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Loss arising on intra-day trading in shares wasn’t speculative if such transactions were in nature of jobbing

Section 73 of the Income-tax Act, 1961 – Losses – In speculation business -Intra-day trading of shares

Before disallowing assessee’s claim of loss on account of intraday trading in shares as speculative loss, a clear finding was to be given as to whether intraday purchases and sales made were jobbing transactions [2015] 56 taxman .com  462 -HIGH COURT OF DELHI -CIT v. Lalit Kumar Poddar

FACTS

The assessee, a share broker, was engaged in trading in stocks and shares. The assessee had claimed a sum of Rs. 66.35 lakhs on account of clearing difference.

The Assessing Officer treated said sum as a speculative loss and disallowed it on account of section 73(1).

On appeal, both Commissioner (Appeals) and Tribunal upset the findings of the Assessing Officer. Both the appellate bodies were of the opinion that the nature and character of the transaction was such that it did not fall within the description of speculative transaction and all the shares and scripts purchased from the broker were on firm basis.

On revenue’s appeal it was held by High Court

Both the Commissioner (Appeals) and the Tribunal took into consideration the assessee’s explanation that certain intraday transactions – broadly described as ‘clearing differences’ were held over in the sense that the delivery had to be obtained.

The assessee had also apparently argued before the concerned authorities and placed a chart reflecting the transactions to support the submission that even in respect of intraday sales, consideration had passed.

A look at the order of the Commissioner (Appeals) as well as Tribunal nowhere reflects this position. Even the discussion of the Assessing Officer while including a sum of Rs. 66,35,210 would show that the no rationale has been given as to whether in fact consideration flowed for the intraday purchases and sales effected by the assessee so as to take it out of the mischief.

The matter should be considered afresh and express findings recorded as to whether in fact intraday purchases and sales made by the assessee were jobbing transactions and whether consideration has passed

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