ASSISTANT COMMISSIONER OF INCOME TAX, ALWAR V. SHRI AKHIL MODI, ALWAR

ITA 1019/JPR/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6314 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 21-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SEEMA MEENA
• Assessee Lawyers: H M SINGHVI CA DHK
• Keywords: Speculation loss; Tax effect
• Section: 43(5)

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 FOT; IKY JKWO] U;KF;D LNL; ,O A JH HKKXPUN ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, A M VK;DJ VIHY LA- @ ITA NO. 1018 & 1019/JP/2017 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2009-10 & 10-11. THE ACIT, CIRCLE-1, ALWAR. CUKE VS. SHRI AKHIL MODI, 10-11, GHANTA GHAR, SABJI MANDI, ALWAR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ABVPM 3602 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SMT. SEEMA MEENA (JCIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI H.M. SINGHVI (CA) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 28.06.2018. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 02/07/2018. VKNS'K@ ORDER PER VIJAY PAL RAO, J.M. THESE TWO APPEALS BY THE REVENUE ARE DIRECTED AGAI NST TWO SEPARATE ORDERS OF LD. CIT (A) DATED 24.10.2017 FOR THE ASSESSMENT YEA RS 2009-10 & 2010-11. THE GROUND RAISED BY THE REVENUE IS COMMON FOR BOTH THE ASSESSMENT YEARS EXCEPT QUANTUM OF DISALLOWANCE. THE GROUND RAISED BY THE R EVENUE FOR THE ASSESSMENT YEAR 2009-10 IS AS UNDER :- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW LD. CIT (A) ERRED IN REDUCING THE DISALLOWANCE OF RS. 11,23,241 /- TO RS. 2,24,853/- MADE BY AO ON ACCOUNT OF SHARE LOSS COMPUTED IN RE SPECT OF A SPECULATION BUSINESS CARRIED ON BY THE ASSESSEE, WI THOUT APPRECIATING THE MATERIAL FACT OF THE CASE. 2 ITA NOS. 1018 & 1019/JP/2017 SHRI AKHIL MODI, ALWAR. 2. THE AO NOTED THAT THE ASSESSEE HAS CLAIMED LOSS ON TRADING OF SHARES AMOUNTING TO RS. 11,23,241/-. THE AO PROPOSED TO D ISALLOW THE SAID CLAIM OF LOSS ON THE GROUND THAT IT IS SPECULATION LOSS WHICH CAN NOT BE ALLOWED AGAINST THE OTHER INCOME OF THE ASSESSEE. ACCORDINGLY, THE AO MADE T HE DISALLOWANCE OF THE SAID AMOUNT OF RS. 11,23,241/- BY CONSIDERING THE SAID S PECULATIVE LOSS AS PER THE PROVISIONS OF SECTION 43(5) OF THE IT ACT. THE ASS ESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT (A). THE LD. CIT (A) RESTRIC TED THE DISALLOWANCE TO RS.2,24,853/- AND ALLOWED THE CLAIM OF THE ASSESSEE OF BALANCE AMOUNT OF RS. 8,98,388/- BY HOLDING THAT THE SAME IS NOT SPECULAT IVE LOSS BEING INCURRED ON F & O TRANSACTION. 3. WE HAVE HEARD THE LD. D/R AS WELL AS THE LD. A/R OF THE ASSESSEE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET, WE NOTE THAT THE AO HAS MADE THE DISALLOWANCE OF LOSS OF RS. 11,23,241/- BY TREATING THE SAME AS SPECULATIVE LOSS UNDER SECTION 43(5) OF THE ACT AND BY INVOKING THE PROVISIONS OF SECTION 73 OF THE ACT. THE AO HAS NOT EXAMINED THE ISSUE IN THE LIGHT OF CLAUSE (D) AND (C) OF PROVISO TO SECTION 43(5) OF THE ACT WHEREBY THE TRA DING AND DERIVATIVES CARRIED OUT IN A RECOGNIZED STOCK EXCHANGE SHALL NOT BE DEEMED TO BE A SPECULATIVE TRANSACTION. THE LD. CIT (A) HAS CONSIDERED THIS ISSUE IN PARA 6 .3 AND 6.3.2 AS UNDER :- 6.3. I HAVE CONSIDERED THE ORDER PASSED BY THE A. O. AND SUBMISSIONS FILED BY THE APPELLANT. FOLLOWING FACTS HAVE EMERGED; 1. THAT THE APPELLANT IS IN THE BUSINESS OF SHARE TRAN SACTION ALSO APART FROM DERIVING INCOME FROM PROFESSION. 2. THAT DURING THE YEAR UNDER CONSIDERATION, THE APPEL LANT HAS ACCUMULATED LOSS IN SHARE TRANSACTION TO THE TUNE O F RS. 11,23,241/-. 3 ITA NOS. 1018 & 1019/JP/2017 SHRI AKHIL MODI, ALWAR. 3. THAT THE AO HAS TREATED THE ENTIRE LOSS OF RS. 11,2 3,241/- AS SPECULATIVE LOSS AND THEREFORE CANNOT BE SET OFF AG AINST BUSINESS/PROFESSION HEAD U/S 73 OF THE ACT. 4. THAT THE APPELLANT HAS CLAIMED THAT OUT OF RS. 11,2 3,241/- ONLY THE LOSS OF RS. 2,24,853/- COMES UNDER SPECULATIVE TRAN SACTION AS THE SAME WAS INCURRED DURING INTRA-DAY TRANSACTION AND FILED THE COPY OF LEDGER IN SUPPORT OF THE CLAIM. 5. THAT WITH REGARD TO BALANCE LOSS OF RS. 8,98,388/-, IT WAS INCURRED DURING F & O TRANSACTION. 6. THAT THE APPELLANT HAS FURTHER CITED THE PROVISION (C) OF SECTION 43(5) OF THE ACT APPLICABLE FROM 01/04/2006 THAT SU CH TRANSACTION SHALL NOT BE DEEMED TO BE SPECULATIVE TRANSACTION. 6.3.2. I HAVE CONSIDERED THE ABOVE MENTIONED FACTS OF THE CASE. I FIND FORCE IN THE ARGUMENT OF THE AR THAT THE SHARE LOSS AMOUNTING TO RS. 8,98,388/- SHALL NOT BE TREATED AS SPECULATIVE TRANSACTION AS PER THE PROVISO TO SECTI ON 43(5) OF THE ACT. ACCORDINGLY, THE A.O. IS DIRECTED TO ALLO W SET OFF OF RS. 8,98,388/- AGAINST THE BUSINESS/PROFESSION HEAD AS PER SECTION 71 OF THE ACT. HOWEVER AMOUNT OF RS. 2,24,8 53/- SHALL BE TREATED AS SPECULATIVE TRANSACTION AS PER SECTION 43(5) AND SUBJECTED TO SECTION 73 OF THE ACT. APPEL LANTS GROUND OF APPEAL, ACCORDINGLY IS PARTLY ALLOWED. THUS THE LD. CIT (A) HAS GIVEN THE FINDING THAT OUT OF TOTAL LOSS OF RS. 11,23,241/-, ONLY THE AMOUNT OF RS. 2,24,853/- COMES UNDER THE S PECULATIVE TRANSACTION AND CANNOT BE SET OFF AGAINST THE BUSINESS/PROFESSIONAL INCOME AS PER SECTION 73 OF THE ACT. THE REVENUE HAS NOT CONTRADICTED THE FACTUAL FINDING GIVEN BY THE LD. CIT (A) BIFURCATING THE AMOUNT OF LOSS ARISING FROM SPECULA TIVE TRANSACTION AND F & O TRANSACTION. HENCE, IN VIEW OF THE FACTS AND CIRCU MSTANCES AS DISCUSSED ABOVE, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDER OF THE LD. CIT (A). 4. THOUGH THE LD. A/R OF THE ASSESSEE HAS RAISED AN OBJECTION AGAINST THE MAINTAINABILITY OF THE APPEALS OF THE REVENUE DUE T O LOW TAX EFFECT, HOWEVER, WE FIND THAT AS PER THE REPORT OF THE AO, THERE WAS AN AUDI T OBJECTION ON THIS ISSUE. ACCORDINGLY AS PER PARA 3 OF THE CBDT CIRCULAR NO. 5/2017 DATED 23 RD JANUARY, 2017 4 ITA NOS. 1018 & 1019/JP/2017 SHRI AKHIL MODI, ALWAR. THE ISSUE INVOLVED IN THE REVENUES APPEAL IS REQUI RED TO BE ADJUDICATED ON MERITS AND NOT ON THE GROUND OF TAX EFFECT WHICH IS LESS T HAN THE MONETARY LIMIT PROVIDED IN THE CIRCULAR. SINCE WE HAVE UPHELD THE IMPUGNED OR DER OF THE LD. CIT (A), THEREFORE, THE OBJECTION RAISED BY THE LD. A/R IS OTHERWISE BE COMES INFRUCTUOUS. 4. IN THE RESULT, APPEALS OF THE REVENUE ARE DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 02/07/2018 . SD/- SD/- HKKXPUN FOT; IKY JKWO (BHAGCHAND) ( VIJAY PAL RAO ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 02/07/2018. DAS/ VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT-THE ACIT, CIRCLE-1, ALWAR. 2. IZR;FKHZ@ THE RESPONDENT-SHRI AKHIL MODI, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE {ITA NO.1018 & 1019 /JP/2017} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR