ITO, Ward - 4(3), Kolkata, Kolkata V. M/s. Alosha Marketing Pvt. Ltd., Kolkata

ITA 1655/KOL/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7925 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2012
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 02-12-2011
• Court: TRIBUNAL
• Department Lawyers: P K CHAKRABORTY
• Assessee Lawyers: J M THARD
• Keywords: Speculation loss

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE , /AND ! ' ! ! ' ! ! ' ! ! ' ! , ) [BEFORE SHRI PRAMOD KUMAR, AM & SHRI MAHAVIR SINGH, JM] # # # # / I.T.A NO. 1655KOL/2011 '$% &' '$% &' '$% &' '$% &'/ // / ASSESSMENT YEAR : 2004-05 INCOME-TAX OFFICER, WD-4(3), KOLKATA. VS. M/S. AL OSHA MARKETING PVT. LTD. (PAN:AACCA1930G) ()* /APPELLANT ) (+)*/ RESPONDENT ) FOR THE APPELLANT: SHRI P. K. CHAKRABORTY FOR THE RESPONDENT: SHRI J. M. THARD DATE OF HEARING: 02.08.2012 DATE OF PRONOUNCEMENT: 02.08.2012 , / ORDER PER MAHAVIR SINGH, JM ( ! ' ! ! ' ! ! ' ! ! ' !, , , , ) THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-XII, KOLKATA IN APPEAL NO. 671/CIT(A)-XII/4(3)/08-09 DATED 26.09.2011. ASSESSM ENT WAS FRAMED BY ITO, WARD-4(3), KOLKATA U/S. 147/143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2004-05 VIDE HIS ORDER DATED 17.12 .2007. 2. THE FIRST ISSUE IN THIS APPEAL OF REVENUE IS AG AINST THE ORDER OF CIT(A) IN ALLOWING SPECULATION LOSS U/S. 73 OF THE ACT. FOR THIS, REV ENUE HAS RAISED FOLLOWING COMMON ISSUE VIDE GROUND NOS.1 TO 3: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , LD.CIT(A) ERRED IN GIVING RELIEF TO THE TREATMENT MADE BY THE A.O. IN RESPECT OF LOSS OF RS .10,71,280/- IN PURCHASE AND SALE OF SHARES AS DEEMED SPECULATION LOSS BY APPLYING THE P ROVISIONS OF SECTION 73 OF THE ACT. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) ERRED IN DELETING THE ADDITION MADE IN RESPECT OF THE EXPENSES ATTRIBUTABLE TO THE LOSS IN SHARE TRADING OF RS.1,35,240/-. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD.CIT(A) ERRED IN STATING THAT SHARE TRADING LOSS CANNOT BE TERMED AS DEEMED SPECULATION LOSS. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. THE AO DURING THE COURSE OF ASSESSMENT PROC EEDINGS DISALLOWED THE CLAIM OF LOSS AT RS.12,06520/- BY INVOKING THE EXPLANATION TO SECTIO N 73 OF THE ACT AND DETERMED THE DEEMED SPECULATION LOSS AND REFUSED TO SET OFF AGAINST THE OTHER INCOMES OF THE ASSESSEE. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A). THE ASSES SEE BEFORE AO CLAIMED THAT IT IS A FINANCE COMPANY AND IT HAS NBFC REGISTRATION CERTIFICATE FR OM RBI AND IS ALSO TRADING IN SHARES. THE ASSESSEE CARRYING ON THE BUSINESS OF FINANCING ACTI VITY. DURING THE YEAR UNDER ASSESSMENT IT HAS EARNED INTEREST INCOME OF RS.5,21,842/- FROM THE BU SINESS OF GRANTING OF LOANS AND ALSO INCURRED 2 ITA 1655/K/2011 M/S. ALOSHA MARKETING PVT. LTD. A.Y. 04-05 BUSINESS LOSS OFRS.2,51,920/- FROM PURCHASE AND SAL E OFSHARES OF OTHER COMPANIES. THE ASSESSEE COMPUTED THE LOSS OF RS.10,71,280/- ON ACC OUNT OF PURCHASE AND SALE OF SHARES AS UNDER: OPENING BALANCE AS ON 01.04.2003 RS.2,37,83,42 6/- ADD : PURCHASE RS.2,46,73,204/- RS.4,84,56,630/- LESS : CLOSING STOCK RS.2,56,32,026/- COST OF SALE OF SHARES RS.2,28,24,604/- LESS: SALE OF SHARES RS.2,17,53,324/- TOTAL LOSS ON SHARES RS. 10,71,280/- 4. THE ASSESSEE CLAIMED THAT IT HAS INTEREST INCOME OF RS.14,08,050/- WHEREAS THE LOSS IS AT RS.10,71,280/- APART FROM BUSINESS LOSS OF RS.2,51, 920/-. THE AO HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE AND INVOKED THE PROVISI ONS OF EXPLANATION TO SECTION 73 OF THE ACT AND DISALLOWED THE LOSS IN ENTIRETY AT RS.12,06,520 /-. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A). BEFORE HIM ALSO IT WAS CLAIMED THAT IT IS A REGISTERED NBFC COMPANY WITH RBI AND ITS INTEREST INCOME IS AT RS.14,08,050/- WHEREA S ITS PRINCIPAL BUSINESS IS OF GRANTING LOANS AND SHARE TRADING LOSS IS AT RS.10,71,280/-, WHICH CLEARLY ESTABLISHES THAT ITS PRINCIPAL BUSINESS IS OF GRANTING OF LOANS AND ADVANCES AND EVEN IT IS A NBFC COMPANY. THE CIT(A) AFTER CONSIDERING THIS FACT ALLOWED THE CLAIM OF ASSESSEE . AGGRIEVED, NOW REVENUE IS IN APPEAL BEFORE US. WE FIND THAT THE ASSESSEE IS A COMPANY REGISTE RED WITH RBI AS NBFC AND ITS PRINCIPAL BUSINESS IS THAT OF GRANTING OF LOANS AND ADVANCES. AS REGARDS THE QUANTUM OF INTEREST INCOME EARNED ISRS.14,08,050/- WHEREAS LOSS IN SHARE TRADI NG ACTIVITY IS AT RS.10,71,280/- WHICH CLEARLY PROVES THAT ITS PRINCIPAL BUSINESS IS OF FINANCING I.E. GRANTING OF LOANS AND ADVANCES. EVEN THOUGH THE ASSESSEE IS A NBFC GRANTED BY RBI AND TH IS BEING A NBFC COMPANY, THE EXPLANATION TO SECTION 73 OF THE ACT WILL NOT APPLY BECAUSE IT FALLS UNDER EXCEPTION. IN SUCH CIRCUMSTANCES, WE HAVE NO HESITATION IN CONFIRMING THE ORDER OF CIT(A) IN DISMISSING THE APPEAL OF REVENUE. APPEAL OF REVENUE IS DISMISSED. 5. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. . 6. ORDER PRONOUNCED IN OPEN COURT. SD/- SD/- , ! ! ! ! ' ! ' ! ' ! ' ! , (PRAMOD KUMAR) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( - - - -) )) ) DATED: 2ND AUGUST, 2012 ./ '$01 '2 JD.(SR.P.S.) 3 ITA 1655/K/2011 M/S. ALOSHA MARKETING PVT. LTD. A.Y. 04-05 , 3 ''4 54&6- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT ITO, WARD-4(3), KOLKATA. . 2 +)* / RESPONDENT M/S. ALOSHA MARKETING PVT. LTD., 4, C LIVE ROW, 3 RD FLOOR, ROOM NO.303, KOLKATA-700 001.. 3 . ',$ ( )/ THE CIT(A)-XII, KOLKATA. 4. ',$ / CIT, KOLKATA. 5 . ='> '$ / DR, KOLKATA BENCHES, KOLKATA +4 '/ TRUE COPY, ,$/ BY ORDER, ! 1 /ASSTT. REGISTRAR .