The C.i.t. Mumbai City-Vi v. Mr. P.s. Sahadevan, For The

(-1-) MGN IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL, CIVIL JURISDICTION ORDINARY ORIGINAL, CIVIL JURISDICTION INCOME TAX APPEAL NO.47 OF 2001 The C.I.T. Mumbai City-VI....Appellant Vs. Maansi Trading Pvt. Ltd. .Respondent Mr. P.S. Sahadevan, for the Appellant Mr.J.D. Mistry with Mr. Raj Darak, for the Respondent CORAM: F.I.REBELLO&R.S.MOHITE,JJ.DATED: 29TH JANUARY,2008 CORAM: F.I. R.S.MOHITE,JJ. DATED: 29TH JANUARY,2008 P.C.: P.C.: . This Appeal was preferred on the following questions:- a. Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the loss incurred by the assessee in the purchase and sales of shares cannot be treated as speculation loss and has to be treated as regular business loss, which is adjusted against the order income u/s.70 & 71 of I.T. Act? b. Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the loss (-2-) incurred by the assessee in the course of its business of dealing in shares cannot be treated as speculation loss within the meaning of explanation to S.73? The Tribunal relying on its own decision for the assessment year 1987-88 held that the loss incurred by the assessee on purchase and sale of shares cannot be treated as speculation loss, but has to be treated as regular business loss to be adjusted against other income under Section 73 of the I.T. Act. The Tribunal then held that they are of the opinion that this is a case where explanation to Section 73 does not apply and accordingly allowed the Appeal. . The explanation to Section 73 reads as under:- "Where any part of the business of a company other 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 consisting in (-3-) 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." From the facts on record it would be clear that the income of the assessee is under the heads "loss of business" and "other sources". The explanation sets out that if 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 sale of shares. The explanation further provides that this business must be a business other than of 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". 2. Considering the above in our opinion the Tribunal was right in coming to the conclusion which it arrived at. Consequently there is no merit in this Appeal. Appeal accordingly dismissed. (-4-) (F.I.REBELLO, J.) (R.S.MOHITE, J.)(F.I.REBELLO, J.) (R.S.MOHITE, J.) (F.I.REBELLO, J.) (R.S.MOHITE, J.)