Expl to s. 73: Share loss to be first set-off to determine what GTI consists of

CIT vs. Darshan Securities Pvt. Ltd (Bombay High Court)

The assessee earned Rs. 2.25 crores from service charges, suffered a loss of Rs.2.23 crores from share trading and earned dividend of Rs.4.79 lakhs. The assessee set off the share trading loss from the service charges and claimed that as its’ gross total income comprised mainly of dividend income, the Explanation to s. 73 (which deems share trading loss to be speculation loss) was not applicable. The department claimed that the share trading loss had to be kept out of the computation for determining whether or not the gross total income comprised mainly of dividend etc. The Tribunal rejected the department’s plea. On appeal to the High Court, HELD dismissing the appeal: