By K. B. Bhujle Advocate
fiogf49gjkf0d
CIT vs. Hertz Chemicals Ltd.; 386 ITR 39 (Bom):
In the A. Y. 2004-05, the Assessing Officer found that the assessee had offered its profits and loss from share trading as profit and loss of speculation business for the purpose of section 73 of the Income-tax Act, 1961 and amounts received from mutual funds/bonds as business income. For the year ending on March 31, 2003, the assessee had offered profit and loss from share trading as well as from mutual funds as income from speculation business showing the closing stock of shares at Rs. 6.69 crore while the opening stock as on April 1, 2003 for the assessment year in question was shown as Rs. 1.01 crores and the balance of Rs. 5.67 crore was shown as opening stock of mutual funds and bonds. The Assessing Officer held that bifurcation was not permissible and considered the activity of dealing in mutual funds and bonds to be an activity of dealing in shares as speculation business. The Tribunal allowed the assessee’s claim and deleted the addition.
On appeal by the Revenue, the Bombay High Court upheld the decision of the Tribunal and held as under: “i) Units were not shares and trading in units was not speculation business. The Tribunal was justified in confirming the deletion of the addition made by the Assessing Officer on account of the assesee’s trading activities in mutual funds and bonds. ii) No question of law arose.”
