT. MOREOVER, SECTION 72(1) OF THE ACT PROHIBITS CONSIDERATION OF THE SPECULATION LOSS WHILE COMPUTING THE INCOME. I N THE PRESENT CASE, THE GROSS TOTAL INCOME WHICH MUST BE COMPRISED OF THE POSITIVE INCOME, IS UNDER THE HEAD INCOME FROM OTHER SOURCES . THEREFORE, THE ASSESSEE WOULD NOT BE DEEMED TO BE CARRYING ON SPECULATIVE BUSINESS FOR THE PURPOSE OF SECTION 73(1) OF THE ACT AS HAS BEEN HELD BY THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS HSBC SECURITIES & CAPITAL MARKETS INDIA PVT. LTD. (SUPRA) WHEREIN THEIR LORDSHIPS OBSER VED AS UNDER: 8. IN THE PRESENT CASE, SECTION 73 WOULD NOT APPLY IN VIEW OF THE FACT THAT THE EXPLANATION THERETO, DOES NOT OPERATE IN RESPECT OF A COMPANY WHOSE GROSS TOTAL INCOME CONSISTS MAINLY OF INCOME WHICH IS CHARGEABLE UNDER THE HEADS OF INTERES T ON SECURITIES , INCOME FROM HOUSING PROPERTY , CAPITAL GAINS AND INCOME FROM OTHER SOURCES . WE HAVE SET OUT THE RELEVANT PART OF THE ASSESSMENT ORDER WHICH INDICATES THAT IN THE RELEVANT YEAR, THE INCOME FROM OTHER ITA NO . 6859 /DEL /2014 A.K. CAPITAL MARKETS LTD. 13 SOURCES WAS THE ONLY CHARGEABLE INCOME, AS THE RESPONDENT HAD SUFFERED A BUSINESS LOSS OTHERWISE. IN THAT VIEW OF THE MATTER, THE JUDGMENT OF THE DIVISION BENCH OF THIS COURT IN THE CASE OF THE COMMISSIONER OF INCOME TAX - 3 VERSUS. M/S DARSHAH SECURITIES PVT. LTD. SUPPORTS THE RESPONDENT'S CASE. IN THAT CASE, DURING THE RELEVANT ASSESSMENT YEAR, THE ASSESSEE HAD A LOSS OF ABOUT RS.2.33 CRORES IN THE SHARE TRADING AND HAD DIVIDEND INCOME OF ABOUT RS.4.80 LACS. THE DIVISION BENCH HELD IN PARAGRAPHS 6, 7, 8 AND 9 AS UNDER: - 6. THE EXPLANATION TO SECTION 73 INTRODUCES A DEEMING FICTION. THE DEEMING FICTION STIPULATES THAT WHERE ANY PART OF THE BUSINESS OF A COMPANY CONSISTS IN THE PURCHASE AND SALE OF SHARES OF OTHER COMPANIES, SUCH COMPANY SHALL, FOR THE PURPOSES OF THE SECTION BE DEEMED TO BE CARRYING ON A SPECULATION BUSINESS TO THE EXTENT TO WHICH THE BUSINESS CONSISTS OF THE PURCHASE AND SALES OF SUCH SHARES. THE DEEMING FICTION APPLIES ONL Y TO A COMPANY AND THE PROVISION MAKES IT CLEAR THAT THE DEEMING FIXATION (SIC) EXTENDS ONLY FOR THE PURPOSES OF THE SECTION. THE BRACKETED PORTION OF THE EXPLANATION, HOWEVER CARVES OUT AN EXCEPTION. THE EXCEPTION IS THAT THE PROVISION O F THE EXPLANATION SHALL NOT APPLY TO 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 WHOSE PRINCIPAL BUSINESS IS OF BANKING OR THE GRANTING OF LOANS AND ADVANCES. 7. THE SUBMISSION WHICH HAS BEEN URGED ON BEHALF OF THE REVENUE IS THAT IN COMPUTING THE GROSS TOTAL INCOME FOR THE PURPOSE OF THE EXPLANATION TO SECTION 73, INCOME ITA NO . 6859 /DEL /2014 A.K. CAPITAL MARKETS LTD. 14 UNDER THE HEADS OF PROFITS AND GAINS OF BUSINESS OR PROFESSION MUST BE IGNORED. ALTERNATIVELY, IT HAS BEEN URGED THAT WHERE THE INCOME FROM BUSINESS INCLUDES A LOSS IN THE TRADING OF SHARES, SUCH A LOSS SHOULD NOT BE ALLOWED TO BE SET OFF AGAINST THE INCOME FROM ANY OTHER SOURCE UNDER THE HEAD OF PROFITS AND GAINS OF BUSINESS OR PROFESSION. 8. IN OUR VIEW, THE SUBMISSION WHICH HAS BEEN URGED ON BEHALF OF THE REVENUE CANNOT BE ACCEPTED. LEAVING ASIDE FOR A MOMENT, THE EXCEPTION, WHICH IS CARVED O UT BY THE EXPLANATION TO SECTION 73, THE EXPLANATION CREATES A DEEMING FICTION BY WHICH A COMPANY IS DEEMED TO BE CARRYING ON A SPECULATION BUSINESS WHERE ANY PART OF ITS BUSINESS CONSISTS IN THE PURCHASE AND SALE OF SHARES OF OTHER COMPANIES. NOW, THE EXC EPTION WHICH IS CARVED OUT APPLIES TO A SITUATION WHERE THE GROSS TOTAL INCOME OF A COMPANY CONSISTS MAINLY OF INCOME WHICH IS CHARGEABLE UNDER THE HEADS INTEREST ON SECURITIES , INCOME FROM HOUSE PROPERTY , CAPITAL GAINS AND INCOME FROM O THER SOURCES . NOW, ORDINARILY INCOME WHICH ARISES FROM ONE SOURCE WHICH FALLS UNDER THE HEAD OF PROFITS AND GAINS OF BUSINESS OR PROFESSION CAN BE SET OFF AGAINST THE LOSS WHICH ARISES FROM ANOTHER SOURCE UNDER THE SAME HEAD. SUB SECTION (1) OF SECTION 73 HOWEVER SETS UP A BAR TO THE SETTING OFF OF A LOSS WHICH ARISES IN RESPECT OF SPECULATION BUSINESS AGAINST THE PROFITS AND GAINS OF ANY OTHER BUSINESS. CONSEQUENTLY, A LOSS WHICH HAS ARISEN ON ACCOUNT OF SPECULATION BUSINESS CAN BE SET OFF ONL Y AGAINST THE PROFITS AND GAINS OF ANOTHER SPECULATION BUSINESS. HOWEVER, FOR SUB SECTION (1) OF SECTION 73 TO APPLY THE LOSS MUST ARISE IN RELATION TO A SPECULATION BUSINESS. THE EXPLANATION PROVIDES A DEEMING DEFINITION OF W HEN A COMPANY IS DEEMED TO BE CARRYING ON A SPECULATION BUSINESS. ITA NO . 6859 /DEL /2014 A.K. CAPITAL MARKETS LTD. 15 IF, THE SUBMISSION OF THE REVENUE IS ACCEPTED, IT WOULD LEAD TO AN INCONGRUOUS SITUATION, WHERE IN DETERMINING AS TO WHETHER A COMPANY IS CARRYING ON A SPECULATION BUSINESS W ITHIN THE MEANING OF THE EXPLANATION, SUB SECTION (1) OF SECTION 73 IS APPLIED IN THE FIRST INSTANCE. THIS WOULD IN OUR VIEW NOT BE PERMISSIBLE AS A MATTER OF STATUTORY INTERPRETATION, BECAUSE THE EXPLANATION IS DESIGNED TO DE FINE A SITUATION WHERE A COMPANY IS DEEMED TO CARRY ON SPECULATION BUSINESS. IT IS ONLY THEREAFTER THAT SUB SECTION (1) OF SECTION 73 CAN APPLY. APPLYING THE PROVISIONS OF SECTION 73(1) TO DETERMINE WHETHER A COMPANY IS CARRYING ON SPECULATION BUSINESS WOULD REVERSE THE ORDER OF APPLICATION. THAT WOULD BE IMPERMISSIBLE, NOR, IS IT CONTEMPLATED BY PARLIAMENT. FOR, THE AMBIT OF SUB SECTION (1) OF SECTION 73 IS ONLY TO PROHIBIT THE SETTING OFF OF A LOSS WHICH HAS RESULTED FROM A SPECULA TION BUSINESS, SAVE AND ACCEPT AGAINST THE PROFITS AND GAINS OF ANOTHER SPECULATION BUSINESS. IN ORDER TO DETERMINE WHETHER THE EXCEPTION THAT IS CARVED OUT BY THE EXPLANATION APPLIES, THE LEGISLATURE HAS FIRST MANDATED A COMPUTATION OF THE GRO SS TOTAL INCOME OF THE COMPANY. THE WORDS CONSISTS MAINLY ARE INDICATIVE OF THE FACT THAT THE LEGISLATURE HAD IN ITS CONTEMPLATION THAT THE GROSS TOTAL INCOME CONSISTS PREDOMINANTLY OF INCOME FROM THE FOUR HEADS THAT ARE REFERRED TO THEREIN. OBVIOUSLY, IN COMPUTING THE GROSS TOTAL INCOME THE NORMAL PROVISIONS OF THE ACT MUST BE APPLIED AND IT IS ONLY THEREAFTER, THAT IT HAS TO BE DETERMINED AS TO WHETHER THE GROSS TOTAL INCOME SO COMPUTED CONSISTS MAINLY OF INCOME WHICH IS CHARGEAB LE UNDER THE HEADS REFERRED TO IN THE EXPLANATION. ITA NO . 6859 /DEL /2014 A.K. CAPITAL MARKETS LTD. 16 13. IN THE PRESENT CASE ALSO THE ASSESSEE ALTHOUGH HAD INCURRED LOSS OF RS.3,93, 08, 929/ - IN TRADING OF DERIVATIVES , BUT IT HAD DIVIDEND INCOME OF RS.14,64,859/ - AND INTEREST INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES AMOUNTING TO RS.39,236/ - . THEREFORE, THE ONLY POSITIVE INCOME OF THE ASSESSEE WAS UNDER THE HEAD INCOME FROM OTHER SOURCES . WE, THEREFORE, BY CONSIDERING THE TOTALITY OF THE FACTS AS DISCUSSED HEREINABOVE ARE OF THE VIEW THAT THE ASSESSEE S CASE FALLS WITHIN THE PURVIEW OF EXCEPTION CARVED OUT IN THE EXPLANATION TO SECTION 73 OF THE ACT AND CONSEQUENTLY THE ASSESSEE SHALL NOT BE DEEM ED TO BE DOING THE SPECULATIVE BUSINESS FOR THE PURPOSE OF SECTION 73(1) OF THE ACT. 14. FOR THE AFORESAID VIEW I AM ALSO FORTIFIED BY THE DECISION OF THE ITAT BOMBAY BENCH IN THE CASE OF SEA GLIMPSE INVESTMENTS PVT. LTD. VS ITO (SUPRA) WHEREIN THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARAS 3.2 AND 3.3 WHICH READ AS UNDER: 3.2 THE ISSUE THUS IS WHETHER THE PROVISION IS APPLICABLE TO THE ASSESSEE COMPANY FOR RELEVANT YEAR, I.E., IN TERMS OF THE PROVISION, OR NOT. THE SAME BOILS DOWN TO THE COMPUTATION OF GROSS TOTAL INCOME (GTI) FOR THE PURPOSE OF SECTION 73. THE TERM GROSS TOTAL INCOME IS DEFINED UNDER SECTION 80B(5), EVEN AS THE SAME IS, AS THE SAID PROVISION ITSELF CLARIFIES, FOR THE PURPOSES OF THAT CHAPTER, I.E., UNDER WHICH THE DEFINING PROVISION OF SECTION 80B(5) FALLS, OR CHAPTER VI - A. THE SAME, THEREFORE, WOULD NOT BE RELEVANT. FURTHER, IF THE GTI IS TO BE RECKONED IN TERMS OF SECTION 80B(5), I.E., UPON AGGREGATING DIFFERENT INCOMES, AND PRIOR TO ALLOWING ANY DEDUCTION UNDER CHAPTER VI - A, IT WOULD ONLY IMPLY AGGREGATION OF INCOMES IN TERMS OF CHAPTER VI. SECTION 73 FALLS ITA NO . 6859 /DEL /2014 A.K. CAPITAL MARKETS LTD. 17 UNDER CH APTER VI, WHICH PROVIDES THE RULES OF AGGREGATION OF VARIOUS INCOME, I.E., FALLING UNDER DIFFERENT HEADS OF INCOME. THE PRESCRIPTION OF CHAPTER VI A, OR OF SECTION 80B (5), THUS, CANNOT GUIDE OR PREDICATE THE APPLICABILITY OF SECTION 73, FALLING UNDER CHAP TER VI. THE MATTER COULD BE LOOKED UPON FROM ANOTHER ANGLE AS WELL. THE WHOLE IMPORT OF SECTION 73, AS AFORE - NOTED, IS WHETHER INCOME FROM PURCHASE AND SALE OF SHARES IS TO BE REGARDED AS SPECULATIVE OR NON - SPECULATIVE BUSINESS INCOME; DIFFERENT CONSEQUENC ES ATTENDING THE TWO CLASSIFICATIONS. PER CONTRA, THE LOSS FROM THE PURCHASE AND SALE OF SHARES IS NOT TO BE SET OFF AGAINST ANY OTHER INCOME FOR THE PURPOSE OF THE APPLICABILITY OF SECTION 73. TO WHAT EFFECT THEREFORE THE NEGATIVITY OF THE INCOME PER SE? THE GTI, FOR THE PURPOSE OF SECTION 73, MUST THEREFORE BE COMPUTED BY GIVING EFFECT TO PROVISIONS UP TO CHAPTER V, AND INDEED OF CHAPTER VI, I.E., IN - SO - FAR AS THEY DO NOT IMPINGE UPON THE WORKING OF SECTION 73. WHY, THE EXPLANATION THERETO ITSELF SPEAKS O F THE COMPUTATION OF INCOME UNDER DIFFERENT HEADS OF INCOME. THE ONLY MANNER THEREFORE IN WHICH THE GTI IS TO RECKONED IS BY DISREGARDING THE LOSS ON THE PURCHASE AND SALE OF SHARES, I.E., EXCLUDING THE SAME. WHY, IF LOSS ON THE SAID ACTIVITY IS TO TAKEN I N TO ACCOUNT, I.E., FOR THE PURPOSE OF COMPUTING THE GTI, THE COROLLARY THEREOF WOULD ITS ADJUSTMENT U/S. 72, WHICH IS PRECISELY WHAT SECTION 73 SEEKS TO REGULATE, I.E., IN RESPECT OF LOSS ARISING ON THE PURCHASE AND SALE OF SHARES BY A CLOSELY HELD COMPAN Y, AS IN THE INSTANT CASE. IF THE LOSS IS, OR STANDS TO BE, ADJUSTED, THE SAME, OR THE NEGATIVE FIGURE, DOES NOT SURVIVE, DEFEATING IN EFFECT THE PURPOSE OF THE PROVISION. THE WHOLE PURPOSE OF THE PROVISION IS TO DETERMINE AS TO WHETHER THE LOSS ARISING FROM THE BUSINESS OF PURCHASE AND SALE OF SHARES (OF THE SPECIFIED COMPANY) IS TO BE REGARDED AS NORMAL BUSINESS LOSS OR OF A SPECULATIVE BUSINESS, SO THAT IT WOULD BE AVAILABLE FOR SET OFF ONLY AGAINST PROFIT, IF ANY, OF ANOTHER SPECULATIVE BUSINESS AND, FURTHER, TO THE EXTENT UNABSORBED THUS, CARRY FORWARD FOR SUCH SET OFF FOR A RESTRICTED PERIOD OF FOUR YEARS AS AGAINST THE NORMATIVE TIME PERIOD OF ITA NO . 6859 /DEL /2014 A.K. CAPITAL MARKETS LTD. 18 SEVEN YEARS. THE ONLY IMPLICATION THEREOF, OR THE MANNER WHEREBY THIS PURPOSE COULD BE FULFILLED, IS, IN OU R VIEW, BY IGNORING THE SAID LOSS. GROSS TOTAL INCOME, FOR THE PURPOSE OF ASCERTAINING ITS CONSTITUENTS, CAN ONLY BE COMPRISED OF POSITIVE INCOME/S. HOW COULD THE EXTENT OF INCOME ASSESSABLE UNDER ANY HEAD OF INCOME BE TAKEN INTO ACCOUNT IF THE SAME STAND S, OR STANDS TO BE, SET OFF, WHOLLY OR PARTLY, AGAINST INCOME FALLING UNDER ANOTHER HEAD OF INCOME? THE SAME COULD WELL BE SET OFF AGAINST ANY HEAD OF INCOME, LEADING, HOWEVER, TO DIFFERENT CONSEQUENCES IN TERMS AND IN VIEW OF EXPLANATION TO SECTION 73. TH E MATHEMATICAL PRESCRIPTION OF THE SAID EXPLANATION WOULD THEREFORE SUGGEST THAT THE LOSS COMPUTED FOR ANY SOURCE OF INCOME FALLING UNDER ANY HEAD OF INCOME WOULD STAND TO BE RECKONED IN THE COMPUTATION OF GROSS TOTAL INCOME ONLY WHERE AND TO THE EXTENT IT YIELDS A POSITIVE INCOME FOR OR UNDER THE RELEVANT HEAD OF INCOME. GROSS TOTAL INCOME, THUS, FOR THE PURPOSE OF DETERMINING THE APPLICABILITY OF SEC. 73, WHILE ADMITTING OF INTER SOURCE ADJUSTMENT OF INCOME FOR ANY HEAD OF INCOME, WOULD EXCLUDE NEGATIVE I NCOMES, SO COMPUTED FOR ANY HEAD OF INCOME. HOW COULD, ONE MAY ASK, IT, I.E., A LOSS, WHICH IS ONLY A NEGATIVE INCOME, BE COMPARED WITH A POSITIVE ONE? THIS ALSO FOLLOWS FROM THE REQUIREMENT OF THE SECTION THAT THE GROSS TOTAL INCOME, I.E., A POSITIVE SUM, IS TO BE EXAMINED FOR ITS CONSTITUENTS, I.E., IN TERMS OF THE INCOMES FALLING UNDER DIFFERENT HEADS OF INCOME, COMPRISING IT. A SET OFF OF INCOME FALLING UNDER ONE HEAD AGAINST INCOME FROM ANOTHER WOULD DILUTE THE INCOME FROM THE LATTER, COMPROMISING THU S THE INTEGRITY OF THE COMPOSITION OF THE TOTAL INCOME IN - AS - MUCH AS THE INCOME OF THE LATTER HEAD OF THE INCOME GETS REDUCED (TO THAT EXTENT). AGAIN, FOR THE SAME REASON, THE INCOME FROM THE BUSINESS/S OF PURCHASE AND SALE OF SHARES IS TO BE SEGREGATED, I .E., WHERE ITS NET RESULT IS A LOSS, AND SHALL NOT ENTER THE COMPARISON OR THE EVALUATION PROCESS PROVIDED FOR BY THE SECTION. THIS IS AS IT IS ONLY ITS CHARACTER, I.E., AS SPECULATIVE OR NON - SPECULATIVE, AND, THUS, ITS AVAILABILITY FOR SET OFF AGAINST AN Y OTHER BUSINESS INCOME, OR THE INCOME FALLING UNDER ANY HEAD OF INCOME FOR THAT MATTER, THAT IS ITA NO . 6859 /DEL /2014 A.K. CAPITAL MARKETS LTD. 19 BEING SOUGHT TO BE DETERMINED. ADJUSTING IT, SO THAT ITS INDEPENDENT IDENTITY IS LOST, WOULD DEFEAT AND DETRACT FROM THE VERY PURPOSE FOR WHICH ITS CHARACTER , BY DETERMINING THE APPLICABILITY OR OTHERWISE OF THE PROVISION OF SEC.73, IS BEING ASCERTAINED. THE LEGISLATIVE INTENT BEHIND A PROVISION, IT IS WELL SETTLED, IS TO BE THE FOUNDATIONAL BASIS FOR ANY INTERPRETATIVE EXERCISE [REFER: PADMASUNDARA RAO (DECD. ) AND OTHERS VS. STATE OF TAMIL NADU AND OTHERS [2002] 255 ITR 147 (SC); CIT VS. BABY MARINE EXPORTS [2007] 290 ITR 323 (SC)], AND HAS GUIDED OUR SAID INTERPRETATION. 3.3 IN THE ADMITTED FACTS OF THE CASE, THE ASSESSEE HAS INCOME FROM ADVISORY CHARGES AN D BROKERAGE AT RS.121.81 LACS AND RS.14.93 LACS RESPECTIVELY. ITS OTHER INCOMES ARE RENT; DIVIDEND; AND CAPITAL GAINS (LONG - TERM), AT RS.6.39 LACS, RS.3.41 LACS AND RS.19.68 LACS RESPECTIVELY. QUITE PLAINLY, THE ASSESSEE S GTI, WHICHEVER WAY ONE MAY RECKON IT, CANNOT BE CONSIDERED AS CONSISTING MAINLY OF THE INCOMES UNDER THE HEADS SPECIFIED UNDER EXPLANATION TO SECTION 73, VIZ. INCOME FROM HOUSE PROPERTY , CAPITAL GAINS AND INCOME FROM OTHER SOURCES . EVEN THOUGH WE DO NOT SUBSCRIBE THERETO, AND IS ALS O NOT CONSISTENT WITH THE FORGOING DISCUSSION, THE DIFFERENCE IS SO HUGE AND APPARENT, THAT EVEN THE SET OFF OF LOSS ON TRADING IN SHARES, AGAIN A BUSINESS INCOME, INCURRED AT RS.44.16 LACS, WOULD NOT ALTER THIS POSITION AND THE ASSESSEE S PRINCIPAL SOURCE OF INCOME WOULD BE BUSINESS INCOME. ACCORDINGLY, THE SAID LOSS IS A LOSS FROM A SPECULATION BUSINESS IN TERMS OF EXPLANATION TO SECTION 73, AND IS TO BE TREATED AS SUCH. WE, THUS, FIND NO INFIRMITY IN THE TREATMENT OF THE SAME AS A SPECULATIVE LOSS BY THE REVENUE. IN SO DECIDING, WE ALSO ENDORSE THE RELIANCE BY THE REVENUE ON THE DECISIONS BY THE HON'BLE HIGH COURTS AND TRIBUNAL, AS CITED IN THEIR ORDERS, VIZ. EASTERN AVIATION & INDUSTRIES LTD. VS. CIT [1994] 208 ITR 1023 (CAL); CIT VS. PARKVIEW PROPERTIES (P.) LTD. [2003] 261 ITR 473 (CAL); JRD SECURITIES PVT. LTD. VS. ACIT (IN ITA NO. 4943 OF 2002 DATED 26.10.2005); ASSOCIATED CAPITAL MARKET MGNT. PVT. LTD. VS. JT. CIT (IN ITA NO. ITA NO . 6859 /DEL /2014 A.K. CAPITAL MARKETS LTD. 20 1103/MUM/2001); AND PRUDENTIAL CONSTRUCTION CO. LTD. VS. ASST. CIT [2000] 7 5 ITD 338 (HYD). WE DECIDE ACCORDINGLY. THIS DISPOSES THE ASSESSEE S GROUND NOS. 1 & 2. 1 5 . AS REGARDS TO THE DECISION OF THE HON BLE DELHI HIGH COURT RELIED BY THE LD. CIT(A) IN THE CASE OF CIT VS DLF COMMERCIAL DEVELOPERS LTD. IS CONCERNED IN THE SAID CASE, T HE ASSESSEE WAS ENGAGED ONLY IN THE DERIVATIVE TRANSACTIONS AND WAS NOT ENGAGED IN ANY OF THE SPECIFICALLY EXCLUDED CATEGORIES OF BUSINESS AS TO RENDER EXPLANATION TO SECTION 73 OF THE ACT INAPPLICABLE. HOWEVER, IN THE PRESENT CASE, THE ASSESSEE WAS HAVING THE INTEREST INCOME AS WELL AS INCOME FROM DIVIDEND, THEREFORE, THE FACTS OF THE PRESENT CASE ARE DISTINGUISHABLE FROM THE FACTS OF THE CASE RELIED BY THE LD. CIT(A). IN VIEW OF THE ABOVE DISCUSSION THE GROUND NO. 7 RAISED BY THE ASSESSEE IS ALLOWE D. 16 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED . ( ORDER PRON OUNCED IN THE COURT ON 04 /12 /2015 ) SD/ - (N. K. SAINI) ACCOUNTANT MEMBER DATED: 04 /12 /201 5 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR