M/s. V.S. Network Solutions (P) Ltd., New Delhi V. ITO, New Delhi

ITA 1591/DEL/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0164 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 29-07-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 18-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH MEENA
• Assessee Lawyers: RAJESH ARORA
• Keywords: Business income; Opportunity of being heard; Speculation loss
• Section: 154; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : SMC-I : NEW DELHI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER ITA NO.1591/DEL/2014 ASSESSMENT YEAR : 2006-07 V.S. NETWORK SOLUTIONS (P) LTD., B-2/60, SAFDARJUNG ENCLAVE, NEW DELHI. PAN : AABCV5047Q VS. ITO, WARD-17(1), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAJESH ARORA, CA DEPARTMENT BY: SHRI OM PRAKASH MEENA, SR.DR ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) ON 16.12.2013 IN RELATION TO ASSESSMENT YEAR 2006-07. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ORIGINAL ASSESSMENT IN THIS CASE WAS COMPLETED ON THE RETURNED INCOME. TH E AO INITIATED PROCEEDINGS U/S 154 BY NOTICING THAT THE ASSESSEE C OMPANY HAD SET OFF SPECULATION BUSINESS LOSS OF RS.1,21,264/- AGAINST INCOME FROM BUSINESS. INVOKING THE PROVISIONS OF SECTION 154, THE AO CAME TO HOLD THAT THE ITA NO.1591/DEL/2014 2 PROVISIONS OF SECTION 73 DO NOT PERMIT SET OFF OF S PECULATION LOSS AGAINST NON-SPECULATION INCOME. HE, THEREFORE, CONSIDERED SPECULATION BUSINESS LOSS OF RS.1,21,264/- INDEPENDENTLY AND REFUSED TO SET IT OFF AGAINST BUSINESS INCOME FROM NON-SPECULATION ACTIVITY. THE ASSESSEE ARGUED BEFORE THE LD. CIT(A) THAT EVEN THOUGH IN COMPUTATION OF TOTAL INC OME SPECULATION LOSS OF RS.1,21,264/- WAS REDUCED FROM THE BUSINESS INCOME, BUT, THE FINAL TAX CALCULATION WAS DONE ONLY BY IGNORING SPECULATION B USINESS LOSS, WHICH WAS CARRIED FORWARD TO NEXT YEAR. NOT CONVINCED, T HE LD. CIT(A) UPHELD THE ORDER PASSED U/S 154. THE ASSESSEE IS AGGRIEVED AG AINST THE ORDER OF THE LD. CIT(A). 3. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE RELEVANT MATERIAL ON RECORD. THE COMPUTATION OF TOTAL INCOME FILED B Y THE ASSESSEE ALONG WITH THE RETURN OF INCOME INDICATES LOSS OF RS.1,21 ,264/- IN COMPUTATION OF BUSINESS INCOME. THIS SHOWS THAT THE ASSESSEE REDU CED SPECULATION LOSS FROM NON-SPECULATION BUSINESS INCOME. OBVIOUSLY, S UCH SET OFF IS NOT PERMISSIBLE UNDER LAW. THE ASSESSEE ALSO APPENDED A NOTE IN THE COMPUTATION OF TOTAL INCOME INDICATING THAT LOSS ON SPECULATION BUSINESS WAS NOT SET OFF WITH THE OTHER INCOME AND, HENCE, T HE SAME WAS BEING ITA NO.1591/DEL/2014 3 CARRIED OVER TO THE NEXT YEAR FOR SET OFF SUBSEQUEN TLY. THE LD. AR CONTENDED THAT THOUGH THE AMOUNT OF SPECULATION BUS INESS LOSS WAS REDUCED FROM OTHER BUSINESS INCOME IN THE COMPUTATION PART, BUT, WHILE CALCULATING THE TOTAL TAX LIABILITY, LOSS FROM SPECULATION BUSI NESS WAS NOT TAKEN INTO CONSIDERATION AND THE TAX WAS COMPUTED ON THE TOTAL INCOME WITHOUT SUCH SET OFF. IT IS OBVIOUS THAT SPECULATION BUSINESS L OSS CANNOT BE SET OFF AGAINST OTHER INCOME EARNED BY THE ASSESSEE DURING THE YEAR . IT, THEREFORE, MEANS THAT THE COMPUTATION OF INCOME MADE BY THE ASSESSEE IS INCORRECT TO THIS EXTENT. IF, HOWEVER, THE ASSESSEES CONTENTION ABO UT THE COMPUTATION OF TAX LIABILITY ON THE TOTAL INCOME WITHOUT SET OFF OF BU SINESS LOSS TURNS OUT TO BE CORRECT, THEN, THERE CAN BE NO REASON FOR ANY RECTI FICATION. UNDER SUCH CIRCUMSTANCES, I SET ASIDE THE IMPUGNED ORDER AND R EMIT THE MATTER TO THE FILE OF AO FOR EXAMINING THIS ASPECT OF THE MATTER, AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. IN OTHER WORDS, IF THE ASSESSEES CONTENTION ABOUT THE COMPUTATION OF TAX LIABILITY WITHOUT SETTING OFF OF SPECULATION BUSINESS LOSS TURNS OUT TO BE CO RRECT, THEN, THE ORDER U/S 154 WILL NOT STAND AND VICE VERSA. ITA NO.1591/DEL/2014 4 4. IN THE RESULT, THE APPEAL FILED BY THE ASS ESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 2 9 TH JULY, 2015. SD/- (R.S. SYAL) ACCOUNTANT M EMBER DATED: 29 TH JULY, 2015. DK COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI