Pan Emami Cosmed Ltd., Kolkata V. ACIT, Central Circle - VIII, Kolkata, Kolkata

CO 109/KOL/2010

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8555 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 9 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2013
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 01-08-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 12-08-2010
• Court: TRIBUNAL
• Department Lawyers: RANADHIR GUPTA
• Assessee Lawyers: D K KOTHARI
• Keywords: Depreciation; Speculation loss; Difference of opinion; Reason to believe; Change of opinion
• Section: 143(3); 147

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A , KOLKATA [ () . .. . . .. . , ,, , , !' #! $'# #! $'# #! $'# #! $'#, ,, , ] ]] ] [BEFORE HONBLE SRI K.K.GUPTA, AM & HONBLE SRI MAHAVIR SINGH, JM] '& '& '& '& /ITA NO.1418/KOL/2010 $'( !)*/ ASSESSMENT YEAR : 2003-04 (,- / APPELLANT ) - !' - ( /0,- /RESPONDENT) A.C.I.T., CENTRAL CIRCLE-VIII, PAN EMAMI COSMED L TD. KOLKATA . -VERSUS- KOLKATA (PAN : AABCP 5150 G) 1 23 /C.O.NO.109/KOL/2010 '& '& '& '& /A/O ITA NO.1418/KOL/2010 $'( !)*/ ASSESSMENT YEAR : 2003-04 (1 23 / CROSS OBJECTOR ) - !' - ( /0,- /RESPONDENT) PAN EMAMI COSMED LTD. A.C.I.T., CENTRAL CIRCLE- VIII, KOLKATA. -VERSUS- KOLKATA (PAN : AABCP 5150 G) ,- 4 5 / FOR THE DEPARTMENT SHRI RANADHIR GUPTA, SR.DR /0,- 4 5 / FOR THE ASSESSEE SHRI D.K.KOTHARI '!6 4 7 /DATE OF HEARING : 13.05.2013 8) 4 7 /DATE OF PRONOUNCEMENT : 16.05.2013. 9 / ORDER PER SHRI K.K.GUPTA, AM THE REVENUE IS IN APPEAL ON THE LD. CIT(A) HAVING R EDUCED THE ESTIMATED DISALLOWANCE OF EXPENDITURE ATTRIBUTABLE TO SHARE T RADING (SPECULATION BUSINESS) TO 50% OF THE TOTAL EXPENSES IN PLACE OF 96.11% CALCUL ATED BY THE AO STATING THAT THE ESTIMATE AS MADE BY THE LD. CIT(A) WAS WITHOUT ANY ACTUAL CALCULATION BASIS. 2. THE ASSESSEE RESPONDENT HAS ALSO PREFERRED A CR OSS OBJECTION INTER-ALIA OBJECTING TO THE LD. CIT(A) UPHOLDING THE INITIATIO N AND COMPLETION OF RE-ASSESSMENT ITA NO.1418/KOL/20120& C.O.109/KOL/2010 PAN EMAMI COSMED LTD., A.YR. 2003-04 2 PROCEEDINGS WHETHER IN ACCORDANCE WITH THE PROVISIO N OF LAW AND WERE NOT ILLEGAL OR VOID AS PUT FORTH BY THE ASSESSEE BEFORE THE LD. CI T(A). 3. THE BRIEF FACTS RELATING TO THE ISSUE AS HAVE B EEN BROUGHT ON RECORD ARE THAT ASSESSMENT U/S 143(3) OF THE ACT WAS PASSED ON 24 TH MARCH, 2006 ON A TOTAL INCOME OF RS.10,24,610/- WHEN PROCEEDINGS WERE INITIATED U/S 147 OF THE ACT THE AO TREATED A SUM OF RS.41,29,814/- AS SPECULATION LOSS IN TERMS OF EXPLANATION TO SECTION 73 OF THE I.T.ACT. WHILE DETERMINING SUCH SPECULATION LOSS TH E LD. A.O. ALLOCATED 96.11% OF THE ADMINISTRATIVE EXPENSES, DEPRECIATION AND PRELIMINA RY EXPENSES AMOUNTING TO RS.14,46,385/- TO SUCH SPECULATION INCOME WHICH WA S ADDED BY THE AO. BEING AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFORE T HE FIRST APPELLATE AUTHORITY, WHO CONSIDERED THE ASSESSEE APPELLANTS SUBMISSION BEFO RE IT WITH RESPECT TO CHANGE OF OPINION BY THE AO FOR INITIATING PROCEEDINGS U/S 14 7/148 OF THE ACT. THE LD. CIT(A) NEGATED THE CLAIM OF THE ASSESSEE APPELLANT BY HOLD ING A VIEW THAT CHANGE OF OPINION CANNOT BE THE BASIS TO BELIEF WAS NOT AN OPINION AS PUT FORTH BY THE AO, IN SO FAR AS, AT THE TIME OF ORIGINAL ASSESSMENT IT WAS A QUESTION O F FACT AND WAS A CASE SPECIFIC. HOWEVER, HE HAD CONSIDERED THE FACT THAT SPECULATIO N LOSS CLAIMED BY THE ASSESEE WHETHER COULD BE INCREASED OR DECREASED BY THE AO W AS NOT THE CONTENTION, IN SO FAR AS, IT WAS NOT THE CASE OF THE ASSESSEE TO ALLOCATE THE EXPENSES WHICH IN ITSELF ARE LOSS FOR DISALLOWANCE WOULD RATHER FOR INCREASING THE BU SINESS INCOME OF THE ASSESSEE AND NOT OTHERWISE WAS CONSIDERED IN ACCORDANCE WITH THE PROVISION OF THE I.T.ACT WAS ESTIMATED DISALLOWANCE AT 50%. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE MATERIAL AVAILABLE ON RECORD. AS PER THE SUBMISSIONS BY THE RESPECTIVE PARTIES, WE ARE OF THE CONSIDERED VIEW THAT IN THE CASE OF ACIT MUMBAI AND ORS. VS ICICI SECURITIES PRIMARY DEALERSHIP LTD. RENDERED BY THE HONBLE BOM BAY HIGH COURT AND CONFIRMED BY THE HONBLE SUPREME COURT IN CIVIL APPEAL NO.596 0 OF 2012 DATED 22 ND AUGUST, 2012 IT HAS CATEGORICALLY GIVEN A FINDING THAT THE OBJECTION OF THE ASSESSEE FOR REOPENING HAVE TO BE TAKEN CARE OF IN SO FAR AS THE WHOLE OF THE INCOME WAS RENDERED TO TAX BY THE ASSESEE WAS NOT TO BE CONSIDERED FOR DERIVING SPECULATION LOSS OR PROFIT ITA NO.1418/KOL/20120& C.O.109/KOL/2010 PAN EMAMI COSMED LTD., A.YR. 2003-04 3 WHETHER IT EXISTED IN THE ORIGINAL ASSESSMENT. THE LD. COUNSEL FOR THE ASSESSEE HAS FURNISHED A COPY OF THE SAID ORDER WHICH DIRECTLY G OES TO THE ROOT OF THE QUESTION BEFORE US RAISED BY THE REVENUE WHETHER FOR DETERMI NING THE INCOME ON THE BASIS OF THE SHARE TRADING COULD THE LOSS BE DISALLOWED ON F INDING THE SPECULATION LOSS WHICH COULD BE ALLOWED IN ACCORDANCE WITH THE PROVISION O F SECTION 73 WHETHER WOULD BE FOR RE-ASSESSMENT OF FINDING OF INCOME HAVING ESCAPED O R DISALLOWANCE OF EXPENDITURE CLAIMED FOR EARNING SUCH INCOME. IN OTHER WORDS, TH E LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED A PAPER BOOK WHEREIN THE ORIGINAL ASSESSM ENT INDICATING THE TOTAL TURN OVER ON ACCOUNT OF SHARE TRADING AND SHARE BUSINESS HAS BEEN VERIFIED BY THE AO. THE ASSESSEE BEING A LIMITED COMPANY WAS HOLDING SHARES AS INVESTMENT AND ALSO FOR TRADING, THEREFORE CANNOT BE SUBJECT ITSELF TO DETE RMINE THE SPECULATION LOSS, IF ANY, WAS NOT TO BE TINKERED WITH UNDER THE PROVISION OF SECT ION 147/148 OF THE ACT. SIMILARLY THE DISALLOWANCE IN THE LIGHT OF HOLDING A VIEW THAT WH ETHER THE SHARE TRADING BUSINESS RESULTED IN SPECULATION LOSS, A LOSS BEING A NEGATI VE FIGURE WHICH EXPENSES CLAIMED AGAINST ITSELF ESTIMATED AT A HIGHER FIGURE IS PURE LY DISALLOWANCE OF EXPENSES RELATING TO THE OTHER BUSINESS THEREFORE WOULD HAVE ONLY RED UCED THE OTHER INCOME, IN SO FAR AS, THE ALLOCATION OF THE EXPENDITURE TO A PARTICULAR H EAD OF INCOME BY ADJUSTING THE INCOME HAS TO BE CORRESPONDINGLY REDUCED, WAS CONSI DERED APPROPRIATELY BY THE LD. CIT(A). THEREFORE, ON THE BASIS OF THE FACTS BROUGH T OUT FROM THE RECORD, WE ARE OF THE CONSIDERED VIEW THAT THE APPEAL OF THE REVENUE DOES NOT HAVE LEGS TO STAND ON AND HAS TO BE DISMISSED. HOWEVER, ON THE ISSUE RAISED BY TH E ASSESSEE-APPELLANT AS CROSS OBJECTION REGARDING THE VALIDITY OF REOPENING IN TH E LIGHT OF THE SUPREME COURTS DECISION BROUGHT ON RECORD AS OF NOW WAS TO BE CONS IDERED, IN SO FAR AS, THE LD. CIT(A) DID NOT DISTINGUISH ANOTHER APEX COURTS DECISION I N THE CASE OF CIT VS KELVINATOR OF INDIA LTD. REPORTED IN 320 ITR 561 (SC) WHICH WAS B ROUGHT TO THE NOTICE OF THE LD. CIT(A) BY THE ASSESSEE THAT THE LAW IS SETTLED THAT THE CHANGE OF OPINION CANNOT BE THE BASIS FOR A REASON TO BELIEVE AND REVIEW OF THE ORD ER U/S 147 OF THE ACT. WE DO NOT FIND ANY INFIRMITY IN THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE, IN SO FAR AS, THE LD. CIT(A) HAS BROUGHT ON RECORD THE FACTS FOR DELETING THE DISALLOWANCE OF SPECULATION LOSS WHETHER COULD BE CORRESPONDINGLY INCREASE FOR REDUCING THE INCOME FROM THE GROSS TOTAL BUSINESS OF THE ASSESSEE HAS NOT BEEN A DDRESSED BY HIM. THEREFORE, THE FACTS ITA NO.1418/KOL/20120& C.O.109/KOL/2010 PAN EMAMI COSMED LTD., A.YR. 2003-04 4 THERETO SQUARELY APPLY TO THE FACTS OF THE ASSESSEE S CASE AND WE ARE INCLINED TO ADMIT AS VALID. IN THIS VIEW OF THE MATTER WE FIND THAT T HE LD. CIT(A) HAS ERRED IN NOT HOLDING THE ASSESSMENT U/S 147 OF THE ACT AS AGAINST THE SE TTLED PRINCIPLE LAID DOWN BY THE HONBLE SUPREME COURT IN AN EARLIER DECISION ALSO I N THE ONE RELIED BY THE LD. COUNSEL FOR THE ASSESSEE. 5. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMI SSED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 16.05.2013. SD/- SD/- [ .#! $'# , ] [ .., ,, , ] [MAHAVIR SINGH ] [K.K.GUPTA] JUDICIAL MEMBER ACCOUNTANT MEMBER ( (( (7 7 7 7) )) ) DATE: 16.05.2013. R.G.(.P.S.) 9 4 /$$2 :2);- COPY OF THE ORDER FORWARDED TO: 1. PAN EMAMI COSMED LTD., 687, EMAMI TOWER, ANANDPUR, EM BY PASS, KOLKATA- 700 107. 2 A.C.I.T., CENTRAL CIRCLE-VIII, KOLKATA. 3 . CIT KOLKATA 4 . CIT(A)-CENTRAL-I, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 02 /$/ TRUE COPY, 9'/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES