ACIT, CIRCLE-6(1), NEW DELHI V. . CHOWDRY ASSOCIATES, NEW DELHI

MA 52/DEL/2022

AI Insights

The case involves the Income Tax Appellate Tribunal's decision on a Miscellaneous Application filed by the ACIT, Circle 6 (1), New Delhi, against Chowdry Associates. The Revenue sought to recall the Tribunal's earlier decision which allowed the business loss claimed by Chowdry Associates for the Assessment Year 2015-16. The Revenue argued that the losses should be treated as speculative losses since the transactions were undertaken before the amendment of section 43(5) of the Act by the Finance Act, 2013. However, the Tribunal upheld its earlier decision, stating that the losses were due to irrecoverable trade advances and thus were allowable as business losses under section 28 of the Act.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 471573 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 13 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 11-12-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 28-02-2022
• Other Referred Cases: Megh Sa Kariya International, Omni Lens Pvt. Ltd., TRF Ltd.
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARPREET KAUR
• Assessee Lawyers: M.P. RASTOGI
• Keywords: Speculation loss; Business income; Bad and doubtful debts; Speculative transactions
• Section: 254(2); 43; 28; 43(5)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B”, NEW DELHI BEFORE SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER and SHRI SUDHIR KUMAR, JUDICIAL MEMBER MA No.52/Del/2022 (in ITA No.3298/DEL/2019) (Assessment Year : 2015-16) ACIT, Circle 6 (1), vs. Chowdry Associates, New Delhi. 4th Floor, Punjabi Bhawan, 10, Rouse Avenue, New Delhi – 110 002. (PAN: AAACC0387R) (APPLICANT) (RESPONDENT) ASSESSEE BY : Shri M.P. Rastogi, Advocate APPLICANT/REVENUE BY : Ms. Harpreet Kaur, Sr. DR Date of Hearing : 29.11.2024 Date of Order : 11.12.2024 O R D E R PER S. RIFAUR RAHMAN, AM : 1. ACIT, Circle 6 (1), New Delhi (hereinafter referred to as ‘the Applicant’) by moving application under section 254 (2) of the Income-tax Act, 1961 (for short ‘the Act’) in the case of ACIT, Circle 6 (1), New Delhi vs. Chowdry Associates for Assessment Year 2015-16 in ITA No.3298/Del/2019 (order dated 11.03.2020) sought to seek recall of the order. 2. At the time of hearing, ld. DR for the Revenue brought to our notice that the present misc. Application (MA) was filed by the Revenue on 28.02.2022 2 MA No.52/Del/2022 whereas relevant ITAT order was passed on 11.03.2020. She submitted that the delay was caused due to Covid pandemic. After excluding the Covid period, the relevant MA filed is within time. After considering the submissions of both the parties, we observed that the present MA filed by the Revenue is within time and proceeded to adjudicate the same. 3. In the MA preferred by the Revenue, it was brought to our notice that the ITAT has allowed the appeal of the assessee with the following findings :- “In conclusion, keeping in view of the facts of the case, a tax history of the assessee. treatment given by the revenue to the transactions undertaken by the assessee, finding of the A 0 that the assessee is into commodity derivatives, provisions of the Section 43(5) invoked by the AO, provisions of Section - e) relied upon by the Ld. AR, Explanation (2) of Section 43 as to what constitutes commodity derivatives, Para 5 of chapter VII of Finance act, 2013, C3DT Circular No. 312006 dated 27.02.2006, orders of the Co-ordinate Bench of ITAT in Megh Sa Kariya International (supra), Omni Lens Pvt. Ltd. (Supra), Judgment of the Hon'ble Apex Court in the case of TRF Ltd. (supra), we hereby hold that the business loss claimed by the assessee is allowable u/s 28 of the Act.\" 4. Further it was submitted that the ITAT erred in deleting the addition made by the AO and held the findings of the ld. CIT (A) on account of losses of Rs.5,56,24,659/- claimed as bad debts written off without appreciating the fact that claim of bad debt by the assessee were unsettled transactions undertaken by the assessee in FY 2011-12, 2012-13 and 2013-14. It was submitted that from 1st July 2013, Government prohibited NSEL to make any transaction. It 3 MA No.52/Del/2022 was submitted that the issue under consideration was decided against the Revenue by relying on newly introduced section 43(5)(e) vide Finance Act, 2013 effective from AY 2014-15. Therefore, these transactions should have been treated as speculative transactions as they were undertaken before 01.04.2014. In view of the above facts on record, the present MA was filed by raising following grounds :- \"Whether the ITAT erred in law as well as on facts in deleting the addition made by AO and upheld by CIT(A) on account of losses of Rs. 5,56,24,659/- claimed as bad debts written off without appreciating the fact that claim of bad debt by the assessee pertains to unsettled transactions undertaken by the assessee in FY 2011-12, 2012-13 and 2013-14. From l \" July 2013 Govt. prohibited NSEL to make any transaction. The ITAT decided the issue against the revenue relying on newly introduced S. 43(5)(e ) vide Finance Act 2013 w.e.f A Y 2014- 15. Therefore, these transactions should have been treated as speculative business transactions as they were undertaken before 01.04.2014. Hence, loss due to bad debt out of the said transactions will be speculative loss only.\" 5. On the other hand, ld. AR for the assessee submitted that the issue raised by the Revenue is nothing but requesting the Hon’ble Bench to review its own order which is not allowed as per the provisions u/s 254 of the Act. 6. Considered the rival submissions and material placed on record. We observed that the Revenue has raised the ground on the basis that section 43(5)(e) of the Act was introduced only in Finance Act, 2013 w.e.f. 01.04.2014 and the assessee had incurred loss from the transactions relating to FYs 2011-12, 2012-13 and 2013-14, therefore, ITAT has allowed the same with the 4 MA No.52/Del/2022 amended definition of speculative transactions. We noticed from the decision of the coordinate Bench at paras 31 & 32 that the Bench has observed that as the assessee is in the business of commodity derivatives but not in the speculative transactions as held by the AO. They also analysed the provisions of section 43(5) of the Act before and after the amendment. Further they observed that the Revenue has also accepted the income from the transaction of the assessee as business income but not as income from speculation for all the earlier years. It is also undisputed fact that the trade advances given by the assessee is irrecoverable and they proceeded to allow the claim of the assessee as business loss due to irrecoverable of trade advance made by the assessee. The claim of the assessee was not allowed by the Bench on the basis of speculative or non-speculative as objected by the Revenue in the present MA. Therefore, in our considered view, we do not have any right to review our own order as per section 254(2) of the Act and also we observed that the Bench has already considered section 43(5) of the Act invoked by the AO and also relevant amended provisions of section 43(5) and CBDT Circular to give relief to the assessee. For the sake of clarity, para 32 of the order is being reproduced as under :- “32. In conclusion, keeping in view the facts of the case, a tax history of the assessee , treatment given by the revenue to the transactions undertaken by the assessee, finding of the AO that the assessee is into commodity derivatives, provisions of the Section 43(5) invoked by the AO, provisions of Section 43(5)(e) 5 MA No.52/Del/2022 relied upon by the ld. AR, Explanation (2) of Section 43 as to what constitutes commodity derivatives, Para 5 of Chapter VII of Finance Act, 2013, CBDT Circular No. 3/2006 dated 27.02.2006, orders of the Co-ordinate Bench of ITAT in Megh Sakariya International (supra), Omni Lens Pvt. Ltd. (supra), judgment of the Hon’ble Apex Court in the case of TRF Ltd. (supra), we hereby hold that the business loss claimed by the assessee is allowable u/s 28 of the Act.” 7. In our considered view, the relief was granted to the assessee based on the irrecoverable trade advance which is business loss for the assessee u/s 28 of the Act. Therefore, we are not inclined to allow the relevant MA filed by the Revenue. 8. In the result, the MA filed by the Revenue is dismissed. Order pronounced in the open court on this 11th day of December, 2024. Sd/- sd/- (SUDHIR KUMAR) (S.RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 11.12.2024 TS 6 MA No.52/Del/2022 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "