SMT. ARCHANA MEHTA, Indore V. THE ITO-2(5), Indore

CO 27/IND/2015

• Counselvise Citation: [2016] 112 COUNSELVISE.COM (IT) 4302 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 28-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 21-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SHRI; S N AGRAWAL
• Keywords: Opportunity of being heard; Principle of natural justice; Transactions in derivatives; Speculation loss; Set aside
• Section: 43(5)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE .., ..!', #$ # !% BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER .. ./ I.T.A. NO. 17/IND/2015 / ASSESSMENT YEAR: 2008-09 INCOME TAX OFFICER 2(5), INDORE / APPELLANT VS SMT. ARCHANA MEHTA INDORE .. ./ PAN: AABCD0729M / RESPONDENT ./ CO NO. 27/IND/2015 ... 17/ ! /2016 %& ' ( ARISING OUT OF ITA NO. 17/IND/2015 SMT. ARCHANA MEHTA INDORE .. ./ PAN: AABCD0729M )( / OBJECTOR VS INCOME TAX OFFICER 2(5),INDORE / RESPONDENT ITA NO. 17/IND/2015 & CO27/IND/2015 ITO VS. SMT. ARCHNA MEHTA 2 * )+ , / REVENUE BY SHRI MOHD. JAVED - ( )+ , / ASSESSEE BY SHRI S.N. AGRAWAL & SHRI PANKAJ MOGRA . / )+ ( 01 DATE OF HEARING 24.8.2016 %234 )+ ( 01 DATE OF PRONOUNCEMENT 28.08.2016 5 / O R D E R PER SHRI D.T. GARASIA, JM THE REVENUE IS IN APPEAL WHEREAS THE ASSESSEE HAS FILED THE CROSS OBJECTION AGAINST THE ORDER OF THE LEARNED CIT(A)-I, INDORE, DATED 22.9.2014. 2. SO FAR AS THE APPEAL OF THE REVENUE IS CONCERNED, THE EFFECTIVE GROUND TAKEN BY THE REVENUE IS THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE SPECULATIVE LOSS AMOUNTING TO RS.17,91,794/- TO BE SET OFF AGAINST THE TOTAL INCOME. ITA NO. 17/IND/2015 & CO27/IND/2015 ITO VS. SMT. ARCHNA MEHTA 3 3. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF FUTURE AND OPTION AND CLAIMED TO HAVE INCURRED LOSS IN FUTURE AND OPTION ACTIVITIES. THE ASSESSEE FILED THE RETURN OF INCOME WHEREIN LOSS ON F&O OF RS. 17,91,794/- WAS CONSIDERED AS SPECULATIVE LOSS. THE ASSESSEE ALSO FURNISHED DETAILS OF LOSS AS INCURRED BY HER IN F& TRANSACTIONS. THE ASSESSEE ALSO FURNISHED THE COPY OF HER ACCOUNT IN THE BOOKS OF THE BROKER AND ALSO SCRIPTWISE STATEMENT OF LOSS AS INCURRED BY HER. THE ASSESSING OFFICER IN THE REMAND REPORT DENIED THE CLAIM OF SET OFF FOR THE REASON THAT THE ASSESSEE HERSE LF HAD NOT CLAIMED THE SAID LOSS IN HER RETURN OF INCOME. HENCE, THE CLAIM OF THE ASSESSEE IN RESPECT OF LOSS O F F&O AS A BUSINESS LOSS WAS NOT ACCEPTED BY THE ASSESSING OFFICER. ON APPEAL, THE LEARNED CIT(A) ITA NO. 17/IND/2015 & CO27/IND/2015 ITO VS. SMT. ARCHNA MEHTA 4 ALLOWED THE CLAIM OF THE ASSESSEE. NOW THE REVENUE IS IN APPEAL AGAINST THE SAME. 4. BEFORE US THE LEARNED DR RELIED UPON THE ORDER O F THE ASSESSING OFFICER WHEREAS THE LEARNED COUNSEL F OR THE ASSESSEE RELIED UPON THE ORDER OF THE LEARNED CIT(A). 5. WE HAVE HEARD BOTH THE SIDES. THE LEARNED CIT(A) WHILE DEALING WITH THE MATTER HAS HELD AS UNDER :- 9. THE APPELLANT HAS CLAIMED A LOSS OF RS.17,91,794/- IN TRADING OF FUTURES. SUCH LOSS WAS SHOWN AS SPECULATIVE LOSS IN THE RETURN OF INCOME FILED BY APPELLANT FOR A.Y. 2008-09 ON 13.03.2009. THE APPELLANT HAS CLAIMED THAT SUCH LOSS IN FUTURE & OPTIONS, IS ELIGIBLE TRANSACTION I N RESPECT OF TRADING IN DERIVATIVES REFERRED TO IN CLAUSE (AC) OF SECTION 2 OF SECURITIES CONTRACTS (REGULATION) ACT, 1956. F&O TRANSACTIONS CARRIED ITA NO. 17/IND/2015 & CO27/IND/2015 ITO VS. SMT. ARCHNA MEHTA 5 OUT BY APPELLANT IN ITS CLIENT CODE THROUGH ARIHENT CAPITAL MARKETS LTD. ON NSE IS NOT SPECULATIVE AS PER PROVISIONS OF SECTION 43(5)(D) OF IT ACT INTRODUCED FROM 01.04.2006. SUCH DEEMING PROVISIONS WAS APPLICABLE IN THE YEAR UNDER CONSIDERATION I.E. A.Y.2008-09 AND THEREFORE SUCH LOSS WAS REQUIRED TO BE ALLOWED AS BUSINESS LOSS BY THE A.O. EVEN IF THE SAME WAS WRONGLY CLAIMED BY APPELLANT AS SPECULATIVE. IN VIEW OF THE SAME THIS ADDITIONAL GROUND OF APPEAL IS ADMITTED AND THE SAME IS HEREBY ALLOWED. AFTER CONSIDERING THE SUBMISSIONS OF THE PARTIES, WE ARE OF THE VIEW THAT THAT THE LOSS IN F&O TRANSACTION IS ELIGIBLE TRANSACTION IN RESPECT OF TRADING OF DERIVATIV ES AS REFERRED TO IN CLAUSE (AC) OF SECTION 2 OF SECURITI ES CONTRACTS (REGULATION) ACT, 1956. THE ASSESSEE HAS ITA NO. 17/IND/2015 & CO27/IND/2015 ITO VS. SMT. ARCHNA MEHTA 6 CARRIED OUT F&O TRANSACTION IN ITS CLIENT CODE THROUGH ARIHANT CAPITAL MARKETS LTD. ON NATIONAL STOCK EXCHANGE WHICH IS NOT SPECULATIVE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 43(5) OF THE ACT INTRODUCE D W.E.F. 1.4.2006 AND AS SUCH IT WAS APPLICABLE TO THE YEAR UNDER CONSIDERATION. WE, THEREFORE, HOLD THAT TH E LEARNED CIT(A) WAS JUSTIFIED IN DIRECTING THE ASSESSI NG OFFICER TO ALLOW SPECULATIVE LOSS AMOUNTING TO RS.17,91,794/- TO BE SET OFF AGAINST THE TOTAL INCOME OF THE ASSESSEE. IN THIS VIEW OF THE MATTER, THE APPEAL O F THE REVENUE STANDS DISMISSED. 6. SO FAR AS THE CROSS OBJECTION OF THE ASSESSEE IS CONCERNED, THE ONLY GROUND TAKEN BY THE ASSESSEE IS THAT THE LEARNED CIT(A) HAS ERRED IN MAINTAINING THE ADDITION OF RS.18,52,000/- AS MADE BY THE ASSESSING OFFICER IN RESPECT OF CASH DEPOSITED IN THE SAVINGS BANK ACCOUNT. ITA NO. 17/IND/2015 & CO27/IND/2015 ITO VS. SMT. ARCHNA MEHTA 7 7. WE HAVE HEARD BOTH THE SIDES. WE HAVE ALSO GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE ASSESSING OFFICER HAS MAINLY MADE THE DISALLOWANCE ONLY BECAUSE OF THE NON-COOPERATION ON THE PART OF THE ASSESSEE INASMUCH AS NEITHER THE ASSESSEE ATTENDED ON VARIOUS DATES NOR FILED THE REQUISITE INFORMATION BEFORE THE ASSESSING OFFICER. ON APPEAL, THE LEARNED CIT(A) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. NOW THE ASSESSEE IS IN CROSS OBJECTION. WE FIND THAT SINCE THE ASSESSEE DID NOT MAKE COMPLIANCE OF THE NOTICES ISSUED BY THE ASSESSING OFFICER NOR FILED THE REQUISITE DETAILS, IN THE INTEREST OF NATURAL JUSTICE, IN OUR OPINION, IT WOULD BE APPROPRIATE TO GIVE ONE ANOTHER OPPORTUNITY TO THE ASSESSEE TO PROVE HER CASE BEFORE THE ASSESSING OFFIC ER. WE, THEREFORE, SET ASIDE THE ORDERS OF THE AUTHORITI ES BELOW WITH THE DIRECTION TO THE ASSESSING OFFICER T O ITA NO. 17/IND/2015 & CO27/IND/2015 ITO VS. SMT. ARCHNA MEHTA 8 REDECIDE THE ISSUE DE NOVO AFTER AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND IF THE ASSESSEE DOES NOT COMPLY WITH THE REQUIREMENTS OF THE ASSESSING OFFICER, THE ASSESSING OFFICER IS AT LIBER TY TO MAKE THE ASSESSMENT ACCORDINGLY. 8. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED WHEREAS THE CROSS OBJECTION OF THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES ONLY. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON 24 TH AUGUST, 2016. SD/- SD/- ( ..!') (..) #$ (O.P.MEENA) (D.T.G ARASIA) ACCOUNTANT MEMBER JUDICIAL MEM BER )'* / DATED : 28 SEPTEMBER, 2016. DN/ ITA NO. 17/IND/2015 & CO27/IND/2015 ITO VS. SMT. ARCHNA MEHTA 9