DCIT, Vellore V. Dr.S.Thilagavathy, Kancheepuram

ITA 1386/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57937 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-02-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 02-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T N PRAKASH
• Keywords: Speculation loss
• Section: 143(3); 43(5); 12

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL CHENNAI C BENCH, CHENNAI. BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER & SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NO. 1386/MDS/2011 ASSESSMENT YEAR: 2008-09 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE I, VELLORE. VS. DR. S. THILAGAVATHY, NO. 33C, HOSPITAL ROAD, KANCHIPURAM. [PAN: ACAPT0645A] (APPELLANT) (RESPONDENT) C.O. NO. 142/MDS/2011 [IN I.T.A. NO. 1386/MDS/2011] ASSESSMENT YEAR: 2008-09 DR. S. THILAGAVATHY, NO. 33C, HOSPITAL ROAD, KANCHIPURAM. VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE I, VELLORE. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI T.N. PRAKASH, JCIT ASSESSEE BY : SHRI SAROJ KUMAR PARIDA, ADVOCATE DATE OF HEARING : 01.02.2012 DATE OF PRONOUNCEMENT : 01.02.2012 ORDER PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AND THE CRO SS OBJECTION FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) IX, CHENNAI DATED 29.04.2011 PASSED IN ITA NO. 60/10-11 FOR THE ASSES SMENT YEAR 2008-09. SHRI T.N. PRAKASH, JCIT REPRESENTED ON BEHALF OF TH E REVENUE AND SHRI I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1386 1386 1386 1386/ // /M/ M/M/ M/11 1111 11 & & & & C.O. NO. 142/M/11 C.O. NO. 142/M/11 C.O. NO. 142/M/11 C.O. NO. 142/M/11 2 SAROJ KUMAR PARIDA, ADVOCATE REPRESENTED ON BEHALF OF THE ASSESSEE. 2. THE ONLY GRIEVANCE OF THE REVENUE IN THIS APPEA L IS THAT THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF ` .24,06,208/- MADE BY THE ASSESSING OFFICER BY DISALLOWING THE LOSS OUT OF SHARE TRANSACTION AN D TREATING THE SAME AS SPECULATION LOSS AND NOT ALLOWING SET OFF AGAINST O THER HEADS OF INCOME. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN T HE INSTANT CASE, THE ASSESSEE IS A MEDICAL PRACTITIONER RUNNING AN ULTRA SOUND SCAN CENTRE AT KANCHIPURAM. THE ASSESSEE FILED HER RETURN OF INCOM E FOR THE ASSESSMENT YEAR 2008-09 ON 16.10.2008 SHOWING INCOME OF ` .9,65,200/-. THE ASSESSING OFFICER ASSESSED THE SAME AT ` .68,89,899/- IN AN ASSESSMENT FRAMED UNDER SECTION 143(3) OF THE ACT ON 08.10.2010. THE APPEAL IS AGAINST THE ORDER OF THE LD. CIT(A) ALLOWING SET OFF OF THE LOSS OF ` .24,06,208/- FROM SHARE TRANSACTIONS AGAINST OTHER HEADS OF INCOME, WHICH W AS DISALLOWED BY THE ASSESSING OFFICER BY TREATING THE LOSS AS SPECULATI ON LOSS. 4. THE LD. CIT(A), WHILE ALLOWING THE CLAIM OF SET OFF OF LOSS OF ` .24,06,208/- HAS HELD THAT THE ASSESSEE HAS FILED B EFORE HIM THE CONTRACT NOTE ISSUED BY THE BROKER RELIGARE SECURITIES LTD. HAVING SEBI REGISTRATION NO. JNB 230653732 TRADING MEMBERS CODE NO. 06537 IN SUPPORT OF TRANSACTIONS OF STATEMENT OF PURCHASE AND SALE OF S HARES FROM TIME TO TIME. THE LD. CIT(A) HAS FOUND FROM THE CONTRACT NOTE THA T THE TRANSACTIONS ARE SETTLED BY DELIVERY OR TRANSFER OF SCRIPTS AND THER EFORE, THEY ARE OUT OF THE I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1386 1386 1386 1386/ // /M/ M/M/ M/11 1111 11 & & & & C.O. NO. 142/M/11 C.O. NO. 142/M/11 C.O. NO. 142/M/11 C.O. NO. 142/M/11 3 PURVIEW OF THE SECTION 43(5) OF THE ACT AND ARE ELI GIBLE TRANSACTION CARRIED OUT IN A RECOGNIZED STOCK EXCHANGE AS SPECIFIED UND ER PROVISO (D) SHALL NOT BE DEEMED TO BE A SPECULATIVE TRANSACTION. HE ALSO NOTED THAT SINCE THE TRANSACTIONS ARE CARRIED OUT ELECTRONICALLY ON SCRE EN BASED SYSTEMS THROUGH THE STOCK BROKER REGISTERED UNDER SECTION 12 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA, 1992, THE SAME SATISFIES THE TERMS ELIGIBLE TRANSACTION AS PER EXPLANATION TO SECTION 43(5)(D) OF THE I.T. ACT . THEREFORE, HE HELD THAT THE ASSESSEE WAS ELIGIBLE FOR SET OFF OF LOSS OF ` .24,06,208/- AS A BUSINESS LOSS AGAINST OTHER HEADS OF BUSINESS OR PROFESSIONAL INC OME. 5. WE FIND THAT IN THE INSTANT CASE, THE ASSESSEE SUFFERED LOSS OF ` .24,06,208/- ON DEALING IN SHARES. GENUINENESS OF T HE ABOVE LOSS IS NOT IN DISPUTE. ACCORDING TO THE ASSESSING OFFICER, AS THE TRANSACTIONS WERE CARRIED OUT THROUGH AN AGENT NAMELY RELIGARE SECURITIES LTD . AND PURCHASES AND SALES WERE DONE BY RELIGARE SECURITIES LTD. ON BEHA LF OF THE ASSESSEE AND THE END RESULT WAS A LOSS, HE TREATED THE SAID SHAR E TRANSACTIONS AS SPECULATIVE TRANSACTIONS. 6. ON THE OTHER HAND, THE LD. CIT(A) FOUND THAT TH E TRANSACTIONS OF SHARES WERE DONE ON DELIVERY BASIS AND FURTHER VIEWED THAT IN VIEW OF PROVISIONS OF SECTION 43(5)(D), THE TRANSACTIONS WERE NON-SPECULA TIVE TRANSACTIONS. 7. BEFORE US, THE REVENUE HAS CONTENDED THAT SECTI ON 43(5)(D) IS NOT APPLICABLE IN THE INSTANT CASE AND THE LD. CIT(A) H AS ERRED IN INVOKING PROVISIONS OF SECTION 43(5)(D). I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1386 1386 1386 1386/ // /M/ M/M/ M/11 1111 11 & & & & C.O. NO. 142/M/11 C.O. NO. 142/M/11 C.O. NO. 142/M/11 C.O. NO. 142/M/11 4 8. ON THE OTHER HAND, THE LD. AR SUPPORTED THE ORD ER OF THE LD. CIT(A). 9. WE FIND THAT SECTION 43(5)(D) COVERS TRANSACTIO NS IN RESPECT OF TRADING IN DERIVATIVE, REFERRED TO IN SECTION 2(AC) OF THE SECURITIES CONTRACT (REGULATION) ACT, 1956. IN THE INSTANT CASE, IT IS NOT IN DISPUTE THAT TRADING WAS DONE IN SHARES, WHICH WERE NOT DERIVATIVES AS M ENTIONED ABOVE. THUS, THE LD. DR IS JUSTIFIED IN CONTENDING THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 43(5)(D) OF THE ACT. 10. HOWEVER, WE FIND THAT THE REAL DISPUTE IN THE INSTANT CASE WAS WHETHER THE LOSS DERIVED BY THE ASSESSEE, WHO IS AN INDIVID UAL, IN TRANSACTION OF SHARES WAS SPECULATIVE LOSS OR NON-SPECULATIVE LOSS . WE FIND THAT THE LD. CIT(A) HAS CATEGORICALLY HELD THAT THE TRANSACTIONS OF THE ASSESSEE WERE DELIVERY BASED AND ACTUAL DELIVERY TOOK PLACE. WE F IND THAT THE ASSESSING OFFICER HAS ALSO NOT FOUND THAT NO DELIVERY WAS REC EIVED OR GIVEN IN RESPECT OF PURCHASE AND SALE OF SHARES, WHICH WERE DONE ON BEHALF OF THE ASSESSEE. IT IS NOT THE CASE OF THE REVENUE THAT TRANSACTION OF PURCHASE AND SALE OF SHARES WERE ULTIMATELY SETTLED OTHERWISE THAN BY AC TUAL DELIVERY. THE ACTUAL DELIVERY MIGHT NOT HAVE BEEN TAKEN PLACE BY THE ASS ESSEE HERSELF, BUT, THE ACTUAL DELIVERY WERE GIVEN OR RECEIVED BY AN AGENT OF THE ASSESSEE. THUS, WE DO NOT FIND ANY ERROR IN THE FINAL CONCLUSION OF THE LD. CIT(A) THAT THE LOSS WAS NOT A SPECULATIVE LOSS WITHIN THE MEANING OF SE CTION 43(5) OF THE ACT. THEREFORE, WE CONFIRM THE ORDER OF THE LD. CIT(A) A ND DISMISS THE APPEAL OF THE REVENUE. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1386 1386 1386 1386/ // /M/ M/M/ M/11 1111 11 & & & & C.O. NO. 142/M/11 C.O. NO. 142/M/11 C.O. NO. 142/M/11 C.O. NO. 142/M/11 5 11. THE CROSS OBJECTION FILED BY THE ASSESSEE IS I N SUPPORT OF THE ORDER OF THE LD. CIT(A) AND AS NO GROUND HAS BEEN RAISED IN THE CROSS OBJECTION CHALLENGING THE ORDER OF THE LD. CIT(A), THE CO FIL ED BY THE ASSESSEE IS INFRUCTUOUS AND HENCE DISMISSED. 9. AS A RESULT, THE APPEAL OF THE REVENUE AND THE CO OF THE ASSESSEE BOTH ARE DISMISSED. ORDER PRONOUNCED AT THE CLOSE OF THE HEARING IN TH E PRESENCE OF THE PARTIES ON 01.02.2012. SD/- SD/- (GEORGE MATHAN) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER CHENNAI, DATED, THE 01.02.2012 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.