M/s. Doe Jones Investment & Consultants Pvt. Ltd., Kolkata V. ITO, Ward 6(1), Kolkata

ITA 1501/KOL/2009

• Counselvise Citation: 150123514 RSA 2009
• Duration Of Justice: 4 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 12-10-2010
• Assessment Year: 2000-2001
• Appeal Filed On: 26-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA
• Assessee Lawyers: SOUMITR A CHOUDHURY
• Keywords: Business income; Speculation loss

Judgement Text

I.T.A. NOS. 1501 & 1502/KOL./2009 ASSESSMENT YEAR: 2000-2001 & 2001-2002 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI SHAMIM YAHYA (ACCOUNTANT MEMBER), AND SHRI GEORGE MATHAN (JUDICIAL MEMBER) I.T.A. NO. 1501 & 1502/KOL/ 2009 ASSESSMENT YEARS : 2000-2001 & 2001-2002 M/S. DOE JONES INVESTMENT & CONSULTANTS (PVT.) LTD. ,......APPELLANT ROOM NO. 9, 7 TH FLOOR, 9, INDIA EXCHANGE PLACE, KOLKATA-700 001 [PAN : AABCD 0184 G] -VS.- INCOME TAX OFFICER,................................ ...................RESPONDENT WARD-6(1), KOLKATA, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 APPEARANCES BY: SHRI SOUMITRA CHOUDHURY, ADVOCATE, FOR THE ASSESSEE SHRI VARINDER MEHTA, CIT, D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : AUGUST 08, 2014 DATE OF PRONOUNCING THE ORDER : AUGUST 12, 2014 O R D E R PER GEORGE MATHAN: ITA 1501/KOL/2009 IS AN APPEAL FILED BY THE ASSESS EE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-V I, KOLKATA IN APPEAL NO. 7/CIT(A)-VI/06-07/WD-6(1) DATED 05.08.2009 FOR THE ASSESSMENT YEAR 2000-01. ITA 1502/KOL/2009 IS AN APPEAL FILED BY THE ASSESS EE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-V I, KOLKATA IN APPEAL NO. 331/CIT(A)-VI/07-08/KOL. DATED 24.06.2009 FOR T HE ASSESSMENT YEAR 2001-02. I.T.A. NOS. 1501 & 1502/KOL./2009 ASSESSMENT YEAR: 2000-2001 & 2001-2002 PAGE 2 OF 5 2. SHRI SOUMITRA CHOUDHURY, ADVOCATE, REPRESENTED O N BEHALF OF THE ASSESSEE AND SHRI VARINDER MEHTA, CIT, D.R., REPRES ENTED ON BEHALF OF THE REVENUE. 3. IN RESPECT OF ITA 1501/KOL/2009 IT WAS SUBMITTED BY THE LD. A.R. THAT THE ISSUE WAS AGAINST THE ACTION OF THE LD. CI T(APPEALS) IN HOLDING THAT THE LOSS ON ACCOUNT OF TRADING IN SHARES WAS H IT BY THE EXPLANATION TO SECTION 73 OF THE INCOME TAX ACT. LD. A.R. DREW OUR ATTENTION TO THE ASSESSMENT ORDER WHEREIN IN PAGE 1, THE ASSESSING O FFICER HAS GIVEN THE BREAK-UP OF THE ASSESSEES INCOME AS PER DIFFERENT HEADS OF INCOME. IT WAS THE SUBMISSION THAT THE SHARE TRADING LOSS INCURRED BY THE ASSESSEE WAS RS.3,15,000/- WHEREAS THE ASSESSEE HAD EARNED INTER EST INCOME OF RS.2,77,243/-, SERVICE CHARGE OF RS.1,50,000/- AND RENTAL INCOME OF RS.24,000/-. IT WAS THE SUBMISSION THAT THE INCOME FROM THE SAID THREE SOURCES FAR EXCEEDED THE SHARE TRADING LOSS AND CON SEQUENTLY THE EXPLANATION TO SECTION 73 OF THE ACT WAS NOT APPLIC ABLE TO THE ASSESSEE. LD. A.R. SUBMITTED THAT THE LD. CIT(APPEALS) DID NO T ACCEPT THE CONTENTION OF THE ASSESSEE. IT WAS THE SUBMISSION THAT AS THE INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES WAS HIGHER THAN THE INC OME ON ACCOUNT OF SHARE TRANSACTIONS, THE EXPLANATION TO SECTION 73 O F THE ACT DID NOT APPLY IN THE ASSESSEES CASE. 4. IN REPLY, LD. CIT, D.R. VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND LD. CIT(APPEALS). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERU SAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE ASSESSEE HA S INCOME FROM SHARE TRADING, WHICH IS A LOSS, THE ASSESSEE HAS INCOME F ROM OTHER SOURCES UNDER THE HEAD INTEREST INCOME TO THE EXTENT OF R S.2,77,243/- SO ALSO UNDER THE HEAD SERVICE CHARGE TO THE EXTENT OF RS. 1,50,000/-, TOTAL OF WHICH FAR EXCEEDED THE SHARE TRADING LOSS. AS THE A SSESSEES INCOME FROM OTHER SOURCES IS FAR EXCEEDING THE SHARE TRADING LO SS, THE SAID LOSS ON I.T.A. NOS. 1501 & 1502/KOL./2009 ASSESSMENT YEAR: 2000-2001 & 2001-2002 PAGE 3 OF 5 ACCOUNT OF THE PURCHASES AND SALES OF SHARES IS NOT HIT BY THE PROVISIONS OF EXPLANATION TO SECTION 73 OF THE ACT AND CONSEQU ENTLY THE SAME CANNOT BE TREATED AS SPECULATION LOSS. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. 7. IN CONNECTION WITH THE APPEAL OF THE ASSESSEE IN ITA NO. 1502/KOL/2009, IT WAS THE SUBMISSION THAT THE ASSES SEE HAD INCURRED A LOSS OF RS.66,40,85,844/- ON ACCOUNT OF SHARE TRANS ACTIONS LOSSES. IT WAS THE SUBMISSION THAT THE ASSESSEE WAS SHARE BROKER A ND THE ASSESSEE HAD MADE PURCHASES OF NEARLY RS.502 CRORES AND SALES OF RS.434 CRORES. IT WAS THE SUBMISSION THAT IN THE COURSE OF ASSESSMENT, TH E ASSESSING OFFICER HAD DISALLOWED THE ASSESSEES CLAIM OF LOSSES OF RS.66. 40 CRORES BY HOLDING THAT THE EXPLANATION TO SECTION 73 OF THE ACT APPLI ED. IT WAS THE SUBMISSION THAT BEFORE THE LD. CIT(APPEALS) IT WAS SUBMITTED THAT THE ASSESSEE WAS IN THE BUSINESS OF DOING SHARE TRADING AND THE ASSESSEE HAD INCURRED A LOSS OF RS.66.40 CRORES IN THE SHARE TRA DING. IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER HAD TREATED O NLY THIS AMOUNT OF RS.66.40 CRORES AS BEING HIT BY THE EXPLANATION TO SECTION 73 OF THE ACT. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD ALSO EARNE D INCOME FROM THE SHARE DEALING TO AN EXTENT OF RS.50.28 CRORES AND W HEN FILING THE RETURN THE ASSESSEE HAD SET OFF THE SHARE TRADING INCOME A GAINST THE LOSSES INCURRED ON THE SHARE TRADING TRANSACTIONS. IT WAS THE SUBMISSION THAT THE LD. CIT(APPEALS) UPHELD THE ACTION OF THE ASSESSING OFFICER IN HOLDING THAT THE INCOME FROM THE SHARE TRADING TO THE EXTENT OF RS.50.28 CRORES WAS A BUSINESS INCOME OF THE ASSESSEE AND THE LOSS IN THE SHARE TRANSACTIONS TO THE EXTENT OF RS.66.40 CRORES WAS HIT BY THE EXPLAN ATION TO SECTION 73 AND CONSEQUENTLY TREATED AS SPECULATION LOSS. IT WAS T HE SUBMISSION BY THE LD. A.R. THAT THE ASSESSEE BEING EXCLUSIVELY SHARE BROK ER DEALING IN SHARES, THE BUSINESS OF THE ASSESSEE ITSELF WOULD HAVE TO D EEMED TO BE A SPECULATION BUSINESS IN VIEW OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TA X VS.- ARVIND I.T.A. NOS. 1501 & 1502/KOL./2009 ASSESSMENT YEAR: 2000-2001 & 2001-2002 PAGE 4 OF 5 INVESTMENTS LTD. REPORTED IN 192 ITR 365 AS ALSO TH E DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS.- LOKMAT NEWSPAPERS (P) LTD. REPORTED IN (2010) 322 ITR 43. IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER MAY BE DIRECTED TO TREAT THE BUSI NESS OF THE ASSESSEE AS SPECULATION BUSINESS AND ALLOW THE SET OFF OF THE S PECULATION INCOME OF RS.50.28 CRORES AGAINST THE SPECULATION LOSS OF RS. 60.40 CRORES. 8. IN REPLY, LD. CIT, D.R. VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND LD. CIT(APPEALS). 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERU SAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE ASSESSEE IS A SHARE BROKER. THE PROFIT & LOSS A/C. OF THE ASSESSEE CLEARLY SHOWS TH AT THE ASSESSEES BUSINESS IS ONLY PURCHASES AND SALES OF SHARES. THE BALANCE-SHEET OF THE ASSESSEE SHOWS THAT THE ASSESSEE IS ONLY DOING THE BUSINESS OF DEALING IN SHARES SO ALSO THE DIRECTORS REPORT. A PERUSAL OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS.- ARVIND INVESTMENTS LTD. (SUPRA) SHOWS THAT THE HONBLE JUR ISDICTIONAL HIGH COURT HAS HELD IN PARA 26 THAT THE BUSINESS ACTIVITY WHICH CONSISTS OF PURCHASE AND SALE OF SHARES WILL BE TREATED AS SPECULATION B USINESS. IF THE ENTIRE BUSINESS ACTIVITY OF A COMPANY CONSISTS OF PURCHASE AND SALE OF SHARES OF OTHER COMPANIES, THEN THE ENTIRE BUSINESS WILL BE T REATED AS SPECULATION BUSINESS. BUT, IF APART FROM PURCHASE AND SALE OF S HARES, THE COMPANY HAS OTHER BUSINESS ACTIVITIES, THEN THOSE OTHER ACTIVIT IES WILL NOT BE TREATED AS SPECULATION BUSINESS. THUS, AS IT IS NOTICED THAT THE ASSESSEE IS HAVING ONLY SHARE TRADING BUSINESS AND THE ASSESSEE IS A C OMPANY WHICH IS DEALING IN SHARES OF OTHER COMPANIES IN VIEW OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF AR VIND INVESTMENTS LTD. (SUPRA), THE ASSESSEES BUSINESS IS LIABLE TO BE TR EATED AS SPECULATION BUSINESS. IN THESE CIRCUMSTANCES, THE ASSESSING OFF ICER IS DIRECTED TO TREAT THE ASSESSEES BUSINESS FROM SHARE TRADING AS SPECU LATION BUSINESS AND I.T.A. NOS. 1501 & 1502/KOL./2009 ASSESSMENT YEAR: 2000-2001 & 2001-2002 PAGE 5 OF 5 ALLOW THE ASSESSEE BENEFIT OF SET OFF OF SPECULATIO N INCOME OF RS.50.28 CRORES AGAINST THE SPECULATION LOSS OF RS.66.40 CRO RES. 10. IN THE RESULT, THE APPEALS OF THE ASSESSEE BOTH ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH AUGUST, 2014. SD/- SD/- SHAMIM YAHYA GEORGE MATHAN (ACCOUNTANT MEMBER) (JU DICIAL MEMBER) KOLKATA, THE 12 TH DAY OF AUGUST, 2014 COPIES TO : (1) M/S. DOE JONES INVESTMENT & CONSULTANTS (PVT.) L TD., ROOM NO. 9, 7 TH FLOOR, 9, INDIA EXCHANGE PLACE, KOLKATA-700 001 (2) INCOME TAX OFFICER, WARD-6(1), KOLKATA, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 (3) COMMISSIONER OF INCOME-TAX (APPEALS) (4) COMMISSIONER OF INCOME TAX (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.