Responce Investments Ltd. (earlier known as Bhimraj Fatrade Pvt. Ltd.), Kolkata V. Income Tax Officer, Kolkata

ITA 1761/KOL/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4094 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 05-09-2016
• Court: TRIBUNAL
• Department Lawyers: RABINDRA GUHA
• Assessee Lawyers: S M SURANA
• Keywords: Speculation loss
• Section: 143(3)

Judgement Text

1 ITA NO.1761/KOL/2016 RESPONSE INVESTMENTS LTD., AY 2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: KOL KATA [BEFORE SHRI M. BALAGANESH, AM & SHRI S. S. VISWAN ETHRA RAVI, JM] I.T.A NO. 1761/KOL/2016 ASSESSMENT YEAR: 2010-11 RESPONSE INVESTMENTS LTD. VS. INCOME-TAX OFFICE R, WD-5(3), KOLKATA (FORMERLY KNOWN AS BHIMRAJ FABTRADE PVT. LTD.) (PAN: AABCB3259N) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 02.12.2016 DATE OF PRONOUNCEMENT: 14.12.2016 FOR THE APPELLANT: SHRI S. M. SURANA, ADVOCATE FOR THE RESPONDENT: SHRI RABINDRA GUHA, JCIT ORDER PER SHRI M. BALAGANESH, AM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-2, KOLKATA VIDE APPEAL NO. 1072/CIT(A)-2/14-15 DATED 18.07.2016. ASSESSMENT WA S FRAMED BY ITO, WD-5(3), KOLKATA U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTE R REFERRED TO AS THE ACT) FOR AY 2010- 11 VIDE HIS ORDER DATED 16.03.2013. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LOSS INCURRED BY THE ASSESSEE ON SALE OF SHARES WOULD FALL UNDER THE AMB IT OF EXPLANATION TO SECTION 73 OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASS ESSEE IS ENGAGED IN THE BUSINESS OF SHARE TRADING AND FINANCIAL BUSINESS. THE LD. AO OBSERVE D THAT IN THE P&L ACCOUNT OF THE ASSESSEE THE ASSESSEE HAS SHOWN SALES AND PURCHASE OF SHARES AT RS.20,78,750/- AND RS.23,85,000/- RESPECTIVELY. THERE WAS NO OPENING OR CLOSING STOCK. THE LOSS INCURRED THEREON AMOUNTING TO RS.3,06,250/- ARISING FROM SHA RE TRADING WAS CLAIMED AS REGULAR BUSINESS LOSS BY THE ASSESSEE WHICH THE AO SOUGHT T O TREAT THE SAME AS SPECULATION LOSS BY 2 ITA NO.1761/KOL/2016 RESPONSE INVESTMENTS LTD., AY 2010-11 INVOKING THE PROVISIONS OF EXPLANATION TO SECTION 7 3 OF THE ACT. THE ASSESSEE EXPLAINED THAT THIS COMPOSITION OF INCOME CONSISTS OF INCOME FROM BUSINESS, INCOME FROM OTHER SOURCES AND INCOME FROM CAPITAL GAINS AND SUCH INCOME IS MU CH MORE THAN THE LOSS ARISING FROM SHARE TRADING AND ACCORDINGLY, PLEADED THAT THE ASS ESSEES CASE FALLS UNDER THE FIRST LIMB OF THE EXCEPTION PROVIDED IN EXPLANATION TO SECTION 73 OF THE ACT. THE AO HOWEVER, NOT CONVINCED WITH THIS REPLY SOUGHT TO TREAT THE SAID LOSS AS SPECULATION LOSS WHICH WAS ALSO CONFIRMED BY THE LD. CIT() IN FIRST APPEAL. AGGRIE VED, THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS: 1. FOR THAT THE ORDER OF THE LD. CIT(A) IS ARBIT RARY, ILLEGAL AND BAD IN LAW. 2. FOR THAT THE LD. CIT(A) ERRED IN TREATING THE L OSS OF RS.3,06,250/- FROM PURCHASE AND SALE OF SHARES DURING THE YEAR AS SPECULATION LOSS BY IN VOKING EXPLANATION TO SEC. 73 WHEN THE ASSESSEES CASE FELL WITHIN THE EXCEPTIONS PROVIDED U/S. 73. 3. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE ORDER OF THE CIT(A) BE MODIFIED AND THE ASSESSEE BE GIVEN THE RELIEF PRAYED FOR. 2.2. THE LD AR PLACED ON RECORD THE COPY OF COMPUT ATION OF TOTAL INCOME TOGETHER WITH THE BALANCE SHEET TO PROVE THAT THE INCOME FROM OTH ER SOURCES COMPRISING OF INTEREST INCOME ITSELF WAS RS.5,61,045/- WHICH WAS MUCH MORE THAN THE ALLEGED SPECULATION LOSS IN RS.3,06,250/- ARISING OUT OF LOSS ON SALE OF SHARES . HE PLACED RELIANCE ON THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF MIDDLETO N INVESTMENT & TRADING CO. LTD. IN ITA NO.196 OF 1999 DATED 15.01.2014. IN RESPONSE T O THIS, THE LD. DR VEHEMENTLY RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 2.3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THRO UGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND FROM THE COMPUTATION OF TOTAL INCOME OF THE ASSESSEE THAT THE INTEREST INCOME DERIVED BY THE ASSESSEE OFFERED TO TAX UNDER THE HE AD INCOME FROM OTHER SOURCES WAS RS.5,61,045/- WHICH IS MUCH MORE THAN THE LOSS ON S ALE OF SHARES OF RS.3,06,250/-. HENCE, WE ARE INCLINED TO AGREE WITH THE ARGUMENT OF THE L D. AR THAT THE ASSESSEES CASE SQUARELY FALLS UNDER THE FIRST LIMB OF THE EXCEPTION PROVIDE D IN EXPLANATION TO SEC. 73 OF THE ACT. WE ALSO FIND THAT THE HONBLE CALCUTTA HIGH COURT IN T HE CASE OF MIDDLETON INVESTMENT & TRADING CO. LTD., SUPRA SUPPORTS THE CASE OF THE AS SESSEE. ACCORDINGLY, THE LOSS ON SALE OF 3 ITA NO.1761/KOL/2016 RESPONSE INVESTMENTS LTD., AY 2010-11 SHARES OF RS.3,06,250/- IS HEREBY DIRECTED TO BE TR EATED AS REGULAR BUSINESS LOSS. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IS A LLOWED. 3. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.12.2016 SD/- SD/- (S. S. VISWANETHRA RAVI) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED :14TH DECEMBER, 2016 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT RESPONSE INVESTMENTS LTD. (FORMERLY KNO WN AS BHIMRAJ FABTRADE PVT. LTD., )SUBON DUTT BUILDING, 13, BRABO URNE ROAD, KOLKATA- 700 001. 2 RESPONDENT ITO, WARD-5(3), KOLKATA. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .