Brief of the Case: In the cited case, ITAT inter-alia held that the claim has been denied merely because the AO has treated the transaction as speculative loss. This cannot be any reason for declining the claim of rebate u/s. 88E of the Act as the claim is allowable from the business income be it speculative or not.
Facts of the Case: The assessee deals in share and security. While scrutinizing the ITR, the AO noticed that the assessee had incurred loss from trading in securities/shares as under:
Profit on sale of shares Rs. 24,25,505/-
Loss on fall in value of shares Rs. (92,46,676)/-
Net figure (-) Rs. 68,21,171/-
The assessee was asked to explain as to why this loss should not be treated as speculation loss invoking the provision of Explanation of Sec.73 of the I.T. Act, 1961. The assessee filed a detailed reply. After considering the detailed submission made by the assessee, the AO observed that the NSE and BSE were notified w.e.f. 24.01.2006 vide notification No. 2 of 2006 for the purpose of S. 43(5) proviso(d), according to which the profit/loss on derivative transaction upto 24.1.2006 is to be treated as speculative profit/loss therefore, the proviso(d) to Sec. 43(5) is inserted w.e.f. 1.4.2006 and is applicable from A.Y. 2007-08. Since the assessee’s case is for A.Y. 2006-07, therefore, is not covered by this proviso. The AO further declined to entertain the claim of the assessee to set off loss against profit on sale of shares as it was not claimed by way of a revised return. The AO further proceeded by considering the explanation to Sec. 73 of the Act and held that the assessee is carrying on business of trading in shares and does not fall in exceptions provided in Explanation to Sec. 73 of the Act therefore, the entire loss claimed by the assessee relating to share transactions as well as loss resulting on valuation of closing stock is treated as Speculation loss. The AO accordingly treated Rs. 68,21,171/-as speculative loss . The AO further denied the rebate claimed u/s. 88E of the Act holding that assessee’s income has been assessed under the head “Speculative income/loss” therefore the assessee is not entitled for rebate u/s. 88E of the Act.
These are appeal by the Revenue and cross objection by the assessee against the very same order of the Ld. CIT(A)-19, Mumbai dated 14.12. 2009` pertaining to Assessment year 2006-07. The appeal and the cross objection were heard together and are disposed of by this common order for the sake of convenience.
Grounds for Appeal:
