DCIT 4(1), MUMBAI V. FOUR DIMENSIONS CAPITAL MARKET P. LTD, MUMBAI

ITA 7488/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9180 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 04-12-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 02-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Transactions in derivatives; Speculation loss
• Section: 143(3); 43(5); 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI . . !'#$ , % &' BEFORE SHRI H.L. KARWA, PRESIDENT AND SHRI N.K. BILLAIYA, AM ./I.T.A. NO.7488/MUM/2010 ( ( ( ( ( / ASSESSMENT YEAR : 2004-05 ACIT-4(1), AAYAKAR BHAVAN, MUMBAI-400 020 / VS. M/S. FOUR DIMENSIONS CAPITAL MARKET PVT. LTD., K.K. CHAMBER, 4 TH FLOOR, SIR PURSHOTTAM THAKURDAS MARG, FORT, MUMBAI-400 001 ') % ./ *+ ./PAN/GIR NO. : AAACF065D ( ), /APPELLANT ) .. ( -.), / RESPONDENT ) ), / / APPELLANT BY: SHRI RITESH MISRA -.), 0 / / RESPONDENT BY : SHRI VIJAY MEHTA 0 12% / DATE OF HEARING : 04.12.2012 34( 0 12% / DATE OF PRONOUNCEMENT :7.12.2012 &5 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST TH E ORDER OF THE LD. CIT(A)-8, MUMBAI DT.23.8.2010 PERTAINING TO A. Y. 2004-05. 2. THE REVENUE HAS RAISED FOLLOWING TWO SUBSTANTIVE GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT TH E ITA NO. 7488/MUM/2010 2 LOSS ARISING FROM TRANSACTIONS OF THE MUTUAL FUND U NITS IS BUSINESS LOSS WHICH IS ALLOWED TO BE REDUCED FRO M OTHER BUSINESS INCOME AND THIS LOSS IS NOT CAPITAL LOSS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE A O TO ADJUST THE LOSS ARISING FROM TRADING OF DERIVATIVE AGAINST PROFIT OF TRADING OF SHARES AND UNITS. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT FO R THE YEAR UNDER CONSIDERATION THE RETURN OF INCOME WAS FILED DECLAR ING TOTAL INCOME AT RS. 37,58,930/-. THE SAID RETURN WAS SELECTED FOR SCRU TINY ASSESSMENT AND ORDER U/S. 143(3) WAS PASSED ON 27.12.2006 DETERMIN ING TOTAL INCOME AT RS. 1,78,94,520/-. SUBSEQUENTLY, THE CASE WAS REOP ENED AND NOTICE U/S. 148 WAS ISSUED ON 30.3.2009. THE ASSESSEE WAS PROV IDED WITH COPY OF REASONS RECORDED VIDE LETTER DT. 20.11.2009. THE AS SESSMENT HAS BEEN REOPENED PRIMARILY FOR THE FOLLOWING TWO REASONS: 1. THE ASSESSEE HAS CREDITED THE P&L A/C. WITH AN AMOU NT OF RS. 2,28,87,937/- ON ACCOUNT OF PROFIT ON SALE SHAR ES AND UNITS (BEING BUSINESS PROFITS) AFTER ADJUSTING THE LOSS FROM THE REDEMPTION OF THE MUTUAL FUND UNIT AMOUNTED TO RS. 71,82,812/-. IT IS OBSERVED THAT THERE IS NO FURTHE R TRANSACTION IN THIS UNIT. ALSO, DIVIDEND FROM THESE UNITS IS SH OWN AS DIVIDEND FROM INVESTMENTS AND IN CASH FLOW STATEM ENT, IT IS SHOWN AS CASH FLOW FROM INVESTING ACTIVITIES, THE REFORE IT IS CONCLUDED THAT THE SAME IS CAPITAL LOSS IN VIEW OF CBDT INSTRUCTION NO.1827 DATED 31-08-1989 THE SAME IS NO T ALLOWED TO BE SET OFF AGAINST BUSINESS INCOME. 2. FOR ANOTHER REASON OF REOPENING, YOUR GOODSELF HAS OBSERVED THAT, DURING THE A.Y. 2004-05 THE ASSESSEE HAS INCU RRED A LOSS OF RS. 57,64,745/- ON ACCOUNT OF TRADING IN D ERIVATIVES. THIS LOSS WAS SET OFF AGAINST THE PROFIT OF RS. 2,8 6,52,682 DERIVED FROM TRADING IN SHARES. IT IS OBSERVED BY Y OUR GOODSELF THAT THE ACTIVITY OF TRADING IN F & 0 OF B SE AND NSE REPRESENTS TRANSACTION OF TRADING IN DERIVATIVES WH ICH ARE ULTIMATELY SETTLED OTHERWISE THAN BY ACTUAL DELIVER Y. HENCE, SUCH TRANSACTIONS ARE SPECULATIVE TRANSACTION WITHI N THE MEANING OF SEC 43(5) OF THE LT. ACT, 1961 AS IT EXI STED BEFORE ITA NO. 7488/MUM/2010 3 AMENDMENT VIDE FINANCE ACT, 2005 W.E.F 1.4.2006. ACCORDINGLY, LOSS ON DERIVATIVES OF RS. 57,64,745/- CANNOT BE SET OFF AGAINST NON SPECULATIVE SHARE TRADING PROFI TS I.E. BUSINESS PROFITS. 4. SO FAR AS FIRST REASON OF REOPENING I.E. TREATIN G THE BUSINESS LOSS AS CAPITAL LOSS IS CONCERNED, IT WAS EXPLAINED BY THE ASSESSEE THAT THE PROFIT AND LOSS ACCOUNT HAS BEEN CREDITED WITH AN AMOUNT OF RS. 2,28,87,937/- ON ACCOUNT OF PROFIT ON SALE OF SHARES AND UNITS AF TER ADJUSTING THE LOSS FROM THE REDEMPTION OF THE MUTUAL FUNDS AMOUNTING T O RS. 71,82,812/-. THE AO WAS OF THE OPINION THAT THE ASSESSEE HAS NOT DONE ANY FURTHER ACTIVITY IN THE SAID UNIT THEREFORE ON FACTS THE A O WAS OF THE OPINION THAT THE LOSS INCURRED BY THE ASSESSEE BY SELLING MUTUAL FUND UNIT OF SUNDRAM BOND IS NOTHING BUT CAPITAL LOSS. DRAWING SUPPORT FROM THE CBDT CIRCULAR, THE AO DISALLOWED THE SET OFF OF LOSS OF RS. 71,82,812/- AND ALLOWED TO BE CARRIED FORWARD AS CAPITAL LOSS. 5. THE MATTER WAS CARRIED BEFORE THE LD. CIT(A). I T WAS EXPLAINED TO THE LD. CIT(A) THAT THE AOS ACTION IN TREATING THE BUSINESS LOSS OF RS. 71,83,812/- AS CAPITAL LOSS WAS BASED ON SURMISES A ND CONJUNCTURES AS THE AO HAS NOT BROUGHT ANY MATERIAL TO ARRIVE AT CONCLU SION THAT THE SAID BUSINESS LOSS WAS A CAPITAL LOSS. IT WAS EXPLAINED TO THE LD. CIT(A) THAT THE INTENTION OF THE ASSESSEE WAS EXPLICITLY CLEAR INASMUCH AS AT THE TIME OF DEALING IN THE UNITS. THE COMPANY HAD SHOWN THE SAID UNIT UNDER INVENTORIES IN THE BALANCE SHEET. IT WAS FURTHER POINTED OUT BY THE ASSESSEE TO THE LD. CIT(A) THAT THE AO HAS INCORREC TLY OBSERVED THAT THE MUTUAL FUND UNITS WERE PURCHASED IN LAST FINANCIAL YEAR AND KEPT AS INVESTMENT WHICH WAS SOLD DURING THE CURRENT FINANC IAL YEAR. IT WAS EXPLAINED BY THE ASSESSEE THAT THE UNITS WERE PURCH ASED ON 7.11.2003 AND SOLD ON 23.2.2004. ITA NO. 7488/MUM/2010 4 5.1. AFTER CONSIDERING THE FACTS AND SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) OBSERVED THAT THE AO HAS NOT BROUGHT ANY MAT ERIAL ON RECORD WHICH WOULD JUSTIFY THE NEGATION OF THE ASSESSEES CLAIM THAT THE LOSS ARISING FROM TRANSACTIONS OF SALE AND PURCHASE OF THE IMPUGNED UNITS WAS BUSINESS LOSS. THE LD. CIT(A) FURTHER OBSERVED THA T THE AO HAS NOT BROUGHT ON RECORD ANY MATERIAL TO JUSTIFY IS CONCL USION THAT THE SAID TRANSACTIONS IN MUTUAL FUND UNIT RESULTED IN CAPITA L LOSS JUST BECAUSE THE ASSESSEE HAS EARNED DIVIDEND ON THESE UNITS COULD NOT BE A SUFFICIENT CAUSE TO CONCLUDE THAT THE TRANSACTIONS WERE OF CAP ITAL NATURE. THE LD. CIT(A) FURTHER POINTED OUT TO THE IDENTICAL FACTS A ND CIRCUMSTANCES IN THE CASE OF THE VERY SAME ASSESSEE IN EARLIER ASSESSMEN T YEARS I.E. 2002-03 AND 2003-04 WHEREIN UNDER SCRUTINY ASSESSMENT, SIMI LAR TRANSACTIONS HAVE BEEN ACCEPTED BY THE AO AS BUSINESS TRANSACTIONS. THE LD. CIT(A) FINALLY CONCLUDED THAT AS THE FACTS IN THE YEAR UND ER CONSIDERATION ARE IDENTICAL TO THOSE IN THE EARLIER YEARS, THEREFORE, THE TRANSACTIONS REQUIRED SIMILAR TREATMENT AND ACCORDINGLY DIRECTED THE AO T O TREAT THE LOSS ARISING FROM THE UNITS AS A LOSS FROM BUSINESS. 6. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE S TRONGLY SUPPORTED THE FINDINGS OF THE AO. PER CONTRA, LD. COUNSEL FO R THE ASSESSEE REITERATED WHAT HAS BEEN SUBMITTED BEFORE THE LD. C IT(A). 7. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES AND THE RIVAL SUBMISSIONS. LET US FIRST EXAMINE THE REASONS RECORDED BY THE AO FOR NOT ACCEPTING THE BUSINESS LOSS ON REDEM PTION OF UNITS AS DECLARED BY THE ASSESSEE. THE AO BASED HIS DECISIO N ON THE FOLLOWING POINTS: ITA NO. 7488/MUM/2010 5 1. LOSS AROSE DUE TO REDEMPTION OF MUTUAL FUND UNIT S OF SUNDARAM BOND SAVER ANNUAL DIVIDEND PAY OUT OFFER W HICH WAS APPARENTLY CAPITAL IN NATURE. 2. MUTUAL FUND UNITS WERE PURCHASED IN LAST FINANCI AL YEAR AND WERE KEPT AS INVESTMENT AND SOLD DURING THE CURRENT FINANCIAL YEAR (2003-04) ONLY. 3. THERE WERE NO FREQUENT SALE AND PURCHASE OF MUT UAL FUNDS UNITS THOUGH THE ASSESSEE HAS BEEN CARRYING OUT HUG E TRANSACTIONS OF SALE AND PURCHASE OF SHARES ON A D AY-TO-DAY BASIS. 4. THE ASSESSEE HAS EARNED DIVIDEND ON THE UNITS OF SUNDARAM BOND AND HAS SHOWN THE SAME NATURALLY AS DIVIDEND FROM INVESTMENTS. 5. AS PER ACCOUNTING STANDARDS, IN CASH FLOW FRO M TRADING ACTIVITIES OR AS FROM INVESTING ACTIVITIES. ASSESS EE HAS CLEARLY SHOWN THE ABOVE TRANSACTION AS CASH FLOW FROM INVES TING ACTIVITIES. 8. THE OBSERVATIONS MADE BY THE AO APPEAR TO BE FAC TUALLY INCORRECT INASMUCH AS IN THE BALANCE SHEET EXHIBITED AT PAGE -3 OF THE PAPER BOOK. TOTAL INVESTMENT SHOWN UNDER THE HEAD INVESTMENT IS AT RS. 2,83,16,165/- WHEREAS IN THE IMMEDIATE PRECEDING YE AR, THE INVESTMENTS WERE NIL. THESE INVESTMENTS WERE IN 55000 EQUITY S HARES OF STERLITE INDUSTRIES LTD., AND 30000 EQUITY SHARES OF PRICOL LTD., WHEREAS UNDER SCHEDULE G OF THE BALANCE SHEET UNDER THE HEAD I NVENTORIES, THE ASSESSEE HAS SHOWN STOCK OF SHARES AND SECURITIES A T RS. 76,96,236/- AS AGAINST RS. 5,19,34,069/- PERTAINING TO IMMEDIATE P RECEDING YEAR. A COMPLETE LIST OF SHARES AND SECURITIES SHOWN UNDER THE HEAD INVESTORIES AT SCHEDULE G OF THE BALANCE SHEET IS EXHIBITED A T PAGE 50,51 & 52 OF THE PAPER BOOK. IT CAN BE SEEN FROM THIS LIST THAT 705255.091 UNITS OF SUNDRAM WERE PURCHASED FOR A VALUE OF RS. 1.50 CROR ES. THE ENTIRE EQUITY OF UNITS WERE REDEEMED AT A VALUE OF RS. 78,17,188/ - THEREBY RESULTING INTO A LOSS OF RS. 71,82,812/-. THIS LOSS WAS SET OFF AGAINST THE PROFITS ITA NO. 7488/MUM/2010 6 MADE IN OTHER TRANSACTIONS FROM SHARES AND SECURITI ES SHOWN UNDER THE HEAD INVENTORIES UNDER SCHEDULE G OF THE BALANC E SHEET. THUS IT CAN BE CONCLUDED THAT THE AO HAS BASED HIS ASSESSMENT E NTIRELY ON WRONG FACTS. THE ASSESSEE IS MAINTAINING TWO PORTFOLIO, ONE HAS INVESTMENT AND THE OTHER HAS INVENTORIES. BOTH HAVE BEEN PROPERLY EXHIBITED IN THE BALANCE SHEET UNDER SCHEDULE F & G OF THE BALANCE S HEET. THIS IS IN LINE WITH THE CBDT CIRCULAR. IT IS ALSO A FACT THAT ON IDENTICAL FACTS IN PREVIOUS YEARS ASSESSMENTS, THE REVENUE HAS ACCEPTED THE LO SS/PROFIT AS BUSINESS LOSS OR BUSINESS PROFITS. THEREFORE, WE DO NOT FIN D ANY REASON OR LOGIC IN GIVING A DIFFERENT TREATMENT TO SIMILAR TRANSACTION S DURING THE YEAR UNDER CONSIDERATION. 8.1 AFTER CAREFULLY CONSIDERING THE FACTS AND THE B ALANCE SHEET AND THE SCHEDULES APPENDED TO THE BALANCE SHEET, WE HAVE NO HESITATION TO HOLD THAT THE LOSS ARISING OUT OF THE REDEMPTION OF THE UNIT OF SUNDRAM AS RESULTED INTO A BUSINESS LOSS AND LD. CIT(A) HAS RI GHTLY DIRECTED THE AO TO TREAT THE LOSS AS BUSINESS LOSS. FINDINGS OF TH E LD. CIT(A) ARE CONFIRMED. GROUND NO. 1 OF THE REVENUE IS DISMISSED . 9. GROUND NO. 2 RELATES TO LOSS ARISING FROM TRADIN G OF DERIVATIVES WHICH THE LD. CIT(A) DIRECTED THE AO TO ADJUST AGAI NST PROFIT OF TRADING OF SHARES AND UNITS. 10. DURING THE COURSE OF THE REASSESSMENT PROCEE DINGS, THE AO OBSERVED THAT THE ASSESSEE HAS ADJUSTED LOSS FROM DERIVATIVE TRANSACTION TO THE TUNE OF RS. 57,64,745/- AGAINST PROFIT OF R S. 2,86,52,682/- WHICH IS DERIVED FROM TRADING IN SHARES. THE AO WAS OF THE OPINION THAT PRIOR TO THE AMENDMENT OF SECTION 43(5) WHICH WAS AMENDED VI DE FINANCE ACT, 2005 W.E.F. 1.4.2006, THE ACTIVITY OF TRADING IN F& O OF STOCK EXCHANGES ITA NO. 7488/MUM/2010 7 REPRESENTS TRADING IN DERIVATIVES WHICH ARE ULTIMAT ELY SETTLED OTHERWISE THAN ACTUAL DELIVERY. SUCH TRANSACTIONS ARE SPECUL ATIVE TRANSACTIONS AS PER SECTION 43(5) OF THE ACT. THE AO WAS CONVINCED THA T THE LOSS INCURRED ON DERIVATIVE TRANSACTION PRIOR TO THE AMENDMENT HA S TO BE TREATED AS DERIVATIVES. THE AO SOUGHT EXPLANATION FROM THE AS SESSEE ASKING IT TO SUBSTANTIATE ITS CLAIM OF SET OFF OF LOSS FROM PROF IT OF SHARES. THE ASSESSEE FILED A DETAILED REPLY EXPLAINING THAT IN THE ORIGINAL ASSESSMENT WHICH WENT UPTO THE ITAT, THE APPELLATE AUTHORITIES HAVE CONFIRMED THAT EXPLANATION TO SEC. 73 IS DEEMING PROVISION WHICH S PECIFIES THAT BUSINESS OF ASSESSEE TO THE EXTENT OF DEALING IN PURCHASE AN D SALE OF SHARES SHALL BE TREATED AS SPECULATION BUSINESS. IN THAT CASE, PRO FIT OR LOSS WHATEVER THE CASE MAY BE , DERIVED FROM THE SAME SHOULD BE TREAT ED AS SPECULATIVE PROFIT AND SPECULATIVE LOSS RESPECTIVELY. THE SUB MISSIONS OF THE ASSESSEE WERE REJECTED BY THE AO WHO WAS OF THE OPINION THAT SECTION 43(5) HAS BEEN SPECIFICALLY AMENDED W.E.F. 25.01.2006 TO ALLO W THE ASSESSEES ADJUSTMENT OF LOSSES FROM DERIVATIVES AGAINST BUSIN ESS INCOME WHICH ITSELF PROVES THAT PRIOR TO THE AMENDMENT LOSS FROM DERIVATIVES WAS NOT ALLOWED TO BE ADJUSTED AGAINST BUSINESS INCOME. TH E AO DID NOT COMMENT ON THE FINDINGS OF THE TRIBUNAL ON THIS ISS UE. THE AO WENT ON TO CONCLUDE THAT LOSSES OF RS. 57,64,745/- IS NOT T O BE ADJUSTED AGAINST TREATING PROFIT FROM SHARES AND TREATED THE SAME AS SPECULATIVE LOSSES AND ALLOWED TO BE CARRIED FORWARD TO NEXT YEAR. 11. THE ASSESSEE STRONGLY OBJECTED TO THIS FINDING BEFORE THE LD. CIT(A). THE ASSESSEE EXPLAINED THE FACTUAL MATRIX TO THE LD. CIT(A). AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS OF THE ASSESSEE AND AFTER CONSIDERING CERTAIN JUDICIAL DECISIONS, THE LD. CIT (A) WAS CONVINCED THAT THE ENTIRE BUSINESS ACTIVITY OF SHARE TRADING, IRRE SPECTIVE OF THE FACT WHETHER DELIVERY OF SHARES WERE EFFECTED OR NOT HAS TO BE TREATED AS ITA NO. 7488/MUM/2010 8 SPECULATIVE TRANSACTION AND THE PROFIT/LOSS ARISING FROM SUCH TRANSACTION TO A COMPANY WHOSE ENTIRE BUSINESS ACTIVITY CONSIST OF PURCHASE AND SALE OF SHARES IS SPECULATIVE. THE LD. CIT(A) FINALLY CONC LUDED THAT THE DENIAL OF THE ASSESSEES CLAIM OF SET OFF OF LOSS OF RS. 57,6 4,745/- AGAINST PROFIT FROM TRADING IN SHARES TREATING THIS LOSS AS A SPEC ULATIVE BUT THE PROFIT FROM TRADING IN SHARES AS NOT SPECULATIVE IS NOT JU STIFIED IN VIEW OF THE PROVISIONS OF EXPLANATION TO SECTION 73 AND OF SECT ION 43 AS IT STOOD PRIOR TO 1.4.2006 AND ACCORDINGLY DIRECTED THE AO TO ADJU ST THE LOSS OF RS. 57,64,745/- AGAINST TRADING PROFIT FROM SHARES. 12. BEFORE US, THE LD. DR DREW OUR ATTENTION TO THE OBSERVATIONS OF THE AO EXHIBITED AT PAGE-4, PARA-6 OF THE ASSESSMENT OR DER AND SUBMITTED THAT THE AO HAS RIGHTLY DISALLOWED THE SET OFF OF LOSS. 13. THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHA T HAS BEEN SUBMITTED BEFORE THE LOWER AUTHORITIES. 14. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF TH E LOWER AUTHORITIES AND THE MATERIAL BROUGHT ON RECORD IN THE FORM OF P APER BOOK EXHIBITING 52 PAGES. A CAREFUL PERUSAL OF THE STOCK RECONCILI ATION STATEMENT AS EXHIBITED ON PAGES 50 TO 52 OF THE PAPER BOOK SHOW THAT THE ASSESSEE HAS MADE A PROFIT OF RS. 2,86,52,683/- FROM PURCHASE AN D SALE OF SHARES/UNITS DURING THE YEAR FROM WHICH THE ASSESSEE HAS DEDUCT ED LOSS ON F &O TRADING AT RS. 57,64,745/- AND CARRIED OVER THE NET PROFIT OF RS. 22,28,87,938/-. IT IS THE SAY OF THE AO THAT THIS LOSS ON F&O TRADING OF RS. 57,64,745/- CANNOT BE ADJUSTED AGAINST THE SHAR E TRADING PROFIT. UNDOUBTEDLY PRIOR TO THE AMENDMENT BROUGHT IN SECTI ON 43(5) OF THE ACT, PROFITS OR LOSSES IN F&O TRANSACTION WERE TREATED A S SPECULATION PROFIT/LOSS. THOUGH THE TERMS SPECULATION PROFIT I S NOT DEFINED ANYWHERE ITA NO. 7488/MUM/2010 9 IN THE ACT, PROFIT ARISING FROM SHARE TRADING SHOUL D ALSO BE TREATED AS SPECULATIVE PROFIT AND ALLOWED TO BE ADJUSTED AGAIN ST SPECULATION LOSS. THEREFORE, THE ASSESSEE HAS RIGHTLY SET OFF LOSS FR OM DERIVATIVES AGAINST THE SHARE TRADING PROFIT. IT WOULD NOT BE OUT OF P LACE TO MENTION THAT WHEN THE ORIGINAL ASSESSMENT FOR THE YEAR UNDER CONSIDER ATION WENT UP TO THE TRIBUNAL, THE TRIBUNAL IN ITS ORDER IN ITA NO. 6086 /M/07 HAS GIVEN A CATEGORICAL FINDING AT PARA-6 AS UNDER: 6. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM CARE FUL PERUSAL OF THE ORDERS OF THE LOWER AUTHORITIES, WE FIND FORCE IN THE CONTENTION OF THE ASSESSEE. IN EXPLANATION TO SECTION 73, NOWH ERE, ANY REFERENCE WAS MADE TO A SPECULATIVE LOSS. AS PER TH E EXPLANATION, WHERE ANY PART OF THE BUSINESS OF A COMPANY (OTHER THAN A COMPANY WHOSE GROSS TOTAL INCOME CONSISTS MAINLY O F INCOME WHICH IS CHARGEABLE UNDER THE HEAD INTEREST ON SEC URITIES, INCOME FROM HOUSE PROPERTY CAPITAL GAINS AND I NCOME FROM OTHER SOURCES) OR A COMPANY, THE PRINCIPAL BUSINES S OF WHICH IS THE BUSINESS OF BANKING OR THE GRANTING OF LOANS AN D ADVANCES, CONSISTS IN THE PURCHASE AND SALE OF SHARES OF OTHE R COMPANIES, SUCH COMPANY SHALL, FOR THE PURPOSE OF THIS SECTION , BE DEEMED TO BE THE CARRYING ON SPECULATION BUSINESS TO THE EXTE NT TO WHICH THE BUSINESS CONSISTS OF THE PURCHASE AND SALE OF SUCH SHARES. MEANING THEREBY, WHERE THE BUSINESS OF THE ASSESSEE IS HELD TO BE THE SPECULATIVE BUSINESS AFTER INVOKING THE EXPL ANATION TO SECTION 73, ALL PROFIT AND LOSS ACCRUED THEREFROM, WOULD BE CONSIDERED TO BE THE SPECULATION LOSS OR PROFIT AND IF ANY CARRIED FORWARD SPECULATIVE LOSS ARE THERE, IT CAN BE ADJUS TED AGAINST THE SPECULATIVE PROFIT. IN THE LIGHT OF THESE PROPOSITI ONS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT (A). WE, ACC ORDINGLY, CONFIRM THE SAME. 15. CONSIDERING THE FACTS IN TOTALITY AND EXPLANATI ON TO SECTION-73, WE FIND THAT THE TRIBUNAL HAS DECIDED THE ISSUE ON IDE NTICAL FACTS AND CIRCUMSTANCES. SIMILAR ISSUE CAME UP BEFORE THE HO NBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS LOKMAT NEWSPAPERS PVT. LTD. (2010) 322 ITR 43 WHEREIN THE HONBLE BOMBAY HIGH COURT HAS HE LD THAT WHERE ANY PART OF COMPANYS BUSINESS CONSISTS OF PURCHASE AND SALE OF SHARES, COMPANY IS DEEMED TO CARRY ON SPECULATION BUSINESS AND THE DEEMING ITA NO. 7488/MUM/2010 10 PROVISION APPLIES WHETHER LOSS OR PROFIT ARISES FRO M SUCH TRANSACTION. EVEN WHERE PROFITS FROM PURCHASE AND SALE OF SHARES ARISES BY ACTUAL DELIVERY SUCH PROFIT CANNOT BE EXCLUDED FOR DEEMING FICTION. THE COMPANY IS ENTITLED TO SET OF PROFITS FROM SUCH TRA NSACTIONS AGAINST SPECULATION LOSS. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE BOMBAY HIGH COURT (SUPRA) AND THE DECISION OF THE MUMBAI TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 6086/M/0 7 (SUPRA), WE HAVE NO HESITATION TO CONFIRM THE FINDINGS OF THE LD. CI T(A). ACCORDINGLY, GROUND NO. 2 OF THE REVENUE IS DISMISSED. 16. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 6 17 *' 0 8 %6* 0 *1 9# ORDER PRONOUNCED IN THE OPEN COURT ON 7.12.2012 . &5 0 4( % 8 :&7 7.12.2012 4 0 ; SD/- SD/- (H.L. KARWA) (N.K. BILLAIYA) /PRESIDENT % &' / ACCOUNTANT MEMBER MUMBAI; :& DATED 7.12.2012 . . ./ RJ , SR. PS ITA NO. 7488/MUM/2010 11 &5 &5 &5 &5 0 00 0 -1! -1! -1! -1! ; -1 , , / DR, ITAT, MUMBAI 6. ;? / GUARD FILE. &5 &5 &5 &5 / BY ORDER, .!1 -1 //TRUE COPY// @ @@ @ / 9 9 9 9 * * * * (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI