Harsha Capital Services Ltd., New Delhi V. ITO, New Delhi

ITA 1132/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65266 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 30-07-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 05-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR B R R KUMAR
• Assessee Lawyers: ANIL MAHESHWARI
• Keywords: Speculation loss; Competent authority

Judgement Text

I.T.A. NO. 1132/DEL/2012 1 IN THE INCOME TAX APPELATE TRIBUNAL DELHI BENCH SMC: NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO. 1132/DEL/2012 A.Y. : 2006-07 HARSHA CAPITAL SERVICES LTD., VS. ITO, WARD-1 2(3), A-111, PREET VIHAR, NEW DELHI DELHI 110 092 (PAN : AAACH7449H) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. ANIL MAHESHWARI, A.R. DEPARTMENT BY : DR. B.R.R. KUMAR, SR. D.R. O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-VIII, NEW D ELHI DATED 23.12.2011 PERTAINING TO ASSESSMENT YEAR 2006-07. 2. THE GROUND RAISED IN THE APPEAL IS THAT ON THE FACTS OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME TAX (A) ERR ED IN CONFIRMING THAT THE DERIVATIVE LOSS OF ` 1,15,880/- ON DEALING IN FUTURE AND OPTION DERIVATIVES OF SHARES IN RECOGNIZED STOCK EXCHANGE PRIOR TO 25.1.2006 IS SPECULATION LOSS. 3. IN THIS CASE DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSE E COMPANY HAD INCURRED LOSS OF ` 1,15,880/- IN RESPECT OF DERIVA TIVE TRANSACTION DURING THE PERIOD UNDER CONSIDERATION. ASSESSI NG OFFICER FURTHER NOTICED THAT THE TRANSACTIONS IN QUESTION HAVE BEE N MADE ON NATIONAL STOCK EXCHANGE AND BOMBAY STOCK EXCHANGE WHICH WERE I.T.A. NO. 1132/DEL/2012 2 NOT RECOGNIZED FOR THE PURPOSE OF RULE 6DDA AND THE NOTIFICATION TO RECOGNIZE THESE STOCK EXCHANGES WAS ISSUED ONLY ON 25.1.2006. THEREFORE, ASSESSING OFFICER HELD THAT THE LOSS A RISING OUT OF PURCHASE AND SALE OF SHARES, DELIVERY OF WHICH WERE NOT PH YSICAL MADE, WERE LIABLE TO BE CONSIDERED IN LIGHT OF THE PROVISIONS OF EXPLANATION TO SECTION 73 OF THE I.T. ACT, 1961. ACCORDINGLY, T HE LOSS OF ` 1,15,880/- WAS DISALLOWED BY THE ASSESSING OFFICER TREATING T HE SAME AS SPECULATIVE LOSS. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (A) NOTED THAT HE FOUND THAT THOUGH THE ASSESSEE COMPANY CLAIMS THAT FOR THE ASSTT. YEAR UNDER CONSIDERATION, THE GROSS TOTA L INCOME CONSISTS MAINLY OF INCOME WHICH IS GENERATED FROM BANKING ACTI VITIES OR THE GRANTING OF LOANS AND ADVANCES, THE NECESSARY DETA ILS AS TO THE VOLUME OF LOANS AND ADVANCES GRANTED DURING THE FIN ANCIAL YEAR HAVE NOT BEEN FURNISHED. LD. COMMISSIONER OF INCOME TAX ( A) FURTHER OBSERVED THAT IT IS NOT KNOWN WHETHER THE INTEREST OF ` 368530/- HAS BEEN OFFERED TO TAX AS INCOME FROM OTHER SOURCES O R AS THE INCOME FROM BUSINESS OR PROFESSION. THEREFORE, LD. COM MISSIONER OF INCOME TAX (A) HELD THAT IN THE ABSENCE OF THE RELEVANT DE TAILS, HE WAS UNABLE TO AGREE WITH THE ASSESSEE COMPANY THAT ITS MAIN BUSI NESS WAS THAT OF BANKING OR THE GRANTING OF LOANS AND ADVANCES. LD. COMMISSIONER OF INCOME TAX (A) FURTHER OBSERVED THAT ASSESSEE COMPAN Y HAS ALSO NOT FURNISHED THE NECESSARY CERTIFICATES ISSUED BY THE COMPETENT AUTHORITY GRANTING IT THE STATUS OF NBFC I.E. NON-BANKING FINAN CE COMPANY. HENCE, LD. COMMISSIONER OF INCOME TAX (A) HELD THAT HE DID NOT FIND ANY INFIRMITY IN THE ACTION OF THE ASSESSING OFFICER AND THE REJECTION OF CLAIM OF LOSS OF ` 1,15,880/- WAS SUSTAINED. I.T.A. NO. 1132/DEL/2012 3 5. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEA L BEFORE ME. 6. I HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED. I FIND THAT LD. COMMISSIONER OF INCOME TA X (A) HAS CONFIRMED THAT THE ASSESSING OFFICERS ACTION ON THIS ACCOUNT AS RELEVANT DETAILS PERTAINING TO THE SOURCE OF INCOME AND ALSO NECESSARY CERTIFICATE ISSUED BY THE COMPETENT AUTHORITY GRANT ING THE ASSESSEE THE STATUS OF NBFC WAS NOT PRODUCED BEFORE HIM. HOWEVER, BEFORE ME THE ASSESSEES COUNSEL HAS FILED THE CERTIFICATE OF REGISTRATION FROM THE RBI TO ENABLE THE ASSESSEE COMPANY TO CARRY ON T HE BUSINESS OF NON-BANKING FINANCIAL INSTITUTION. IN VIEW THE OB SERVATION OF THE LD. COMMISSIONER OF INCOME TAX (A) THAT PROPER DETAILS W ERE NOT AVAILABLE IN THIS CASE AND THE NECESSARY CERTIFICATE OF REGIS TRATION AS NBFC WAS NOT PRODUCED, I DEEM IT FIT TO REMIT BACK THE MATTE R TO THE FILE OF THE ASSESSING OFFICER TO CONSIDER THE ISSUE AFRESH, A FTER OBTAINING THE NECESSARY DETAILS AND GOING THROUGH THE CERTIFICA TE OF REGISTRATION AS NBFC PRODUCED BEFORE ME. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 08/8/2012. SD/- [SHAMIM YAHYA] ACCOUNTANT MEMBER DATE: 08/8/2012 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT (A) 5. D R, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES