COMMISSIONER OF INCOME TAX Vs. SHARWAN KUMAR AGARWAL

JUDGEMENT

(1.) THIS is an application filed by the CIT (Central), Kanpur, for a direction to the Tribunal to draw up a statement of the case and refer the questions of law mentioned in para. 3 of the application filed by the applicant.

(2.) THE assessee is a sharebroker and filed his return of income on 13th Dec., 1994. The assessment was completed under S. 143(3) of the IT Act, 1961. During the course of assessment proceedings, the AO had found that the assessee had at times settled that share transactions by corresponding delivery. On an examination of invoice bills, the AO found that the assessee had earned a profit of Rs. 32,80,949 and suffered a loss of Rs. 1,10,14,010, thereby incurring a net loss of Rs. 77,33,061. It was hold that this was speculative transaction within the meaning of sub S. (5) of S. 43 of the IT Act. Invoking the provisions of S. 73 of the IT Act, the AO held that the speculative loss of Rs. 77,33,061 could not be allowed to be set off against the profit of general business of the assessee. The order was affirmed by the CIT(A) 1, Kanpur. The Tribunal in appeal held that the assessee was entitled to the exception covered by cl. (c) of the proviso to S. 43(5) of the IT Act, which reads as under :

(3.) WE have heard Shri Shambhu Chopra, learned counsel for the applicant, and Sri Rakesh Ranjan Agrawal, learned counsel for the assessee.