ACIT, Jaipur V. BRIGHT METAL (INDIA) PVT. LTD., Jaipur

ITA 1018/JPR/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2062 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 29-05-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 29-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: P C PARWAL CA DHK
• Keywords: Business expenditure; Additional evidence; Speculation loss
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH HKKXPUN] YS[KK LNL; ,OA JH DQY HKKJR] U;KF;D LNL; DS LE{K BEFORE: SHRI BHAGCHAND, AM AND SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO.1018/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12. THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-1, JAIPUR. CUKE VS. M/S BRIGHT METAL (INDIA) PVT. LTD., 158-159, MENDWAS HOUSE, NEHRU BAZAR, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAACB 9670 N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA (ADDL.CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : P.C. PARWAL (C.A.) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 29.05.2017. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 07/06/2017. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THE APPEAL BY THE REVENUE IS DIRECTED AGAINST THE O RDER OF LD. CIT(APPEALS)- I, JAIPUR DATED 27.10.2015 PERTAINING TO ASSESSMENT YEAR 2011-12. THE REVENUE HAS RAISED THE FOLLOWING REVISED GROUND S OF APPEAL :- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN REDUCING THE DISALLOWAN CE MADE BY THE AO ON THE ISSUE OF LOSS ON COMMODITY TRADING FROM RS. 92,87,247/- TO RS. 22,56,457/- WITHOUT APPRECIATING FACTS AND CIRCUMST ANCES OF THE CASE. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN ACCEPTING ADDITIONAL EV IDENCE I.E. STATEMENT CONTAINING ITS STOCK POSITION ( RAW MATERIAL AND FI NISHED GOODS) AND TO COMPARE IT WITH THE QUANTITY OF FORWARD SALES (ENCL OSED AS ANNEXURE-A) IN VIOLATION OF RULE-46A OF IT RULES. 2. GROUND NOS. 1 & 2 ARE INTER- CONNECTED AND AGAIN ST REDUCING THE DISALLOWANCE MADE ON ACCOUNT OF LOSS ON COMMODITY TRADING OF RS. 92,87,247/- TO RS. 22,56,457/- 2 ITA NO. 1018/JP/2015 M/S BRIGHT METAL (INDIA) PVT. LTD., JAIPUR. AND AGAINST THE ACCEPTANCE OF ADDITIONAL EVIDENCE I .E. STATEMENT CONTAINING ITS STOCK POSITION IN VIOLATION OF RULE-46A OF IT RULES, 1962 . 3. BRIEFLY, STATED FACTS ARE THAT THE CASE OF THE A SSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S 143(3) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VID E ORDER DATED 06/03/2014. WHILE FRAMING THE ASSESSMENT, THE AO MADE DISALLOWANCE OF RS. 92,87,247/- CLAIMED AS BUSINESS EXPENSES UNDER THE CATEGORY OF ADMINISTRAT IVE AND OTHER EXPENSES. THE ASSESSEE BEFORE THE AO HAD CLAIMED THAT THIS EXPENS ES, BEING THE LOSS ON ACCOUNT OF CURRENCY FLUCTUATION AND THE RAW MATERIAL PRICE FLU CTUATION. THIS EXPLANATION OF THE ASSESSEE WAS NOT ACCEPTED BY THE AO. 4. AGGRIEVED BY THIS, THE ASSESSEE PREFERRED AND AP PEAL BEFORE LD. CIT(A). THE LD. CIT(A) DURING THE APPELLATE PROCEEDINGS CLAUSE 4A OF STATEMENT CONTAINING THE STOCK POSITION AND SUSTAINED THE ADDITION OF EXTENT OF RS. 22,56,457/-, THE AO WAS FURTHER DIRECTED TO VERIFY THE WORKING OF THIS STOC K POSITION AS SUBMITTED BY THE ASSESSEE AND RECTIFY THE FIGURES OF SPECULATIVE LOS S, ACCORDINGLY. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL. LD. D/R SUBMITTED THAT THE, LD. CIT(A) WAS NOT JUST IFIED IN REDUCING THE DISALLOWANCE AND DIRECTING THE AO TO VERIFY THE FIGURES SUBMITTE D DURING THE COURSE OF APPELLATE PROCEEDINGS. HE SUBMITTED THAT LD. CIT(A) WAS NOT C ORRECT IN ACCEPTING THE WORKING GIVEN BY THE ASSESSEE DURING THE APPELLATE PROCEEDI NG WITHOUT CALLING FOR REMAND REPORT FROM THE AO. HE SUBMITTED THIS ACT OF THE L D. CIT(A) IS IN VIOLATION OF RULE 46A OF THE INCOME TAX RULES 1962. 5. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE SU PPORTED THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT THERE IS NOT INFIRMITY IN TO THE ORDER OF THE LD. CIT(A). 3 ITA NO. 1018/JP/2015 M/S BRIGHT METAL (INDIA) PVT. LTD., JAIPUR. THE LD. CIT(A) HAS RIGHTLY REDUCED THE ADDITION, HE FURTHER SUBMITTED THAT THERE IS NO VIOLATION OF RULE 46A AS CLAIMED BY THE LD. DR. HE DREW OUR ATTENTION TO THE RELEVANT RULES AND MORE PARTICULARLY SUB-RULE 4 OF RULE 46A. 6. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDER OF THE AUTHORITIES BELOW . THE LD. CIT(A) IN HIS ORDER HAS OBSERVED AS UNDER:- (IX) IT IS EVIDENT FROM THE ABOVE DETAILS THAT THESE FOR WARD SALES WERE IN THE NATURE OF SPECULATIVE TRANSACTIONS AND THE LOSS ARISES THEREON IS IN THE NATURE OF SPECULATIVE LOSS. THEREFORE, IT IS H ELD THAT OUT OF LOSS OF RS. 92,87,247/- CLAIMED BY THE APPELLANT COMPANY AS HEDGING LOSS AND TREATED BY THE AO AS SPECULATIVE LOSS, THE SPECULAT IVE LOSS IS TO THE TUNE OF RS. 22,56,457/- ONLY AS WORKED OUT IN THE A BOVE TABLE. THEREFORE, ADDITION OF RS. 22,56,457/- IS SUSTAINED AS SPECULATIVE LOSS. THE AO IS DIRECTLY TO VERIFY THE ABOVE WORKING BY O BSERVING THE PRINCIPLES AS LAID DOWN IN THE CASE OF SOPROPHA SA (SUPRA) AND TO RECTIFY THE FIGURES OF SPECULATIVE LOSS, IF ANY, AC CORDINGLY. 6.1 THE GRIEVANCE OF THE REVENUE IS THAT, THE LD. C IT(A) HAS ACTED IN VIOLATION OF RULE 46A IN CONSIDERING THE DETAILS FILED BY THE AS SESSEE DURING THE COURSE OF APPELLATE PROCEEDINGS WITHOUT CALLING FOR REMAND RE PORT FROM THE AO. FOR THE SAKE OF CLARITY SUB-RULE 4 RULE 46A IS REPRODUCED HERE A ND BELOW:- 46A. (1) THE APPELLANT SHALL NOT BE ENTITLED TO PR ODUCE BEFORE THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MA Y BE, THE COMMISSIONER (APPEALS), ANY EVIDENCE, WHETHER ORAL OR DOCUMENTAR Y, OTHER THAN THE EVIDENCE PRODUCED BY HIM DURING THE COURSE OF PROCE EDINGS BEFORE THE [ASSESSING OFFICER], EXCEPT IN THE FOLLOWING CIRCUM STANCES NAMELY:- (A) WHERE THE [ASSESSING OFFICER] HAS REFUSED TO ADMIT EVIDENCE WHICH OUGHT TO HAVE BEEN ADMITTED; OR 4 ITA NO. 1018/JP/2015 M/S BRIGHT METAL (INDIA) PVT. LTD., JAIPUR. (B) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAU SE FROM PRODUCING THE EVIDENCE WHICH HE WAS CALLED UPON TO PRODUCE BY THE [ASSESSING OFFICER]; OR (C) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAU SE FROM PRODUCING BEFORE THE [ASSESSING OFFICER] ANY EVIDEN CE WHICH IS RELEVANT TO ANY GROUND OF APPEAL; OR (D) WHERE THE [ASSESSING OFFICER] HAS MADE THE ORDER AP PEALED AGAINST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE APPELL ANT TO ADDUCE EVIDENCE RELEVANT TO ANY GROUNDS OF APPEAL. (2). NO EVIDENCE SHALL BE ADMITTED UNDER SUB-RULE ( 1) UNLESS THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, TH E COMMISSIONER (APPEALS)] RECORDS IN WRITING THE REASONS FOR ITS A DMISSION. (3) THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS)] SHALL NOT TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER SUB-RULE(1) UNLESS THE [ASSESSING OFFICER] HA S BEEN ALLOWED A REASONABLE OPPORTUNITY- (A) TO EXAMINE THE EVIDENCE OR DOCUMENT OR TO CROSS -EXAMINE THE WITNESS PRODUCED BY THE APPELLANT, OR (B) TO PRODUCE ANY EVIDENCE OR DOCUMENT OR ANY WITN ESS IN REBUTTAL OF THE ADDITIONAL EVIDENCE PRODUCED BY THE APPELLAN T. (4) NOTHING CONTAINED IN THIS RULE SHALL AFFECT THE POWER OF THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, TH E COMMISSIONER ( APPEALS)] TO DIRECT THE PRODUCTION OF ANY DOCUMENT, OR THE EXAMINATION OF ANY WITNESS, TO ENABLE HIM TO DISPOSE OF THE APPEAL , OR FOR ANY OTHER SUBSTANTIAL CAUSE INCLUDING THE ENHANCEMENT OF THE ASSESSMENT OR PENALTY (WHETHER ON HIS OWN MOTION OR ON THE REQUEST OF THE [ASSESSING OFFICER] UNDER CLAUSE (A) OF SUB-SECTION (1) OF SECTION 251 OR THE IMPOSITION OF PENALTY UNDER SECTION 271.] 6.2 A BARE READING OF SUB RULE 4 MAKES IT CLEAR THA T THE COMMISSIONER (APPEAL) MAY DIRECT THE PRODUCTION OF ANY DOCUMENT OR THE EX AMINATION OF WITNESS TO ENABLE HIM TO DISPOSE OF THE APPEAL OR FOR ANY OTHER SUBST ANTIAL CAUSE. WE FIND MERIT INTO 5 ITA NO. 1018/JP/2015 M/S BRIGHT METAL (INDIA) PVT. LTD., JAIPUR. THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT SUB-RULE 1 OF RULE 46A WOULD NOT BE APPLICABLE IN THE PRESENT CASE AS THE DETAIL OF STOCK WAS DIRECTED BY THE LD. CIT(A) DURING THE APPELLATE PROCEEDINGS TO BE FURNISHED. MOREOVER, THESE EVIDENCES IN THE FORM OF STOCK WERE AVAILABLE WITH THE AO. 6.3 UNDER THESE FACTS, WE DO NOT SEE ANY INFIRMITY INTO THE LD. CIT(A). FURTHER THE LD. CIT(A) HAS GIVEN A FINDING ON FACT THAT THESE F ORWARD SALES WERE IN THE NATURE OF SPECULATION TRANSACTION AND THE LOSS ARISES THEREON IS IN THE NATURE OF SPECULATIVE LOSS. THIS FINDING ON FACT IS NOT CONTROVERTED BY THE REVENUE BY PLACING ANY CONTRARY MATERIAL ON RECORD. HENCE, WE DO NOT SEE ANY MERIT INTO THE GROUNDS RAISED BY THE REVENUE, SAME ARE DISMISSED. 7. IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO. 1018/JP/2015 IS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON WEDNESDAY , THE 07TH DAY OF JUNE 2017. SD/- SD/- ( HKKXPUN ( DQY HKKJR ) ( BHAGCHAND) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 07/06/2017. POOJA/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- THE ACIT, CIRCLE-1, JAIPUR. 2. THE RESPONDENT M/S BRIGHT METAL (INDIA) PVT. L TD., NEHRU BAZAR, JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 1018/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 6 ITA NO. 1018/JP/2015 M/S BRIGHT METAL (INDIA) PVT. LTD., JAIPUR.