DCIT, CC - XXII, Kolkata, Kolkata V. Basukinath Properties Pvt. Ltd., Kolkata

ITA 135/KOL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62101 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2001-2002
• Appeal Filed On: 25-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MAITRA
• Assessee Lawyers: A K TIBREWAL
• Keywords: Speculation loss; Tax effect
• Section: 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE , !' !' !' !' /AND #! $'# #! $'# #! $'# #! $'# , ) [BEFORE SHRI PRAMOD KUMAR, AM & SHRI MAHAVIR SINGH, JM] '% '% '% '% / I.T.A NO. 135/KOL/2012 $&' !() $&' !() $&' !() $&' !()/ // / ASSESSMENT YEAR : 2001-02 DEPUTY COMMISSIONER OF INCOME-TAX, VS. BASUKINATH PROPERTIES PVT. LTD. CENTRAL CIRCLE-XXII, KOLKATA (PAN: AABCB 4123 D) (+, /APPELLANT ) (-+,/ RESPONDENT ) FOR THE APPELLANT: SHRI A. K. MAITRA FOR THE RESPONDENT: SHRI A. K. TIBREWAL DATE OF HEARING: 21.05.2012 DATE OF PRONOUNCEMENT: 21.05.2012 . / ORDER IMMEDIATELY UPON CONCLUSION OF HEARING OF THIS APPE AL ON 21 ST MAY, 2012, THE BENCH PASSED THE FOLLOWING ORDER: 21 ST MAY, 2012 FOR THE REASONS TO BE SET OUT IN THE DETAILED ORDER, THE APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT TODAY. IN ACCORDANCE WITH THE ABOVE, THE REASONED ORDER IS NOW SET OUT AS FOLLOWS: PER MAHAVIR SINGH, JM ( #! $'# #! $'# #! $'# #! $'#, , , , ) THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A), CENTRAL-III, KOLKATA IN APPEAL NO. 163/CC-XXIII/CIT(A)C-III/04-05 DATED 02.11.2011 . ASSESSMENT WAS FRAMED BY ACIT, CC-XXIII, KOLKATA U/S. 144 OF THE INCOME TAX ACT, 1 961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2001-02 VIDE HIS ORDER DATED 29 .03.2004. 2. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE RAISED THE ISSUE THAT THE APPEAL OF THE REVENUE IS NOT MAINTAINABLE AND THE SAME BE DISMISS ED AS UNADMITTED REASON BEING THE TAX EFFECT IS LESS THAN RS.3 LACS. ON QUERY FROM THE BENCH, T HE LD. COUNSEL FOR THE ASSESSEE FAIRLY STATED THAT HE IS NOT PRESSING THIS ISSUE AND HE HAS CONSE NTED FOR DEALING WITH THE ISSUES ON MERITS. THE FIRST ISSUE IN THIS APPEAL OF REVENUE IS AGAINST TH E ORDER OF CIT(A) IN ALLOWING LOSS OF RS.16.06 LACS ARISING IN SHARE TRADING BUSINESS. FOR THIS, REVENUE HAS RAISED AS MANY AS 5 GROUNDS OF APPEAL ALL ARE ARGUMENTATIVE IN NATURE EXCEPT GROUN D NO. 1, WHICH IS REPRODUCED AS UNDER: 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED IN HOLDING THE LOSS OF RS.16,06,950/- IN SHARE TRADING AS BUSI NESS LOSS INSTEAD OF SPECULATION LOSS WITHIN THE MEANING OF PROVISIONS CONTAINED IN EXPLA NATION TO SEC. 73 OF THE ACT. 2 ITA 135/K/2012 BASUKINATH PROPERTIES PVT. LTD.. A.Y. 01-02 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE, BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT ASS ESSEE FILED ITS RETURN OF INCOME ON 30.10.2001 FOR THE RELEVANT AY 2001-02 DECLARING LOSS OF RS.1, 23,15,120/-. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SHARE DEALING AND ALSO BORROWED FUNDS F OR ITS BUSINESS PURPOSES AND PAID A SUM OF RS.21,06,39,427/- AS INTEREST ON BORROWED LOANS. D URING THE RELEVANT ASSESSMENT YEAR ASSESSEE INCURRED SHARE TRADING LOSS OF RS.16,06,590/- ON TH E TOTAL TURNOVER OF SHARES AT RS.61,71,908/-. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS TREATED THIS LOSS ARISING OUT OF SHARE TRADING AT RS.16,06,590/- AS SPECULATIVE LOSS UNDER THE PROVISIONS OF EXPLANATION TO SECTION 73 OF THE ACT. AGGRIEVED, ASSESSEE PREFERRED APPEAL B EFORE CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE NOTED THAT AO HAS NOT D ISPUTED THE EARNING OF INTEREST INCOME AND INCOME FROM SHARES. HE ALSO NOTED THAT ASSESSEE HA S INCURRED SHARE TRADING LOSS OF RS.16,06,590/- ON SALES TURNOVER OF RS.61,71,908/-. THE CIT(A) ALSO CONSIDERED THAT THE ASSESSEE COMPANY IS A NBFC AND ITS PRINCIPAL BUSINE SS IS GRANTING OF LOANS AND ADVANCES FROM WHICH INTEREST IS RECEIVED. ACCORDING TO CIT(A), P URCHASE AND SALE OF SHARES MADE BY THE ASSESSEE COMPANY CANNOT BE DEEMED TO BE SPECULATIVE BUSINESS AND ACCORDINGLY, HE ALLOWED THE LOSS. AGGRIEVED, NOW REVENUE IS IN APPEAL BEFORE U S. 4. WE FIND THAT THE ASSESSEE HAS BORROWED MONEY FOR THE PURPOSE OF BUSINESS AND FOR THE PURPOSE OF EARNING INCOME. ACCORDING TO ASSESSEE, PAYMENT OF INTEREST WAS FOR THE PURPOSES OF BUSINESS. WE FIND THAT THE ASSESSEE HAS EARNED INT EREST INCOME AND ALSO INCOME FROM SHARE DEALINGS. ASSESSEE BEING AN NBFC AND ITS PRINCIPAL BUSINESS IS OF GRANTING OF LOANS AND ADVANCES FROM WHICH IT RECEIVED INTEREST, THE ASSES SEE CANNOT BE COVERED UNDER EXPLANATION TO SECTION 73 OF THE ACT RATHER IT FALLS UNDER EXCEPTI ON AS PROVIDED IN EXPLANATION UNDER THIS PROVISION. ACCORDINGLY, WE ARE OF THE VIEW THAT TH E CIT(A) HAS RIGHTLY ALLOWED THE CLAIM OF ASSESSEE AND WE CONFIRM THE SAME. REVENUES APPEAL IS DISMISSED. 5. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. 6. ORDER PRONOUNCED IN OPEN COURT. SD/- SD/- , #! #! #! #! $'# $'# $'# $'# , (PRAMOD KUMAR) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( / / / /) )) ) DATED: 21 ST MAY, 2012 !01 $&23 $4! JD.(SR.P.S.) 3 ITA 135/K/2012 BASUKINATH PROPERTIES PVT. LTD.. A.Y. 01-02 . 5 $$ 6(7- COPY OF THE ORDER FORWARDED TO: 1 . +, / APPELLANT DCIT, C.C. XXII, KOLKATA. 2 -+, / RESPONDENT, BASUKINATH PROPERTIES PVT. LTD., 6, L YONS RANGE, KOLKATA-700 001. 3 . $.& ( )/ THE CIT(A), KOLKATA 4. $.& / CIT, KOLKATA 5 . !>$? $& / DR, KOLKATA BENCHES, KOLKATA - $/ TRUE COPY, .&/ BY ORDER, # '3 /ASSTT. REGISTRAR .