ITO 2(2)(1), MUMBAI V. JAY INVESTRADE P. TD, MUMBAI

ITA 1854/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 5196 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 09-10-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 16-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SAHU
• Keywords: Business income; Speculation loss; Speculative transactions

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL J JJ J BENCH, BENCH, BENCH, BENCH, MUMBAI MUMBAI MUMBAI MUMBAI , . . . ! ! ! ! , ' ' ' ' #$ #$ #$ #$ BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM & & & & SHRI SHRI SHRI SHRI N. K. BILLAIYA N. K. BILLAIYA N. K. BILLAIYA N. K. BILLAIYA, AM , AM , AM , AM ./ I.T I.TI.T I.T.A. NO. .A. NO. .A. NO. .A. NO.1854/MUM/2012 1854/MUM/2012 1854/MUM/2012 1854/MUM/2012 ( % % % % & & & & / ASSESSMENT YEAR :2008-09) ITO, 2(2)(1), AAYAKAR BHAVAN, ROOM NO. 549, 5 TH FLOOR, M. K. ROAD, MUMBAI-400020 / VS. M/S JAY INVESTRADE PVT. LTD., ACHAL BUILDING, 3 RD FLOOR, 21, MODI STREET, FORT, MUMBAI-400001 $' ' ./ ( ./ PAN/GIR NO. :AAACJ5150H ( ') / APPELLANT APPELLANT APPELLANT APPELLANT) .. ( *+') / RESPONDENT RESPONDENT RESPONDENT RESPONDENT) ') ') ') ') , , , , / APPELLANT BY : SHRI R. K. SAHU *+') *+') *+') *+') - -- - , , , , /RESPONDENT BY : SHRI NEELKANTH KHANDELWAL - -- - .' .' .' .' / DATE OF HEARING : 9 TH OCTOBER 2013 /0& /0& /0& /0& - -- -.' .' .' .' /DATE OF PRONOUNCEMENT: 17 TH OCTOBER 2013 #1 / O R D E R PER : , . . / VIJAY PAL RAO, JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 22.12.2011 OF COMMISSIONER OF INCOME TAX(APPEALS) F OR THE ASSESSMENT YEAR 2008-09. 2. THE REVENUE HAS RAISED THE FOLLOWING EFFECTIVE G ROUND AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING SET OFF OF CURRENT YEARS SPECULATION LOSS AGAINST THE INCOME ARISING FROM BU SINESS OF TRADING IN SHARES AND SECURITIES AND IGNORING THE A CTION OF ASSESSEE BY SETTING OFF OF SPECULATION LOSS AGAINST BUSINESS INCOME IS CONTRARY TO THE SECTION 73(1) OF THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING TO SET OFF OF BROU GHT FORWARD UNABSORBED SPECULATION LOSS OF A. YRS. 2005-06 TO 2 007-08, RELYING ON THE CASE OF LOKMAT NEWSPAPER PVT. LTD. 3 22 (ITR) 43 ITA NO.1854/M/2012 JAY INVESTRADE PVT. LTD. 2 (BOM) AND FAILED TO APPRECIATE THAT SET OFF OF UNAB SORBED SPECULATION LOSS AGAINST BUSINESS INCOME IS CONTRAR Y TO SECTION 73(1) OF THE I. T. ACT. 3. THE ASSESSEE IS A COMPANY AND ENGAGED IN THE BUS INESS OF TRADING IN SHARES AND SECURITIES. THE AO HAS OBSERVED FROM THE COMPUTATION OF INCOME THAT THE ASSESSEE HAS SHOWN BUSINESS INCOME OF ` 6,55,63,169/- AND SPECULATION LOSS OF ` 99,49,257/- DURING THE YE AR UNDER CONSIDERATION WHICH WAS SET OFF AGAINST THE BUSINESS INCOME. THE AO FURTHER OBSERVED THAT THIS IS NOT ALLOWED AS PER THE CLEAR PROVISION S OF SECTION 73 OF THE INCOME TAX ACT. ACCORDINGLY, THE AO DISALLOWED THE SETTING OFF OF SPECULATION LOSS OF ` 99,49,257/- AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. SIMILARLY, THE CLAIM OF THE ASSESSEE REGARDING SETTING OFF OF BROUGHT FORWARD SPECULATION LOSS WAS ALSO DISALLOWE D BY THE AO. ON APPEAL, THE CIT(A) HAS ALLOWED THE CLAIM OF THE ASS ESSEE BY FOLLOWING THE DECISION OF HONBLE JURISDICTION HIGH COURT IN CASE OF CIT VS TRIUMPH SECURITIES LTD. DATED 26.7.2010 IN ITA NO. 509/2007 WHICH WAS PASSED BY THE HONBLE HIGH COURT BY FOLLOWING THE EARLIER JUD GMENT IN THE CASE OF CIT VS LOKMAT NEWSPAPER PVT. LTD. 322 ITR 43. 4. BEFORE US THE LD. DR OF THE ASSESSEE HAS STRONGL Y RELIED UPON THE ORDER OF THE ASSESSING OFFICER. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE IS IN THE BUSINESS OF TRADING IN SHARES AND SECURITIES AND THE EXPLANATION TO SECTIO N 73 THE BUSINESS OF THE ASSESSEE IS DEEMED TO BE SPECULATION BUSINESS T HEREFORE, NO DISALLOWANCE CAN BE MADE OF THE LOSSES ARISING FROM SPECULATIVE TRANSACTIONS AGAINST THE PROFIT OF OTHER TRANSACTIO NS WHICH ARE ALSO PART OF ITA NO.1854/M/2012 JAY INVESTRADE PVT. LTD. 3 THE SPECULATION BUSINESS AS PER THE EXPLANATION TO SECTION 73. HE HAS RELIED UPON THE DECISION OF HONBLE JURISDICTION HI GH COURT IN CASE OF TRIUMPH SECURITIES LTD. (SUPRA) AS WELL AS IN CASE OF CIT VS LOKMAT NEWSPAPER PVT. LTD. 5. HAVING CONSIDERED THE RIVAL SUBMISSIONS AND CARE FUL PERUSAL OF THE RECORD WE NOTE THAT THERE IS NO DISPUTE THAT THE AS SESSEE IS IN THE BUSINESS OF TRADING OF SHARES AND SECURITIES THEREF ORE, THE BUSINESS OF THE ASSESSEE CONSISTS OF PURCHASE AND SALE OF SHARES AN D SECURITIES. AN IDENTICAL ISSUE HAS BEEN CONSIDERED AND DECIDED BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN CASE OF TRIUMPH SECURITIES LTD. (SUPRA) IN PARA 5 AS UNDER: 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. ACCORDING TO THE LEARNED CIT(A) THE PROVISIONS OF E XPLANATION TO SECTION 73 APPLY ONLY IF THE BUSINESS OF THE ASSESS EE CONSISTS OF TWO PARTS, ONE BEING TRADING IN SHARES, AND THAT EX PLANATION SHALL NOT APPLY WHERE THE ENTIRE BUSINESS IS TRADING IN S HARES ONLY. WE DO NOT SEE ANY WARRANT FOR SUCH CONCLUSION IN THE L ANGUAGE OF EXPLANATION. THE JUDGMENT OF HONBLE CALCUTTA HIGH COURT REPORTED IN 192 ITR 365 (CAL) IS AGAINST THE PROPOS ITION AS MADE OUT BY THE LEARNED CIT(A). WE FIND THAT THE ISSUE A RISING IN THIS APPEAL IS IDENTICAL TO THAT CONSIDERED BY INCOME TA X APPELLATE TRIBUNAL MUMBAI BENCH B MUMBAI IN THE CASE OF M/ S SAMBA TRADING VS ACIT 58 ITD 360(BOM.). RESPECTFULLY FOLL OWING THE TRIBUNAL DECISION, WE ALLOW THIS APPEAL FILED BY TH E ASSESSEE AND DIRECT THE ASSESSING OFFICER TO SET OFF THE LOSS IN CURRED BY THE ASSESSEE ON TRADING OF SHARES AGAINST THE PROFIT MA DE BY THE ASSESSEE ON TRADING OF SHARES. 6. THE SAID DECISION OF THE TRIBUNAL HAS BEEN UPHEL D BY THE HONBLE JURISDICTION HIGH COURT IN THE CASE OF CIT VS TRIUM PH SECURITIES LTD. DATED 26.7.2010 AS UNDER: ITA NO.1854/M/2012 JAY INVESTRADE PVT. LTD. 4 COUNSEL APPEARING ON BEHALF OF THE REVENUE STATES THAT THE ISSUES RAISED IN THE APPEAL WOULD STAND COVERED AGA INST THE REVENUE BY THE JUDGMENT OF THE DIVISION BENCH OF TH IS COURT DATED 16 FEBRUARY 2010 IN COMMISSIONER OF INCOME TA X VS LOKMAT NEWSPAPERS PVT. LTD. (ITXA(L) 3005 OF 2009). IN VIEW OF THE STATEMENT MADE ON BEHALF OF THE REVENUE THE QUE STIONS OF LAW SHALL STAND ANSWERED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE IN TERMS OF THE JUDGMENT OF THIS COURT IN LOKMAT NEWSPAPERS (SUPRA). THE APPEAL IS ACCORDINGLY DISPO SED OF. 7. IN VIEW OF THE DECISIONS OF THE HONBLE JURISDIC TION HIGH COURT ON THIS ISSUE WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE IMPUGNED ORDER OF THE CIT(A). ACCORDINGLY, THE SAME IS UPHELD. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 17 TH DAY OF OCTOBER 2013 SD/- SD/- ( . . ! ) ' #$ (N. K. BILLAIYA) ACCOUNTANT MEMBER ( ) % #$ (VIJAY PAL RAO) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 17 TH OCTOBER 2013 SUBODH COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI