ITO, Ward - 11(1), Kolkata, Kolkata V. P.M. Dealers Pvt. Ltd., Kolkata

ITA 1406/KOL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75009 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2014
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 18-10-2011
• Court: TRIBUNAL
• Department Lawyers: P B PRAMANIK
• Keywords: Business income; Speculation loss

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B , KOLKATA [BEFORE HONBLE SRI ABRAHAM P.GEORGE, AM & HONBL E SRI GEORGE MATHAN, JM] ITA NO.1406/KOL/2011 ASSESSMENT YEAR : 2004-05 ( APPELLANT ) (RESPONDENT) I.T.O., WARD-11(1) -VS- P.M.DEALERS PVT. LTD., KOLKATA KOLKATA (PAN:AABCP 5348 N) FOR THE APPELLANT SHRI P.B.PRAMANIK, JCIT (SR.DR) FOR THE RESPONDENT: SHRI SUBASH AGARWAL, ADVOCATE DATE OF HEARING : 14.02.2014 DATE OF PRONOUNCEMENT : 14. 02.2014. ORDER PER SHRI GEORGE MATHAN, JM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. C.I.T(A)-XII, KOLKATA IN APPEAL NO.444/XII/WARD-11(1)/09-10 DATED 01.07.2011 FOR ASSESSMENT YEAR 2004-05. 2. SHRI P.B.PRAMANIK, JCIT(SR.DR) REPRESENTED ON BEHALF OF THE REVENUE AND SHRI SUBASH AGARWAL, ADVOCATE REPRESENTED ON BEHA LF OF THE ASSESSEE. 3. IT WAS SUBMITTED BY THE LD. DR THAT THE ASSESSE E CLAIMED TO BE A NON BANKING FINANCE COMPANY. IT WAS THE SUBMISSION THAT THE ASS ESSEE HAD DURING THE YEAR DONE NO BUSINESS IN LOANS AND ADVANCES BEING ITS MAIN BUSIN ESS. IT WAS THE SUBMISSION THAT THE ASSESSEE COMPANY, HOWEVER, HAD TRADED IN SHARES OF OTHER COMPANIES. IT WAS THE SUBMISSION THAT THE SURPLUS FUNDS AVAILABLE WITH TH E ASSESSEE COMPANY WAS INVESTED IN SHORT TERM FIXED DEPOSITS WITH BANKS. IT WAS THE SU BMISSION THAT DURING THE YEAR THE ASSESSEE COMPANY HAD EARNED AN INTEREST INCOME FROM FIXED DEPOSITS TO AN AMOUNT OF RS.26,78,843/-. HOWEVER IT HAD INCURRED A LOSS OF A N AMOUNT OF RS.23,59,947/- IN DEALING IN SHARES. IT WAS THE SUBMISSION THAT THE A O HAD TREATED THE LOSS IN DEALING OF ITA NO.1406/KOL/2011 M/ S.P.M.DEALERS PVT.LTD. A.YR.2004-05 2 SHARES AS SPECULATION LOSS AND HAD DISALLOWED THE S ET OFF AS CLAIMED BY THE ASSESSEE IN RESPECT OF THE LOSS IN THE DEALING OF SHARES AGAINS T THE INTEREST INCOME. IT WAS THE SUBMISSION THAT THE AO HAD TREATED THE INTEREST INC OME RECEIVED BY THE ASSESEE FROM THE SHORT TERM DEPOSITS WITH BANK AS BUSINESS INCOM E. IT WAS THE SUBMISSION THAT ON APPEAL THE LD. CIT(A) HAD HELD THAT THE INTEREST IN COME EARNED BY THE ASSESEE FROM THE SHORT TERM FIXED DEPOSITS WITH THE BANK WERE LIABLE TO BE ASSESSED ONLY UNDER THE HEAD INCOME FROM OTHER SOURCES AND CONSEQUENTLY AS THE GROSS TOTAL OF THE ASSESSEE AFTER INCLUDING THE SHARE TRANSACTION BEING A POSITIVE FI GURE IN RESPECT OF ITS INCOME BEING HIGHER THAN THE INCOME FROM THE DEALING OF SHARES, HAD INVOKED THE PROVISION OF SECTION 73 OF THE ACT AND HAD HELD THAT THE LOSS ON ACCOUNT OF THE DEALING IN SHARES WAS NOT A SPECULATION LOSS. IT WAS THE SUBMISSION T HAT THE INTEREST INCOME OF THE ASSESSEE WAS BUSINESS INCOME AND THE LOSS ON ACCOUN T OF DEALING IN SHARES WAS LIABLE TO BE TREATED AS ONLY SPECULATION LOSS AND WAS NOT ELIGIBLE FOR EXEMPTION UNDER THE EXPLANATION U/S 73 OF THE IT ACT. THE LD. DR VEHEME NTLY SUPPORTED THE ORDER OF AO AND IT WAS PRAYED THAT ORDER OF LD. CIT(A) WAS LIAB LE TO BE REVERSED. 4. IN REPLY THE LD. AR SUBMITTED THAT THE MAIN BUSI NESS OF THE ASSESSEE WAS NOT INVESTING OF MONEY IN BANKS. IT WAS THE SUBMISSION THAT CONSEQUENTLY THE INTEREST RECEIVED BY THE ASSESSEE FROM THE FIXED DEPOSITS WI TH THE BANKS WAS LIABLE TO BE ASSESSED ONLY UNDER THE HEAD INCOME FROM OTHER SOU RCES AS HAD BEEN OFFERED BY THE ASSESSEE IN ITS RETURN. IT WAS THE FURTHER SUBMISSI ON THAT THE FIXED DEPOSITS MAINTAINED BY THE ASSESSEE WAS TO AN EXTENT OF RS.3,15,60,128 /- WHEREAS ITS INVESTMENT IN SHARES AND SECURITIES WAS ONLY TO THE EXTENT OF RS.5,14,94 0/-. IT WAS THE FURTHER SUBMISSION THAT THE PRINCIPAL BUSINESS OF THE ASSESSEE BEING N OT INVESTMENT OF MONEY IN BANKS THE INTEREST FROM THE FIXED DEPOSITS WAS LIABLE TO BE A SSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES IN VIEW OF THE DECISION OF THE HONBL E ORISSA HIGH COURT IN THE CASE OF ORISSA TYRES LIMITED REPORTED IN 188 ITR 342, MADRA S HIGH COURT IN THE CASE OF SOUTH INDIA SHIPPING CORPORATION LTD. VS CIT 240 IT R 24(MAD), DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF GIMPEX P. LTD. 268 ITR 377 AS ALSO THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF RAJASTHAN LAND DEVELOPMENT CORPORATION 211 ITR 599 (RAJ). HE FURTH ER PLACED BEFORE US THE ITA NO.1406/KOL/2011 M/ S.P.M.DEALERS PVT.LTD. A.YR.2004-05 3 COMPUTATION OF INCOME TREATING THE INTEREST INCOME AS ASSESSABLE UNDER THE HEAD BUSINESS INCOME TO SHOW THAT THE NET TAXABLE INCOME CAME TO A POSITIVE FIGURE OF RS.10,853/- WHICH CLEARLY SHOWED THAT THE GROSS TOT AL INCOME OF THE ASSESSEE COMPANY WAS A POSITIVE FIGURE IN RESPECT OF ITS BUSINESS IN COME AND CONSEQUENTLY THE MAIN SOURCE OF INCOME ITSELF WAS A POSITIVE FIGURE. IT W AS THE SUBMISSION THAT IN VIEW OF THE SAID DECISIONS AS ALSO THE COMPUTATION, THE ORDER O F THE LD. CIT(A) WAS LIABLE TO BE CONFIRMED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERU SAL OF THE ORDER OF LD. CIT(A) MORE SPECIFICALLY PARA-3 OF HIS ORDER CLEARLY SHOWS THAT THE LD. CIT(A) HAS TAKEN INTO CONSIDERATION THE FACT THAT THE GROSS TOTAL INCOME AFTER INCLUDING THE SHARE TRANSACTION IS RS.10,853/- AND CONSEQUENTLY HAD HELD THAT THE A SSESSEE COMPANY IS COVERED BY THE EXCEPTION MENTIONED IN EXPLANATION TO SECTION 73 OF THE ACT. THIS FINDING OF LD. CIT(A) IT IS NOTICED THAT IS ON A RIGHT FOOTING AND DOES NOT CALL FOR ANY INTERFERENCE. EVEN OTHERWISE IN VIEW OF THE DECISIONS OF THE HON BLE MADRAS HIGH COURT, ORISSA HIGH COURT AND RAJASTHAN HIGH COURT REFERRED TO SUP RA THE INTEREST INCOME IS LIABLE TO BE ASSESSED ONLY UNDER THE HEAD INCOME FROM OTHER SOURCES AND THE GROSS TOTAL INCOME OF THE ASSESSEE CONSEQUENTLY WOULD CONSIST M AINLY OF THE INCOME ASSESSABLE FROM INCOME FROM OTHER SOURCES AND EVEN ON THIS GRO UND THE ASSESSEE FALLS WITHIN EXEMPTION TO EXPLANATION TO SECTION 73 OF THE ACT. IN THE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE FINDINGS OF LD. CIT(A) ON THIS ISSUE IS ON A RIGHT FOOTING AND DOES NOT CALL FOR ANY INTERFERENCE. 6. IN THE RESULT THE APPEAL OF THE REVENUE STANDS D ISMISSED. ORDER PRONOUNCED IN THE COURT ON 14.02.2014. SD/- SD/- [ABRAHAM P.GEORGE] [ GEORGE MATHAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 14.02.2014. R.G.(.P.S.) ITA NO.1406/KOL/2011 M/ S.P.M.DEALERS PVT.LTD. A.YR.2004-05 4 COPY OF THE ORDER FORWARDED TO: 1. M/S.P.M.DEALERS PVT.LTD., 4 & 6, JUDGES COURT ROAD, ALIPORE, KOLKATA-700027. 2 I.T.O., WARD-11(1), KOLKATA. 3 . CIT(A)-XII, KOLKATA. 4. CIT - KOLKATA. 5. CIT(A)DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES