Girdhar Fiscal Services Pvt. Ltd., V. ITO, Ward - 3(1), Kolkata,

CO 74/KOL/2010

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 6232 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 24-06-2011
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 08-06-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 21-06-2010
• Court: TRIBUNAL
• Department Lawyers: B R PURKAYASTHA
• Keywords: Transactions in derivatives
• Section: 43(5)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH B, KOLKATA () BEFORE . .. . . .. . , , , , , SHRI B.R.MITTAL, JUDICIAL MEMBER. /AND . .. .!' !'!' !'. .. . , #$ SHRI C.D.RAO, ACCOUNTANT MEMBER %& %& %& %& ' ' ' ' / ITA NO . 527/KOL/2010 () *+/ ASSESSMENT YEAR : 2006-07 (-. / APPELLANT ) I.T.O., WARD-3(1), KOLKATA - ( - - VERSUS - . (01-./ RESPONDENT ) M/S.GIRDHAR FISCAL SERVICES PVT. LTD., KOLKATA (PAN: AAACG 9202 B) 2 & 2 & 2 & 2 & /C.O. NO.74/KOL2010 ' ' ' ' / A/O ITA NO . 527/KOL/2010 () *+/ ASSESSMENT YEAR : 2006-07 (-. / APPELLANT ) M/S.GIRDHAR FISCAL SERVICES PVT. LTD., KOLKATA (PAN: AAACG 9202 B) - ( - - VERSUS - . (01-./ RESPONDENT ) I.T.O., WARD-3(1), KOLKATA -. 3 4 #/ FOR THE DEPARTMENT: SHRI B.R.PURKAYASTHA 01-. 3 4 #/ FOR THE RESPONDENT: SHRI RAVI TULSIYAN #5 / ORDER ( (( ( . .. .!' !'!' !'. .. . ) )) ), , , , #$ PER SHRI C.D.RAO, AM THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJE CTION FILED BY THE ASSESSEE ARE AGAINST THE ORDER DATED 09.12.2009 OF THE CIT( A)-I, KOLKATA PERTAINING TO A.YR. 2006-07. 2 ITA NO.527/KOL/2010 (BY THE REVENUE): THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APP EAL : 1. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED IN GIVING RELIEF TO THE ASSESSEE THAT THE LOSS INCURRE D BY THE ASSESSEE WAS FROM HEDGING ACTIVITIES COVERED BY SECTION 43(5)(B) WHER EAS IT WAS ADMITTED BY THE ASSESSEE BEFORE THE AO THAT IT WAS DEALING IN DERIV ATIVES WHICH WAS COVERED BY SUB-CLAUSE (D) OF SECTION 43(5). 2. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE CIT(A) ERRED IN GIVING RELIEF TO THE ASSESSEE ON CONTRADICTORY FACT S AND SUBMISSIONS OF THE ASSESSEE THAT IT WAS ADMITTED IN COURSE OF ASSESSME NT PROCEEDINGS THAT ASSESSEES LOSS WAS FROM DERIVATIVES TRADING WHEREA S IN COURSE OF APPELLATE PROCEEDINGS IT WAS STATED THAT THE LOSS INCURRED OF RS.29,15,466/- WAS FROM HEDGING ACTIVITIES. 3. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT THE ASSESSEES LOSS FROM TRANSACTIONS WAS NOT SPECULATIVE ON WRONG APPRECIATION OF THE FACTS THAT THE ASSESSEE WAS NOT ENGAGED IN DERIVATIVES TRANSACTIONS WHICH WAS SPECU LATIVE TRANSACTIONS UPTO 25/01/2006, I.E. FROM THE DATE FROM WHICH SUB-CLAUS E (D) IN SECTION 43(5) BECAME OPERATIVE. 4. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE CIT(A) ERRED IN GIVING RELIEF TO THE ASSESSEE RELYING COMPLETELY ON CONTRADICTORY STATEMENTS MADE BY THE ASSESSEE BEFORE HIM AND, AS SUCH, HIS O RDER IS PERVERSE AND LIABLE TO BE CANCELLED AND ORDER OF THE AO BE RESTORED. C.O.NO.74/KOL/2010 (A/O ITA NO.527/KOL/2010 (BY THE ASSESSEE): 1. THAT THE CIT(A) SHOULD HAVE NOTICED THAT EVEN GOING BY THE ASSESSING OFFICERS OWN FINDING THE ASSESSEES TRANSACTIONS T O BE IN THE NATURE OF DERIVATIVES AS OPPOSED TO HEDGING, THE SAME ARE TO FALL UNDER THE EXCEPTION IN PROVISO(D) BELOW SECTION 43(5) AS TRANSACTIONS IN T HE NATURE OF DERIVATIVES THUS BEING NON-SPECULATIVE IN NATURE FOR ASSESSMENT YEAR 2006-07 ONWARDS IN VIEW OF THE SPECIAL BENCH DECISION OF THE TRIBUNAL IN SH REE CAPITAL SERVICES LIMITED VS ACIT AS FURTHER EXPLAINED AND INTERPRETED BY THE ITAT BENCH, DELHI IN G.K.ANAND BROTHERS BUILDWELL PVT LTD VS ITO REPORTE D IN (2009) SOT 429 (DEL) AND SHOULD HAVE UPHELD THE NONSPECULATIVE NAT URE OF THE TRANSACTIONS ON THAT ALTERNATIVE SCORE. 2. THAT THE OVERSIGHT OF THE PRONOUNCEMENT OF THE LAW ON THE MATTER IN THE SAID ORDERS OF KOLKATA SPECIAL BENCH AND THE DELHI DIVIS ION BENCH OF ITAT AFFORDING THE ADDED ALTERNATIVE SUPPORT TO NON-SPEC ULATIVE NATURE OF THE TRANSACTIONS AMOUNTS TO FAILURE TO APPLY LAW TO THE RESPONDENTS PREJUDICE. 3 2. THERE IS A DELAY OF 66 DAYS IN FILING OF THE CROSS OBJECTION BY THE ASSESSEE FOR WHICH THE ASSESSEE HAS FILED A CONDONATION PETITION EXPLAINING THE REASONS FOR SUCH DELAY. AFTER CONSIDERING THE SUBMISSIONS BY THE ASS ESSEE THE DELAY IS CONDONED. 3. AT THE TIME OF HEARING BEFORE US, THE LD. CO UNSEL APPEARING ON BEHALF OF THE ASSESSEE HAS SUBMITTED THAT IN VIEW OF THE SPECIAL BENCHS ORDER IN THE CASE OF SHREE CAPITAL SERVICES LTD. VS ACIT VIDE ITA NO.1294/KOL/ 2008 DATED 31 ST JULY, 2009 EVEN IF THE CONTENTION OF THE A.O. AS CONTEMPLATED BY TH E REVENUE IN THE APPEAL IS CONSIDERED THE ASSESSEE IS ENTITLED TO RELIEF AS PE R THE DECISION OF THE SPECIAL BENCH. THEREFORE, HE REQUESTED TO DISMISS THE APPEAL OF TH E REVENUE. 4. AFTER HEARING THE RIVAL SUBMISSIONS AND ON C AREFUL PERUSAL OF MATERIALS AVAILABLE ON RECORD, IT IS OBSERVED THAT THE SPECIAL BENCH OF THIS TRIBUNAL IN THE CASE OF SHREE CAPITAL SERVICES LTD. VS ACIT (SUPRA) HAS HELD AS U NDER :- 7. IN VIEW OF THE ABOVE, WE HOLD THAT CL.(D) OF S.43(5) IS PROSPECTIVE IN NATURE AND WILL BE EFFECTIVE FROM THE DATE FROM WHICH THE LEGISLATURE MADE IT EFFECTIVE, 1 ST APRIL, 2006 AND ILL BE APPLICABLE FROM ASST. YEAR 2006-07 ONWARDS. IN VIEW OF THE ABOVE, WE FIND NO MERIT IN THE ASSES SEES APPEAL. THE SAME IS DISMISSED. 4.1. SINCE THE ASSESSMENT YEAR INVOLVED IN THIS C ASE IS 2006-07 RESPECTFULLY FOLLOWING THE ORDERS OF THIS TRIBUNAL, WE DISMISS THE APPEAL OF THE REVENUE AS WELL AS THE CROSS OBJECTION FILED BY THE ASSESSEE WHICH IS IN SUPPORT OF THE ORDERS OF THE LD. CIT(A). 5. IN THE RESULT THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 24.06.2011. SD/- SD/- . .. . . .. . , , , , B.R.MITTAL, JUDICIAL MEMBER . .. .!' !'!' !'. .. . , ,, , #$ #$ #$ #$ , C.D.RAO, ACCOUNTANT MEMBER. ( (( ('$ '$ '$ '$) )) ) DATE: 24.06.2011. R.G.(.P.S.) 4 #5 3 0& 6#&*7- COPY OF THE ORDER FORWARDED TO: 1. M/S.GIRDHAR FISCAL SERVICES PVT. LTD., 18, BRITISH INDIAN STREET, KOLKATA- 700069. 2 THE I.T.O., WARD-3(1), KOLKATA 3. THE CIT, 4. THE CIT(A)-I, KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA 1& 0/ TRUE COPY, #5(