(-1-) MGN IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL, CIVIL JURISDICTION ORDINARY ORIGINAL, CIVIL JURISDICTION ORDINARY ORIGINAL, CIVIL JURISDICTION INCOME TAX APPEAL NO.296 OF 2001 The Commissioner of Income Tax..Appellant Vs. M/s.Hero Textiles & Trading Ltd...Respondent Mr. Vimal Gupta for the Appellant. Mr. J.D. Mistry with Mr. Raj Darak, for the Respondent. CORAM: F.I. CORAM: F.I. CORAM: F.I. REBELLO REBELLO REBELLO & R.S.MOHITE,JJ. R.S.MOHITE,JJ. R.S.MOHITE,JJ. DATED: 29TH JANUARY,2008 DATED: 29TH JANUARY,2008 DATED: 29TH JANUARY,2008 P.C.: P.C.: P.C.: . The Revenue has preferred this Appeal on the following questions:- 1. Whether on the facts and circumstances of the case, the Tribunal was justified in law in holding that the loss incurred by the assessee in the purchase and sale of shares cannot be treated as speculation loss and has to be treated as regular business, which is adjusted against the other income u/s.70 & 71 of the I.T.Act? 2. Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the loss incurred by the assessee in the course of (-2-) its business of dealing in shares cannot be treated as speculation loss within the meaning of explanation to S.73 of the I.T.Act? 2. The learned Counsel seeks to rely on the judgment of this Court in Commissioner of Income-tax Commissioner of Income-tax Commissioner of Income-tax vs. Amritlal & Co. Ltd., 212 ITR 540 (Bom.). vs. Amritlal & Co. Ltd., 212 ITR 540 (Bom.). vs. Amritlal & Co. Ltd., 212 ITR 540 (Bom.). That judgment was considering the provisions other than the explanation to Section 73 which is in issue in this Appeal and consequently in our opinion that judgment would not be applicable to the facts of the present case. 3. The learned Counsel also sought to place reliance on the judgment of the learned Division Bench of the Calcutta High Court in Aryasthan Aryasthan Aryasthan Corporation Ltd. vs. Commissioner of Income-tax, Corporation Ltd. vs. Commissioner of Income-tax, Corporation Ltd. vs. Commissioner of Income-tax, 253 ITR 401 (Cal.). 253 ITR 401 (Cal.). 253 ITR 401 (Cal.). That judgment was considering the import of the meaning of Section 109 (11) of the Income Tax Act, 1961. In that context the learned Bench was pleased to proceed to hold placing reliance on the judgment of an earlier decision in Eastern Aviation and Industries Ltd. vs. CIT Eastern Aviation and Industries Ltd. vs. CIT Eastern Aviation and Industries Ltd. vs. CIT (1994) 208 ITR 1023(Cal.) (1994) 208 ITR 1023(Cal.) (1994) 208 ITR 1023(Cal.) where the learned Bench had held that "the words ’income’ or ’profits and gains’ should be understood as including losses also. In our opinion what is in issue and is being (-3-) considered is the express language of the explanation to Section 73 which creates a legal fiction. In The C.I.T. Mumbai City -II vs. The The C.I.T. Mumbai City -II vs. The The C.I.T. Mumbai City -II vs. The Andhra Valley Power Supply Co. Ltd., Income Tax Andhra Valley Power Supply Co. Ltd., Income Tax Andhra Valley Power Supply Co. Ltd., Income Tax Appeal No.43 of 2001 Appeal No.43 of 2001 Appeal No.43 of 2001 decided today i.e. 29th January, 2008 we have held that where the gross total income under the heads "interest on securities", "income from house property capital gains" and "income from other sources" is more than the income from trading in shares which is deemed speculation for the purpose of explanation, the said explanation would not apply. Considering the facts of this case that judgment in Income Tax Appeal No.43 of 2001 would squarely apply and consequently the question as framed would not arise and consequently Appeal dismissed. (R.S.MOHITE, J.) (R.S.MOHITE, J.) (R.S.MOHITE, J.) (F.I.REBELLO, J.) (F.I.REBELLO, J.) (F.I.REBELLO, J.) ‘