Kalyan Jyoti Sengupta and Kalidas Mukherjee, JJ.
The Judgment of the Court was as follows:
1. The Court: This is an appeal against the judgment and order of the learned Income Tax Appellate Tribunal dated 16.11.2007 preferred by the
appellant unsuccessfully against the order of the Commissioner of Income Tax (Appeals) who also turned down the prayer of the appellant to
reverse the order of the assessing officer. We have gone through the judgment and order of the Learned Tribunal. We find the Learned Tribunal
did not give any reason as to why the appeal was dismissed and order of the first appellate authority is to be accepted. The relevant portion of the
order of the learned Tribunal is set out hereunder:
We have examined the rival submissions. We agree with the findings of the A.O. and the order of the CIT(A). We find no reason to interfere with
the orders of the lower authorities which are correctly based on the actual facts after appreciating the current legal position. We, accordingly,
confirm the order of the CIT(A) and dismiss the assessee''s appeal on all the three grounds.
2. Having noted the ordering portion we thought at the first instance the learned Tribunal ought to decide the matter afresh with the reasons as to
why the order of all the authorities below appealed to its mind and why the assessee''s contention did not register him to write judgment in its
favour. Therefore, those reasons were not there. At one point of time we minded to set aside the same and to remand the matter for fresh hearing.
However, having regard to the facts and circumstances of this case which is obviously an old one and particularly as we got all the materials before
us we thought that instead of sending it back we should decide the matter whether the decision of acceptance of the Tribunal of all the judgment
and orders of the authorities below is correct or not.
3. Here the question arises in order to ascertain the taxable income and the amount thereof. It appears that petitioner admittedly have been carrying
on mixed business which includes the business of purchase and sale of share of the companies and also having other income. The key point in this
matter is which should be the income in case of transaction for purchase and sale of the share of the companies. Mr. N.K. Poddar, appearing for
the assessee emphasized that income derived from the purchase and sale of the shares of the company in a particular year would the difference of
the sale price and also the cost of the purchase price of those shares. The sale price of a number of shares of a particular year cannot be the
income. We find considerable force in this submission and we note that assessing officer himself has accepted this position. He has taken note of a
negative income of the business of the share transaction. After computing everything the assessing officer came to a figure of Rs. 16,79,666/- as
being total income which is a greater figure than that of the income derived from share transaction being negative income of Rs. 7,51,065. Even
after coming to a conclusion the assessing officer did not assess income based on the said figure. The Commissioner of Income Tax (Appeals),
however, noted the aforesaid fact he has treated the entire sale figure of the share transaction namely Rs. 10,05,29,292.99p. as an income without
giving any deduction of the cost of purchase of those shares. As a result this income from the sale transaction of the shares has become greater
than that of other income. Therefore, deduction as allowed on account of loss was not set off.
4. Mr. Bhowmick, learned Counsel appearing for the Revenue submits that in a case of this nature the loss on account of speculation business
cannot be set off as in view of the fact that unless there is a finding that assessee comes within the purview of Section 73 Expl.(ii), such benefit
cannot be given. Here there is no case as has been made out for bringing the case within the purview of the Expl. (ii) Section 73 of the said Act.
He has cited three decisions in support of his submissions namely Commissioner of Income Tax Vs. Micro India Ltd., . Commissioner of Income
Tax Vs. Intermetal Trade Ltd., and another decision of this Court reported in Eastern Aviation and Industries Ltd. Vs. Commissioner of Income
Tax,
5. We have noted the fact finding arrived at by the assessing officer and there has been no challenge against those orders of fact finding. While
taking note of the fact we do not find any difficulty to give the benefit of the setting off as permissible u/s 73, Expl. (ii). The decision cited by Mr.
Bhowmick Commissioner of Income Tax Vs. Micro India Ltd., was rendered when there was no fact finding whether assessee was covered by
Expl.(ii) Section 73 unlike the case on hand wherein it is factually found that income from share transaction is a negative income and such figure is
less than the income from the sources. Similarly in 285 IT R 536 (MP) Commissioner of Income Tax v. Intermetal Trade Ltd is also distinguishable
on the fact that in that case there was no finding that income speculative business was less than the total income: As far as the decision of this Court
is concerned this judgment is not applicable in that case and factually it was noticed that income from the share business namely speculative income
is greater than that of the total income.
6. Under those circumstances, we are of the view that the Learned Tribunal ought to have noticed the aforesaid apparent mistake of the learned
Commissioner of Appeals, that total sale of the share in a business should not have been taken into consideration for arriving at figure of income
when the assessing officer himself has accepted the position of law that difference of purchase and sale of the shares of a company should be the
income We therefore, set aside all those orders and we direct the assessing officer taking note of the aforesaid judgment to pass a fresh order of
assessment and to do the needful m accordance with law. This exercise shall be done within a period of one month from the date of communication
of this order.
7. All parties are to act on a xerox signed copy of this order on the usual undertakings.
