STANDARD CHARTERD SECURITIES (INDIA) LTD ( FORMERLY KNOWN AS STANDARD CHARTERED STCI CAPITAL MARKETS LTD AND PRIOR THAT UTI SECURITIES LTD), MUMBAI V. ASST CIT RG 4(2), MUMBAI

ITA 1506/MUM/2012

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0806 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 05-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI LD
• Assessee Lawyers: NITESH JOSHI LD
• Keywords: Business income; Speculation loss
• Section: 143(3); 14A

Judgement Text

ITA.NO.1506/MUM/2012 STANDARD CHARTERED SECURITIES (INDIA) LIMITED ASSESSMENT YEAR-2008-09 IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI . . , , BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.1506/MUM/2012 ( / ASSESSMENT YEAR: 2008-09) STANDARD CHARTER E D SECURITIES (INDIA) LIMITED (FORMERLY KNOWN AS STANDARD CHARTERED -STCI CAPITAL MARKETS LIMITED AND PRIOR THAT UTI SECURITIES LIMITED) 2 ND FLOOR, 23-25, MG ROAD FORT, MUMBAI 400 001 / VS. ASSISTANT COMMISSIONER OF INCOME TAX RANGE 4(2) R.NO.642,AAYKAR BHAVAN MUMBAI-400 020 !' ./ ./PAN/GIR NO. AAACU-0622-M ( '$ /APPELLANT ) : ( %&'$ / RESPONDENT ) A SSESSEE BY : NITESH JOSHI, LD.AR RE VENUE BY : RAM TIWARI, LD. DR / DATE OF HEARING : 19/01/2018 / DATE OF PRONOUNCEMENT : 24/01/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE IS BEFORE US FO R HEARING CONSEQUENT TO TRIBUNALS MA NO. 148/MUM/2016 DATED 21/10/2016 ARISING OUT OF ITA NO. 1506/MUM/2012 DATED 02/03/20 16 FOR ASSESSMENT YEAR [AY] 2008-09. ITA.NO.1506/MUM/2012 STANDARD CHARTERED SECURITIES (INDIA) LIMITED ASSESSMENT YEAR-2008-09 2 2. THE BRIEF BACKGROUND IS THAT THE CAPTIONED APPEA L FOR ASSESSMENT YEAR [AY] 2008-09 CONTEST THE ORDER OF THE LD. COMMISSIONER OF INCOME- TAX (APPEALS)-9 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-9/AC- 4(2)/16/2011-12 DATED 07/12/2011. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. ASSISTANT COMMISSIONER OF INCOME TAX RANGE 4(2) , MUMBAI [AO] U/S 143(3) OF THE INCOME TAX ACT, 1961 ON 15/12/2010 DETERMINING INCOME OF RS.128.74 LACS AFTER CERTAIN ADJUSTMENTS / DISALLOWANCES AS AGAINST RETURNED INCOME OF RS.88.9 8 LACS. THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BE FORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 07/12/2011. AGGRIEVED, THE ASS ESSEE CONTESTED THE SAME BEFORE THIS TRIBUNAL VIDE ITA NO. 1506/MUM /2012 ORDER DATED 02/03/2016 BY RAISING TWO GROUNDS OF APPEALS VIZ. D ISALLOWANCE U/S 14A AND TREATMENT OF CERTAIN SHORT TERM CAPITAL GAINS UNDER THE HEAD BUSINESS INCOME OR CAPITAL GAINS. THE TRIBUNAL ADJUDICATED THE ISSUE OF DISALLOWANCE U/S 14A IN ITA NO. 1506/MUM/2012 BUT O MITTED TO ADJUDICATE THE SECOND ISSUE. UPON BEING POINTED OUT VIDE MA 148/MUM/2016, THE SAID OMISSION WAS NOTED AND THE O RDER WAS RECALLED TO THE LIMITED EXTENT OF HEARING THE SECOND GROUND ON MERITS. ACCORDINGLY, THE APPEAL IS BEFORE US FOR RE-ADJUDIC ATION WITH RESPECT TO SECOND GROUND VIZ. TREATMENT OF CERTAIN SHORT TERM CAPITAL GAINS UNDER THE HEAD BUSINESS INCOME OR CAPITAL GAINS. FOR THE SAME, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1B. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX, APPEAL-9, MUMBAI HAS ER RED IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT O F THE FOLLOWING- SHORT TERM CAPITAL GAINS ASSESSED UNDER HEAD BUSINESS IN COME INSTEAD OF SHORT TERM CAPITAL GAIN RS. 10,50,927/-. 2. WITHOUT PREJUDICE TO WHAT IS STATED ABOVE ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE APPELLANT SHALL BE ALLOWED TO ADJUST THE DEEMED ITA.NO.1506/MUM/2012 STANDARD CHARTERED SECURITIES (INDIA) LIMITED ASSESSMENT YEAR-2008-09 3 SPECULATION LOSS DETERMINED UNDER EXPLANATION TO SE CTION 73 OF THE INCOME TAX ACT, 1961 FOR THE EARLIER PERIODS AGAINST THE C URRENT INCOME UNDER SHARE TRADING ACCOUNT DETERMINED AS BUSINESS INCOME ARISI NG FROM THE TRANSACTIONS IN SHARES. 3. THE LD. AUTHORISED REPRESENTATIVE [AR], AT THE O UTSET, DREW OUR ATTENTION TO THE FACT THAT SIMILAR ISSUE CAME BEFOR E THIS TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2006-07 VIDE ITA NO. 187 3/MUM/2010 DATED 21/03/2012 WHERE ADDITIONAL ALTERNATIVE GROUN D RAISED BY THE ASSESSEE HAS BEEN RESTORED TO THE FILE OF LD. CIT(A ) WITH CERTAIN DIRECTIONS AND THEREFORE, THE PRESENT MATTER MAY AL SO BE RESTORED BACK ON SIMILAR LINES. THE LD. DEPARTMENTAL REPRESENTATI VE [DR] FAIRLY CONCEDED THE SAME. 4. UPON PERUSAL OF CITED ORDER OF THE TRIBUNAL FOR AY 2006-07, WE FIND THAT THE MATTER HAS BEEN RESTORED BACK TO THE FILE OF LD. CIT(A) IN THE FOLLOWING MANNER:- 13. WITH REFERENCE TO GROUND NO.2, THE LEARNED COUN SEL SUBMITTED THAT THE GAINS ARISING OUT OF SALE OF SHARES/UNITS ARE TREATED AS BUSINESS INCOME INSTEAD OF SHORT TERM CAPITAL GAIN. IT WAS SUBMITTED THAT IN THE EAR LIER YEARS THE ASSESSEE HAD SUFFERED LOSSES ON THE SAME ACCOUNT AND THE ASSESSI NG OFFICER TREATED AS SPECULATION LOSS BY VIRTUE OF INVOKING THE PROVISIO NS OF SECTION 73 EXPLANATION (2) AND THEREFORE, THE ASSESSEE HAS RAISED THE ADDITION AL GROUND THAT IN CASE THE AMOUNTS ARE TREATED AS SPECULATION BUSINESS, THE SA ME IS REQUIRED TO BE SET OF TO THE LOSSES DETERMINED BY THE ASSESSING OFFICER IN T HE EARLIER YEARS. HE REFERRED TO THE SUBMISSIONS BEFORE THE ASSESSING OFFICER VIDE L ETTER DATED 25/02/2008, MORE SO ITEM NO.24 TO SUBMIT THAT AN AMOUNT OF RS.73,79,000 /- AND RS.35,93,025/- WERE DISALLOWED BEING LOSS INCURRED IN SHARE TRADING AS DEEMED SPECULATION LOSS IN ASSESSMENT YEARS 2001-02 AND 2002-03. IT WAS FURTHE R SUBMITTED THAT BY APPLYING THE SAME PRINCIPLES THE ASSESSEE REQUESTED THE ASSE SSING OFFICER THE BENEFIT OF ADJUSTING SPECULATION LOSS AGAINST THE SHARE TRADIN G INCOME OF THE CURRENT ASSESSMENT YEAR. IT WAS SUBMITTED THAT THE ASSESSIN G OFFICER EVEN THOUGH WAS SPECIFICALLY REQUESTED, DID NOT CONSIDER THIS CLAIM OF THE ASSESSEE AND SIMPLY TREATED SHORT TERM CAPITAL GAIN AS BUSINESS INCOME WITHOUT ADJUSTING THE LOSS DETERMINED BY THE ASSESSING OFFICER IN THE EARLIER YEARS. IT WAS SUBMITTED THAT IF THIS ADDITIONAL GROUND IS ALLOWED, THE ASSESSEE WOULD NOT PREFER GR OUND NO.2. THE LEARNED DEPARTMENTAL REPRESENTATIVE, HOWEVER, SUBMITTED THA T AS PER THE PROVISIONS OF THE ACT, THE EARLIER YEARS DETERMINATION AS SPECULATIO N LOSS HAS NO BEARING ON THE ISSUE ITA.NO.1506/MUM/2012 STANDARD CHARTERED SECURITIES (INDIA) LIMITED ASSESSMENT YEAR-2008-09 4 AND FURTHER SUBMITTED THAT THE ORDERS IN EARLIER YE ARS WERE NOT ON RECORD. THEREFORE, HE IS NOT IN A POSITION TO OFFER HIS COMMENTS ON TH E CLAIM OF THE ASSESSEE. IT WAS SUBMITTED THAT THE ASSESSING OFFICER AND THE CIT (A ) CORRECTLY TREATED THE SHORT TERM CAPITAL GAIN SHOWN BY THE ASSESSEE AS BUSINESS INCO ME AS THE ASSESSEE WAS TRADING IN THE SHARES AND UNITS. 14. IN REPLY THE LEARNED COUNSEL SUBMITTED THAT HE HAS NO OBJECTION IF THE MATTER IS REMITTED BACK TO THE CIT (A) FOR CONSIDERATION OF T HE ADDITIONAL GROUND AS THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF LOKMAT HOLDINGS 32 2 ITR 43 HAS CONSIDERED THE SCOPE OF SECTION 73 EXPLANATION (2) AND THEREFORE, IN VIEW OF THE JURISDICTIONAL HIGH COURT JUDGMENT THE ASSESSEES CONTENTION MADE BEFOR E THE ASSESSING OFFICER DURING THE ASSESSMENT SHOULD BE ALLOWED AND IF THAT IS CON SIDERED, THERE IS NO CASE FOR ADJUDICATING THE GROUND NO.2 AS SUCH. 15. WE HAVE CONSIDERED THE ISSUE. THE MAIN DISPUTE IS WITH REFERENCE TO TREATMENT GIVEN TO SHARE TRANSACTIONS. ASSESSEE TREATED THEM AS INVESTMENTS WHERE AS AO TREATED THEM AS TRADING TRANSACTIONS. WE WERE INFOR MED THAT IN EARLIER YEARS WHEN ASSESSEE SUFFERED CAPITAL LOSS THE AO TREATED THEM AS BUSINESS LOSS AND SPECULATION LOSS. AS SEEN FROM THE PAPER BOOK PLACE D, THE ASSESSEE HAD MADE SPECIFIC REQUEST TO THE ASSESSING OFFICER TO SET OF F SPECULATION LOSSES DETERMINED IN EARLIER YEARS CONSEQUENT TO CHANGE OF HEAD FROM SH ORT TERM CAPITAL LOSS TO SPECULATION LOSS ON THE SAME SET OF TRANSACTIONS. T HEREFORE, WE ARE OF THE OPINION THAT THIS ASPECT OF THE CLAIM HAS TO BE EXAMINED BY THE AUTHORITIES, SINCE EARLIER YEAR ORDERS WERE NOT AVAILABLE ON RECORD. WITHOUT GOING INTO MERITS OF RIVAL CONTENTIONS, WE ARE OF THE OPINION THAT THE ADDITIONAL GROUND BE ING A LEGAL GROUND CAN BE ADMITTED AND WE ORDER ACCORDINGLY. THE ISSUE IN GRO UND NO.2 AND ADDITIONAL GROUND NOW ADMITTED ARE INTER-LINKED. IN CASE THE ASSESSIN G OFFICER TREATED THE SHORT TERM CAPITAL LOSS IN EARLIER YEARS AS BUSINESS INCOME AN D CONSEQUENTLY AS SPECULATION LOSS BY VIRTUE OF PROVISIONS OF SECTION 73 EXPLANAT ION (2), SIMILAR TREATMENT IS ALSO REQUIRED IN THIS YEAR. RESPECTFULLY FOLLOWING THE P RINCIPLES LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF LOKMAT HOLDINGS 32 2 ITR 43, THE ASSESSEES CONTENTIONS PRIMA FACIE ARE TO BE ALLOWED. SINCE IT REQUIRES EXAMINATION OF THE TREATMENT GIVEN BY AO IN EARLIER YEARS, WE ARE OF T HE OPINION THAT THE MATTER CAN BE RESTORED TO THE FILE OF THE CIT (A) WHO AFTER GIVIN G DUE OPPORTUNITY TO THE ASSESSING OFFICER AND THE ASSESSEE, SHOULD EXAMINE AND CONSID ER THE CLAIM AFRESH. WITH THESE REMARKS, THE ISSUE IN THESE GROUNDS IS RESTORED TO THE FILE OF THE CIT (A) FOR FRESH ADJUDICATION. GROUNDS ARE ALLOWED FOR STATISTICAL P URPOSES. WE FIND THAT A VIEW HAS ALREADY BEEN TAKEN BY THE T RIBUNAL IN ASSESSEES OWN CASE ON SIMILAR FACTS AND CIRCUMSTANCES. THEREF ORE, RESPECTFULLY FOLLOWING THE SAME, WE RESTORE THE ISSUE BACK TO TH E FILE OF LD. CIT(A) ON SIMILAR LINES. THE GROUND OF ASSESSEES APPEAL STAN DS ALLOWED FOR STATISTICAL PURPOSES. ITA.NO.1506/MUM/2012 STANDARD CHARTERED SECURITIES (INDIA) LIMITED ASSESSMENT YEAR-2008-09 5 5. RESULTANTLY, THE ASSESSEES APPEAL STANDS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH JANUARY, 2018. SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARW AL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 24 .01.2018 SR.PS:- THIRUMALESH ! / COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. %&'$ / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT CONCERNED 5. %'- , - , / DR, ITAT, MUMBAI 6. . / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI