JT. CIT. (OSD) Rg. - 3(3), MUMBAI V. M/s. RAMA CAPITAL & FISCAL SERVICES LTD., MUMBAI

ITA 1739/MUM/2006

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7846 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 1999-2000
• Appeal Filed On: 14-03-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KISHAN VYAS
• Assessee Lawyers: J D MISTRY
• Keywords: Speculation loss

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI RAJENDRA SINGH ,(AM) ITA NO.1739/MUM/2006 ASSESSMENT YEAR : 1999-00 DY. COMMISSIONER OF INCOME TAX CIRCLE-3(3), 6 TH FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. ..( APPELLANT ) VS. M/S. RAMA CAPITAL & FISCAL SERVICES LTD. 812, RAHEJA CHAMBERS NARIMAN POINT MUMBAI-400 021. ..( RESPONDENT ) P.A. NO. (AAACR 7189 J) APPELLANT BY : SHRI KISHAN VYAS RESPONDENT BY : SHR I J.D. MISTRY O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 9 TH DECEMBER, 2005 PASSED BY THE LD. CIT(A) FOR THE ASSESSMENT YEAR 1999-00 DELETING THE PENALTY IMPOSED BY THE AO RS.1,29,02,623/- U/S.271(1)(C) OF THE INCOME TAX ACT, 1 961(THE ACT). 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE COM PANY IS ENGAGED IN THE BUSINESS OF FINANCIAL SERVICES. THE RETURN WAS FILED SHOWING A LOSS OF RS.6,71,72,160/-. HOWEVER, THE ASSESSMENT WAS ITA NO.1739/M/06 A.Y: 99-00 2 COMPLETED DETERMINING THE BUSINESS LOSS RS.2,03,50,936/-, INCOME FROM HOUSE PROPERTY RS.72,000/- AND SPECULATION LOSS RS.17 ,42,930/-, VIDE ORDER DT. 26.2.2002 PASSED U/S.143(3) OF THE ACT. ON APPEAL, THE LD. CIT(A) PARTLY ALLOWED THE APPEAL. IN THE MEANT IME THE AO ISSUED A NOTICE TO THE ASSESSEE TO SHOWCAUSE AS TO WHY PENALTY U/S.27 1(1)(C) MAY NOT BE IMPOSED. IN REPLY, IT WAS, INTERALIA, SU BMITTED BY THE ASSESSEE THAT THE LOSS IN SHARES OF RS.17,42,930/- HAS BEEN T REATED AS SPECULATION LOSS WHICH DOES NOT APPLY TO THEM, THE PROVISI ON FOR DISALLOWANCE U/S.14A RS.25,000/- IS NOT APPLICABLE IN T HE ASSESSEES CASE AND THE DISALLOWANCE OF INTEREST AMOUNTING TO RS.3,5 0,95,715/- IS NOT WARRANTED AS THE SAID LIABILITY HAD CRYSTALLISED DURING THE YEAR, THEREFORE, THE SAME IS ALLOWABLE. IT WAS THEREFORE, ST ATED TO DROP THE PENALTY. HOWEVER, THE AO DID NOT ACCEPT THE ASSESSEES EX PLANATION FOR THE REASONS THAT THE SAID PLEA HAVE ALSO BEEN REJECT ED IN THE APPELLATE PROCEEDING. HENCE, HE IMPOSED PENALTY OF RS.1 ,29,02,623/- U/S.271(1)(C) VIDE ORDER DATED 14.3.2005 PASSED U/S. 27 1(1)(C) OF THE ACT. ON APPEAL, THE LD. CIT(A) WHILE OBSERVING THAT THE ISSUES ARE DEBATABLE AND KEEPING IN VIEW THAT THE ASSESSEES EXPLAN ATION WAS NOT FOUND TO BE FALSE, DELETED THE PENALTY IMPOSED BY THE AO. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE REVENUE IS IN APPEAL BEFORE US AGAINST THE DELETION OF PENALTY IMPO SED IN RESPECT OF DISALLOWANCE OF SPECULATION LOSS AND INTEREST EXPENDITURE. ITA NO.1739/M/06 A.Y: 99-00 3 4. AT THE TIME OF HEARING BOTH PARTIES HAVE AGREED T HAT THE TRIBUNAL IN THE QUANTUM APPEAL FILED BY THE ASSESSEE AND REVEN UE IN DCIT VS. RAMA CAPITAL AND FISCAL SERVICES LTD. AND VICE-VERSA IN I TA NO.6248 & 6249/MUM/2003 AND CO NO.280 AND 281/MUM/2004 FOR ASSE SSMENT YEARS 1998-99 AND 1999-00 VIDE ORDER DATED 25.4.2007 HAS DELETED ALL THE THREE DISALLOWANCES, THEREFORE, THE ISSUE MAY B E DECIDED ACCORDINGLY. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO PLACE D ON RECORD THE COPY OF THE SAID ORDER OF THE TRIBUNAL . 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE TRIBUNAL WHILE DECIDING THE ASSESSEES CROSS OBJECTION NO.281/M/04 FO R THE ASSESSMENT YEAR 1999-00 HAS CONSIDERED THE ISSUE OF SPECULATI ON LOSS VIS-A-VIS APPLICATION OF THE EXPLANATION TO SECTION 7 3 IN PARA-21 OF ITS ORDER AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE HOL DING THAT THE SHARES HELD BY THE ASSESSEE WHICH RESULTED IN A LOSS, CAN NOT BE TREATED AS SPECULATION LOSS U/S.73 VIDE PARA- 23.2 AND 24 OF THE ORDER. WE FURTHER FIND THAT THE ISSUE OF DISALLOWANCE OF RS.25 ,000/- U/S.14A WAS ALSO DECIDED IN FAVOUR OF THE ASSESSEE VIDE PARA-27 OF THE ORDER. WE ALSO FIND THAT THE ISSUE OF ALLOWABILITY OF CLAIM OF INTEREST LIABILITY OF RS.3,50,95,715/- WAS ALSO DECIDED IN FAVOUR OF THE ASSESSEE BY HOLDING THAT THE ASSESSEES CLAIM FOR DEDUCTION FOR INTER EST PAYABLE HAS ITA NO.1739/M/06 A.Y: 99-00 4 CRYSTALLIZED DURING THE YEAR IN VIEW OF BOARD RESOLUTI ON THEREFORE, THE SAME IS ALLOWABLE IN THE ASSESSMENT YEAR 1999-00. 6. SINCE THE TRIBUNAL HAS DELETED ALL THE ABOVE DISALL OWANCES ON WHICH THE PENALTY WAS IMPOSED BY THE AO, THEREFORE, WE ARE OF THE VIEW THAT THE PENALTY HAS NO LEGS TO STAND AND ACCORDING LY WE ARE INCLINED TO UPHOLD THE ORDER OF THE LD. CIT(A) IN DE LETING THE PENALTY IMPOSED BY THE AO. THE GROUNDS TAKEN BY THE REVENUE ARE THEREFORE REJECTED. 7. IN THE RESULT REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 01.02.2010. SD/- SD/- (RAJENDRA SINGH) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 01.02.2010. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR E BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI. ITA NO.1739/M/06 A.Y: 99-00 5 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 13.1.10 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 14.1.10 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 01-02-2010 SR.PS/PS 7. FILE SENT TO THE BENCH CLERK 04-02-2010 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER