M/s. Aristro Projects Ltd., Kolkata V. ACIT, Circle - 4, Kolkata, Kolkata

ITA 1710/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1576 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 15-06-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 28-08-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Opportunity of being heard; Speculation loss
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SRI A.T.VARKEY, JM & SHRI M.BALAG ANESH, AM ] I.T.A NO.1710/KOL/201 4 ASSESSMENT YEAR : 2006-0 7 M/S. ARISTRO PROJECTS LTD. -VS.- A.C.I. T., CIRCLE-4, KOLKATA KOLKATA [PAN : AACCA 5748 C] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI MIRAJ D.SHAH, AR FOR THE RESPONDENT : NONE DATE OF HEARING : 15.06.2017. DATE OF PRONOUNCEMENT : 07.07.2017 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL OF THE ASSESSEE ARISES OUT OF THE OR DER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -IV , KOLKATA [ IN SHORT THE L D CITA] IN APPEAL NO. 268/CIT(A)- IV/CIR.4/2008-09 DATED 04.07.2014 AGAINST THE ORDE R PASSED BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-4, KOLKATA [ IN SHORT THE LD AO] UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REF ERRED TO AS THE ACT ) DATED 26.12.2008 FOR THE ASST YEAR 2006-07. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD CITA WAS JUSTIFIED IN DISMISSING THE APPEAL EXPARTE WITHOUT GIVING ANY FINDINGS ON THE MERITS OF THE CASE , IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESS EE IS PUBLIC LIMITED COMPANY ENGAGED IN THE BUSINESS OF SHARE TRADING ACCORDING TO LD AO. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASST YEAR 2006-07 ON 18.10.2006 SHOWING LOS S OF RS 1,19,22,562/-. THE LD AO OBSERVED THAT THE ASSESSEE HAD DERIVED INTEREST INC OME OF RS 30,12,038/- FROM FIVE 2 ITA NO.1710/KOL/2014 M/S. ARISTRO PROJECTS LTD. A.YR.2006-07 2 PARTIES. THE LD AO ON ANALYSIS OF ACCOUNTS CAME TO THE CONCLUSION THAT THE ASSESSEE HAD SHOWN TRADING LOSS OF RS 1,47,42,130/- AND HAD SET OFF THE INTEREST INCOME WITH THE SAID LOSS WHICH IS NOT PERMISSIBLE IN LAW AS THE SHARE T RADING LOSS SHOULD BE CONSTRUED AS SPECULATION LOSS IN ACCORDANCE WITH EXPLANATION TO SECTION 73 OF THE ACT. THE ASSESSEE REPLIED THAT ITS PRINCIPAL BUSINESS IS GRANTING OF LOANS AND ADVANCES AND THE QUANTUM OF LOAN AND ADVANCE WAS RS 415 LAKHS WHEREAS THE QUANT UM OF STOCK OF SHARES WAS ONLY RS 85 LAKHS. HENCE BASED ON FUNDS DEPLOYED BY THE AS SESSEE, ITS PRINCIPAL BUSINESS SHOULD HAVE TO BE CONSTRUED ONLY AS ONE OF GRANTING LOANS AND ADVANCES AND ACCORDINGLY IT FALLS UNDER THE EXCEPTION PROVIDED IN EXPLANATION TO SECT ION 73 OF THE ACT. HENCE IT PRAYED THAT THE SHARE TRADING LOSS SHOULD HAVE TO BE CONST RUED AS BUSINESS LOSS. THE LD AO OBSERVED THAT THE SHARE TRADING LOSS IS PRIMARY ACT IVITY OF THE ASSESSEE AND STOCK OF SHARES IS NOT COMPARABLE TO BALANCE OF LOAN AND ADV ANCE AS BOTH ARE DIFFERENT IN NATURE. HE FURTHER OBSERVED THAT JUST BECAUSE, FOR A PARTIC ULAR YEAR, LOAN IS HIGHER DUE TO INDUCTION OF CAPITAL, BUT IN EARLIER YEAR, THE LOAN WAS MUCH LOWER THAN THE STOCK OF SHARES. ACCORDINGLY HE CONCLUDED THAT THE PRINCIPAL BUSINESS OF THE ASSESSEE IS NOT GRANTING OF LOANS AND ADVANCES . BASED ON THIS OBS ERVATION, HE HELD THAT THE SHARE TRADING LOSS WOULD HAVE TO BE CONSTRUED AS SPECULAT ION LOSS AND HENCE SETTING OFF THE INTEREST INCOME WITH THE SAME IS NOT PERMISSIBLE IN LAW. THE LD CITA DISMISSED THE APPEAL OF THE ASSESSEE EXPARTE AS NONE APPEARED BEF ORE HIM ON THE DATES OF HEARING. AGGRIEVED , THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS:- 01) THAT THE ORDER OF THE LEARNED CIT (A) CONFIRMI NG THE ADDITIONS MADE BY LEARNED ASSESSING OFFICER IS CONTRARY TO THE LAW AN D FACTS OF THE CASE. 02) THAT THE LEARNED CIT (A) OUGHT TO HAVE PASSED O RDER AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE APPELLANT BEFORE PASS ING EX-PARTE ORDER. 03) THAT ON FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT (A) OUGHT HAVE TREATED THE LOSS OF RS.1,49,34,599/- FROM SHARE TRA DING BUSINESS AS NON-SPECULATIVE LOSS INSTEAD OF SPECULATIVE LOSS AS TREATED BY THE LD. ASSESSING OFFICER BY APPLYING PROVISIONS OF SECTION 73 OF INCOME TAX ACT, 1961. 04) THAT THE APPELLANT CRAVES LEAVE TO ADD/OR AMEND ANY GROUNDS OF THIS APPEAL. 3 ITA NO.1710/KOL/2014 M/S. ARISTRO PROJECTS LTD. A.YR.2006-07 3 4. THE LD AR ARGUED THAT THE OFFICE OF THE ASSESSEE IS SITUATED IN THE SECOND FLOOR AT 28, STRAND ROAD, KOLKATA AND SINCE SECOND FLOOR WAS NOT MENTIONED BY THE LD CITA IN THE HEARING NOTICE AND IN THE APPELLATE ORDER, THE ASSE SSEE HAD NOT RECEIVED ANY NOTICE FROM THE OFFICE OF THE LD CITA. HE PRAYED FOR ONE LAS T OPPORTUNITY TO BE PROVIDED TO THE ASSESSEE TO PURSUE ITS CASE BEFORE THE LD CITA. NO NE APPEARED ON BEHALF OF THE REVENUE WHEN THE CASES WERE CALLED FOR HEARING. THE REVENU E HAD NOT EVEN SOUGHT AN ADJOURNMENT BEFORE US ON THE DATE OF HEARING. HEN CE WE PROCEED TO DISPOSE OFF THESE APPEALS AFTER HEARING THE LD AR. 5. WE HAVE HEARD THE LD AR. WE FIND THAT THE LD CI TA HAD PASSED AN ORDER EXPARTE BY DISMISSING THE APPEAL OF THE ASSESSEE FOR NON-COMPL IANCE. THE REASON GIVEN BY THE LD AR FOR NON-COMPLIANCE WAS THAT THE NOTICE WAS NOT S ERVED ON THE ASSESSEE DUE TO WRONG MENTION OF THE ADDRESS THEREON. HENCE WE DEEM IT F IT AND APPROPRIATE , IN THE INTEREST OF JUSTICE AND FAIRPLAY, TO SET ASIDE THIS APPEAL TO T HE FILE OF THE LD CITA, FOR FRESH ADJUDICATION, IN ACCORDANCE WITH LAW. NEEDLESS TO MENTION THAT THE ASSESSEE BE GIVEN REASONABLE OPPORTUNITY OF BEING HEARD. THE ASSESSE E IS ALSO DIRECTED TO CO-OPERATE WITH THE LD CITA BY NOT SEEKING ADJOURNMENT UNLESS PREVE NTED BY BONAFIDE REASON AND IN EXCEPTIONAL CIRCUMSTANCES. THE LD CITA IS DIRECTED TO DISPOSE OFF THIS APPEAL ON OR BEFORE 30.11.2017 AS THE APPEAL RELATES TO ASST YE AR 2006-07. ACCORDINGLY THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 07.07.2017 SD/- SD/- [A.T.VARKEY] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 07.07.2017 [RG PS] 4 ITA NO.1710/KOL/2014 M/S. ARISTRO PROJECTS LTD. A.YR.2006-07 4 COPY OF THE ORDER FORWARDED TO: 1. M/S. ARISTRO PROJECTS LTD., 28, STRAND ROAD, 2 ND FLOOR, KOLKATA-700001. 2. A.C.I.T., CIRLCE-4, KOLKATA. 3..C.I.T.(A)-IV, KOLKATA 4. C.I.T.-II, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S