DCIT 4(1)(1), MUMBAI V. CENTRUM BROKING P.LTD, MUMBAI

ITA 1590/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8727 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 21-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI , JUDICIAL MEMBER ITA NO. 1590/MUM/2016 : A.Y : 2010 - 11 DCIT - 4(1)(1), MUMBAI (APPELLANT) VS. M/S. CENTRUM BROKING PVT. LTD., 1, CENTRUM HOUSE, CST ROAD, VIDYANAGARI MARG, KALINA, SANTA CRUZ (E), MUMBAI 400 098. PAN : AABCA1498E (RESPONDENT) APPELLANT BY : SHRI RAJESH KUMAR YADAV RESPONDENT BY : NONE DATE OF HEARING : 25/10/2017 DATE OF PRONOUNCEMENT : 31 /10/2017 O R D E R PER G.S. PANNU , AM : THE CAPTIONED APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A) - 9 , MUMBAI DATED 30.12.2015 , PERTAINING TO THE ASSESSMENT YEAR 2010 - 11 , WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER, MUMBAI DATED 18.02.2013 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2 M/S. CENTRUM BROKING PVT. LTD. ITA NO. 1590/MUM/2016 2. IN ITS APPEAL, REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE AO TO DELETE THE DISALLOWANCE OF THE MARK TO MARKET LOSS AMOUNTING TO RS.45,92,651 WHEN IT IS A NOTIONAL LOSS BASED ON FUTURE CONTRACTS, A PROVISION MADE IN BALANCE SHEET AND THE PROFIT OR LOSS ACCOUNT ACCRUE UNTIL AND UNLESS THE CONTRACTS ARE MATERIALIZED AND SETTLED. 3. AT THE TIME OF HEARING, IT WAS NOTICED THAT INSPITE OF ISSUANCE OF NOTICE OF HEARING, NONE APPEARED ON BEHALF OF THE RESPONDENT - ASSESSEE. ON THE OTHER HAND, THE LD. DR APPEARED ON BEHALF OF THE REVENUE. 4. ACCORDINGLY, IN VIEW OF RULE 25 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963, THE APPEAL OF THE REVENUE IS BEING DISPOSED OFF EX - PARTE THE RESPONDENT - ASSESSEE AFTER HEARING THE AP PELLANT - REVENUE ON MERITS. 5. FROM THE ORDERS OF THE AUTHORITIES BELOW, THE RELEVANT FACT POSITION CAN BE SUMMARISED AS FOLLOWS. THE RESPONDENT - ASSESSEE IS A MEMBER OF THE NATIONAL STOCK EXCHANGE AND BOMBAY STOCK EXCHANGE AND IS, INTER - ALIA , ENGAGED IN T HE BUSINESS OF STOCK BROKING, ETC. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT ASSESSEE HAD DEBITED IN ITS PROFIT & LOSS ACCOUNT A SUM OF RS.45,92,651/ - TOWARDS PROVISION FOR LOSS OF OPEN POSITION IN DERIVATIVE SEGMENT . ON BEING ASKED TO EXPLAIN, IT WAS SUBMITTED BY THE ASSESSEE THAT THE AFORESAID PROVISION WAS TO ACCOUNT FOR THE DROP IN THE MARKET 3 M/S. CENTRUM BROKING PVT. LTD. ITA NO. 1590/MUM/2016 RATE OF THE FUTURE AND OPTIONS AS ON THE BALANCE - SHEET DATE BELOW THE COST. IT WAS ALSO ASSERTED THAT SUCH ACCOUNTING POLICY WAS BEING CONSISTENTLY FOLLOWED FROM THE EARLIER YEARS. ASSESSEE ALSO RELIED UPON CERTAIN DECISIONS OF THE TRIBUNAL IN SUPPORT, WHICH HAVE BEEN NOTED IN PARA 4.2 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER, HOWEVER, WAS OF THE VIEW THAT SUCH LOSS WAS ONLY NOTIONAL AND WAS CONTINGENT IN NATURE AND, THEREFORE, IT COULD NOT BE ALLOWED AS A DEDUCTION. ACCORDINGLY, THE SUM OF RS.45,92,651/ - WAS DISALLOWED AND ADDED TO THE RETURNED INCOME. 6. BEFORE THE CIT(A), ASSESSEE CANVASSED A STAND SIMILAR TO TAKE N BY IT FOR THE ASSESSMENT YEAR 2009 - 10 ON THE SAME ISSUE. IN PARA 6.2 OF HIS ORDER, CIT(A) NOTED THAT SIMILAR ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE IN ASSESSMENT YEAR 2008 - 09 AND THAT FOLLOWING THE SAME, HE HAD ADJUDICATED THE ISSUE IN FAVOUR OF THE ASSESSEE IN THE EARLIER ASSESSMENT YEAR OF 2009 - 10 ALSO. NOTICING THAT THERE WAS NO CHANGE IN FACTS, HE ALLOWED THE CLAIM OF THE ASSESSEE AND SET - ASIDE THE ACTION OF THE ASSESSING OFFICER IN THE INSTANT YEAR ALSO . 7. IN THIS BACK GROUND, DEPARTMENT IS IN APPEAL BEFORE US. APART FROM REITERATING THE REASONING CANVASSED BY THE ASSESSING OFFICER, THE LD. DR HAS NOT CONTROVERTED THE FACTUAL MATRIX ARRIVED AT BY THE CIT(A) THAT ON THIS ASPECT THE TRIBUNAL HAS ALREADY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2008 - 09. IN ORDER TO MAINTAIN CONSISTENCY, WE FIND THAT THE CIT(A) HAS MADE NO MISTAKE IN DELETING THE DISALLOWANCE, WHICH WE HEREBY CONFIRM. 4 M/S. CENTRUM BROKING PVT. LTD. ITA NO. 1590/MUM/2016 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 1 S T OCTOBER, 2017. SD/ - SD/ - (RAM LAL NEGI) JUDICIAL MEMBER (G.S. PANNU) ACCOUNTANT MEMBER MUMBAI, DATE : 3 1 S T OCTOBER, 2017 *SSL* COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, A BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI