section 73

Nature of Loss Suffered By a Share Broking Company in Trading Of Shares

Income Tax - BLK Securities Pvt. Ltd. v. ITO The assessee company shall, for the purpose of section 73 of the IT Act, be deemed to be carrying on a speculation business to the extent to which its business consists of the purchase and sale of shares of other companies; thus, the loss incurred in purchase and sale of shares of other companies shall be d...

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Set-off & carry-forward of losses under Income-Tax Act, 1961

Income Tax - The Income-Tax Act, 1961, allows set-off and carry-forward of the loss incurred by any assessee subject to some restrictions Apart from other information, the new income-tax forms, ITR-1 to ITR-8, notified by the Central government seeks details on set-off of losses. Now almost every assessee has to give this information. Therefore, one h...

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Section 73 / 43(5) cannot be interpreted to disadvantage of assessee

J. M. Financial Services Ltd Vs JCIT (ITAT Mumbai) - Under provisions of section 43(5), the transactions in derivatives at certain stock exchanges are deemed to be non-speculative, however, as per the explanation to section 73 for the purpose of computation of business loss the derivative transactions squarely fall within the scope of explanation to s...

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Sec. 73 applies only if assessee incurres loss from Sale / Purchas eof Shares or intends to C/F non-absorbed loss

The Commissioner of Income Tax VI Vs. Appollo Vikas Steels Pvt Ltd (Gujarat High Court) - Assessing Officer committed an error in resorting to explanation to section 73 of the Act. The issue before him was whether the income earned by the assessee through sale of shares should be taxed as business income or should be treated as capital gain. Such issue had to be decided on the basis of t...

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Exp. to S. 73 would apply even when entire business consists of purchase & sale of shares

Deputy Commissioner of Income-tax, Range - 3(3), Mumbai Vs Savlani Trading & Investments Co. (P.) Ltd. (ITAT Mumbai) - First issue is whether the provisions of Explanation to section 73 would apply when the entire business consists of purchase and sale of shares. This issue is covered by the judgment of Hon'ble High Court of Calcutta in the case of Arvind Investments Ltd. (supra), in which it has been held that Expl...

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Loss from trading in Shares to Dr. Reddy held as speculative in view of Explanation to S. 73

Dr. Reddy's Laboratories Ltd. Vs Additional Commissioner of Income-tax (ITAT Hyderabad) - The transaction of purchase and sale of shares would be held as speculative business only if the company was hit by the Explanation to section 73. The implication of the Explanation is that if a company incurs a speculation loss in a manner deemed in the explanation such loss shall not be set off ex...

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Share loss to be first set-off to determine what Gross Total Income consists of under explanation to section 73

CIT Vs. Darshan Securities Pvt. Ltd. (Bombay High Court) - CIT vs. Darshan Securities Pvt. Ltd (Bombay High Court)- During the assessment year, the assessee returned an Income of Rs.2,25,04,588 from service charges. The assessee had a loss of Rs.02,23,32,127 in share trading. The assessee had a dividend income of Rs.4,79,325/­. The assessee claimed that in...

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Recent Posts in "section 73"

Section 73 / 43(5) cannot be interpreted to disadvantage of assessee

J. M. Financial Services Ltd Vs JCIT (ITAT Mumbai)

Under provisions of section 43(5), the transactions in derivatives at certain stock exchanges are deemed to be non-speculative, however, as per the explanation to section 73 for the purpose of computation of business loss the derivative transactions squarely fall within the scope of explanation to section 73....

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Sec. 73 applies only if assessee incurres loss from Sale / Purchas eof Shares or intends to C/F non-absorbed loss

The Commissioner of Income Tax VI Vs. Appollo Vikas Steels Pvt Ltd (Gujarat High Court)

Assessing Officer committed an error in resorting to explanation to section 73 of the Act. The issue before him was whether the income earned by the assessee through sale of shares should be taxed as business income or should be treated as capital gain. Such issue had to be decided on the basis of the question whether the assessee is invo...

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Exp. to S. 73 would apply even when entire business consists of purchase & sale of shares

Deputy Commissioner of Income-tax, Range - 3(3), Mumbai Vs Savlani Trading & Investments Co. (P.) Ltd. (ITAT Mumbai)

First issue is whether the provisions of Explanation to section 73 would apply when the entire business consists of purchase and sale of shares. This issue is covered by the judgment of Hon'ble High Court of Calcutta in the case of Arvind Investments Ltd. (supra), in which it has been held that Explanation to Section 73 would apply even w...

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Loss from trading in Shares to Dr. Reddy held as speculative in view of Explanation to S. 73

Dr. Reddy's Laboratories Ltd. Vs Additional Commissioner of Income-tax (ITAT Hyderabad)

The transaction of purchase and sale of shares would be held as speculative business only if the company was hit by the Explanation to section 73. The implication of the Explanation is that if a company incurs a speculation loss in a manner deemed in the explanation such loss shall not be set off except against profit and gains, if any, o...

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Share loss to be first set-off to determine what Gross Total Income consists of under explanation to section 73

CIT Vs. Darshan Securities Pvt. Ltd. (Bombay High Court)

CIT vs. Darshan Securities Pvt. Ltd (Bombay High Court)- During the assessment year, the assessee returned an Income of Rs.2,25,04,588 from service charges. The assessee had a loss of Rs.02,23,32,127 in share trading. The assessee had a dividend income of Rs.4,79,325/­. The assessee claimed that in computing the gross total income for th...

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Allowability of Interest when Assessee has also advanced interest free loan to sister concern

ITO Vs GSB Capital Markets Ltd (ITAT Mumbai)

ITO, Mumbai Vs GSB Capital Markets Ltd (ITAT Mumbai)- Whether where the assessee has considered the amount receivable from debtor as bad debts in the books of account, no disallowance can be made for want of fulfilment of conditions of section 36(2) – Whether where the amount is given to the sister concern by the assessee interest-free...

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Speculation loss can be set off against delivery based profits

CIT Vs. Lokmat Newspapers (Bombay High Court)

The assessee earned a profit on sale of shares held as stock-in-trade. This profit was offered as profit from a ’speculation business’ and was set off against a ’speculation loss’ brought forward from an earlier assessment year. The AO took the view that the profit from sale of shares was not from a ’speculation business’ on t...

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Any company whose principal business is banking or granting of loans and advances will not be attracted by explanation to section 73 of the IT Act, 1961

ITO Vs Bijay Paper Traders & Investments Ltd. (ITAT Delhi)

. In view of the above decision, the company whose principal business is that of granting of loans and advances, may earn a comparatively high income from some other activity in a particular year, merely because the income/loss from share trading in the year under consideration is higher than the interest income,...

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Losses could not be ignored in determining the applicability of exception clause of Explanation to section 73

Mafatlal securities Ltd. Vs Joint Commissioner of Income-tax (ITAT Mumbai)

Section 254 of the Income-tax Act, 1961 - Appellate Tribunal - Powers of - Assessment year 1996-97 -Whether though Tribunal is not akin to a Court but functions discharged by it are similar to a Court, and, hence, in addition to its expressed statutory powers it has got inherent power to pass such orders as may be necessary for ends of ju...

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If part of company business is deal in shares then all types of transactions, whether delivery based or non-delivery based, will be treated as speculative transactions

Metropolitan Traders Pvt. ltd. Vs ITO (ITAT Mumbai)

Admittedly, the assessee company was dealing in Cement and also engaged in the business of dealing in shares. There is no dispute over the fact that the assessee had taken delivery of shares before selling them. The assessee company had claimed set off of unabsorbed speculation loss relating to assessment year 1995-96 and 1997-98 carried ...

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