SRJ SECURITIES LTD. Vs. ASSISTANT COMMISSIONER OF INCOME

JUDGEMENT

(1.) The assessee being aggrieved by the order dated 19-10-2000 passed by the CIT(A) has invoked jurisdiction of this Tribunal and challenged the same on the grounds detailed below:

(2.) To adjudicate the controversy involved in the present proceedings, we must at the threshold refer to certain relevant facts available on record.

(3.) The facts as available on the record are that the appellant is a company incorporated under the Companies Act. The appellant company claims to be the Member of the Delhi Stock Exchange as well as the National Stock Exchange. It is also the case of the appellant that they are engaged in the sale and purchase of shares on behalf of their clients on which they earn brokerage and also are engaged in the sale and purchase of shares for themselves. For the assessment year 1997-98 for which the relevant accounting year is 1996-97, the assessee filed its return of income and in the return of income filed, the assessee claimed to have earned a gross commission from the activity of sale and purchase of shares on behalf of its clients amounting to Rs. , 62,39,332.69. During the same year, the assessee claimed to have suffered a loss for a sum of Rs. 37,40,658. The said loss which was incurred by the assessee comprised of two amounts, namely, a sum of Rs. 2,40,957 which was suffered in purchase of those shares in which no delivery was taken while the balance amount of loss ie., Rs. 34,99,611 was suffered in those scrips where the delivery was taken. The assessee while filing his return adjusted the loss suffered by him in the purchase of shares which amounted to Rs. 37,40,568 against the receipts of brokerage for the sale and purchase of shares undertaken by the asscssee on behalf of his clients which amounted to Rs. 62,39,322.69 and in this manner the assessee claimed to have earned a gross profit of Rs. 24,98,674 Rs. 62,39,332.69-37,40,658). It is also the case of the appellant that he had incurred an expense of Rs. 40,51,658 and, thus, reducing the expense i.e. Rs. 40,51,582 from the income earned i.e., Rs. 24,98,675, the appellant company claim that there was a loss of Rs. 15,52,818 Rs. 24,98,675-40,51,582) though the appellant claim to have suffered a loss of Rs. 15,52,818 from the business in the manner indicated above, but the appellant declared an income under the head 'capital gains andincome from other sources' to the tune of Rs. 16,17,224. The appellant in the return filed squared up the loss suffered to the tune of Rs. 15,52,818 against the income of Rs. 16,17,224. The appellant after set-off of the aforesaid loss declared a taxable income of Rs. 64,412 (Para 10 of the synopsis). Against the said income of Rs. 64,412 the appellant company set off brought forward losses of Rs. 71,860 and in this manner returned negative income of Rs. 7,450.