HB Stockholdings Ltd., New Delhi V. CIT Delhi-IV, New Delhi

ITA 2114/DEL/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1312 (ITAT-DELHI)
• Duration Of Justice: 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 29-10-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 04-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R J GILL
• Assessee Lawyers: AMIT GOEL
• Keywords: Capital asset; Business income; Opportunity of being heard; Rule of consistency; Transactions in derivatives; Speculation loss; Speculative transactions
• Section: 143(3); 142(1); 43(5); 263; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C: NEW DELHI BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTAN T MEMBER ITA NO. 2114/DEL/2012 ASSESSMENT YEAR 2007-08 HB STOCKHOLDINGS LTD. VS. COMMISSIONER OF I NCOME TAX H-72, CONNAUGHT CIRCUS, DELHI-IV NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AMIT GOEL, CA RESPONDENT BY : SHRI R.J. GILL, CIT. DR DATE OF HEARING : 29/10/2012 DATE OF PRONOUNCEMENT : ORDER PER I.C. SUDHIR, JUDICIAL MEMBER THE ASSESSEE HAS QUESTIONED THE REVISION AL ORDER U/S 263 OF THE ACT ON THE FOLLOWING GROUNDS :- 1. ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN L AW, THE LD. COMMISSIONER OF INCOME TAX -IV, NEW DELHI (HEREINAF TER REFERRED TO AS THE LEARNED CIT) ERRED IN INITIATING PROCEEDI NGS UNDER SECTION 263 OF COME TAX ACT, 1961 (ACT) BY WRONGLY ASSUMING JURISDICTION UNDER SECTION 263 OF THE ACT AND HENCE, THE ORDER P ASSED BY THE CIT UNDER SECTION 263 OF ACT IS WITHOUT JURISDICTIO N, BAD IN LAW AND VOID AB-INITIO. 2. ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN L AW, THE LD. CIT ERRED IN SETTING ASIDE THE ASSESSMENT AND HAS ALSO ERRED IN HOLDING THAT THE ORIGINAL ASSESSMENT ORDER PASSED BY THE AS SESSING IF OFFICER UNDER SECTION 143(3) OF ACT WAS ERRONEOUS A ND PREJUDICIAL TO THE INTEREST OF THE REVENUE. ITA NO. 2114/DEL/12 2 . 3. ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LAW, THE DIRECTIONS ISSUED BY THE LD. CIT UNDER SECTION 263 OF ACT ARE ERRONEOUS, VAGUE, AMBIGUOUS AND UNTENABLE AND, THEREFORE THE O RDER UTS 263 OF THE ACT PASSED BY THE LD. CIT IS LIABLE TO BE QU ASHED. 4. ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LAW, THE ORDER PASSED UNDER SECTION 263 OF THE ACT BY THE LD. CIT IS BAD IN LAW AS THE SAME HAS BEEN PASSED WITHOUT APPLICATION OF MIND AN D DESERVES TO BE QUASHED. 5. ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LAW, THE LD. CIT ERRED IN INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT, AND THEREBY DIRECTING THE ASSESSING OFFICER TO CONSIDER THE ISSUE OF LONG TERM CAPITAL GAIN RETURNED BY THE APPELLANT. 6. ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LAW, THE LD. CIT ERRED IN INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT, AND THEREBY DIRECTING THE ASSESSING OFFICER TO CONSIDE R THE ISSUE OF LOSS IN DERIVATIVE TRADING . 2. THE RELEVANT FACTS ARE THAT THE ASSESSEE H AS BEEN DEALING IN SHARES AND SECURITIES. IT MAINTAINS DUAL PORTFOLIOS , ONE IN T RADING AND ANOTHER FOR CAPITAL INVESTMENT. DURING THE YEAR THE ASSESSEE CLAIMED BU SINESS PROFIT OF RS. 2,72,70,650/- FROM THE DEALING IN SHARES. IT CLAIME D SHORT TERM CAPITAL GAIN OF RS. 45,51,449/- AND LONG TERM CAPITAL GAINS OF RS. 13,55,68,839/- TOTALING TO RS. 14,01,20,388/- ON THE SALES OF SHARES AND SECURITIE S HELD AS INVESTMENTS. IN ITS RETURN OF INCOME IT DECLARED AN INCOME OF RS. 17,04 ,020/- AS SHORT TERM CAPITAL GAIN AFTER SETTING OFF THE CURRENT YEARS BUSINESS LOSS OF RS. 28,47,433/- FROM THE TOTAL SHORT TERM CAPITAL GAIN OF RS. 45,51,449/-. I T ALSO DECLARED IN ITS RETURN THE LONG TERM CAPITAL GAIN OF RS. 13,55,68,839/- AND DI VIDEND INCOME OF RS. 1,32,74,683/-. THE ASSESSMENT U/S 143(3) WAS FRAMED DETERMINING THE TAXABLE INCOME OF RS. 1,72,34,811/-. THE AO TREATED THE ENT IRE SHORT TERM CAPITAL GAIN AS ITA NO. 2114/DEL/12 3 BUSINESS INCOME AND ACCEPTED THE LONG TERM CAPITAL GAIN AS SUCH. THE ASSESSEE PREFERRED APPEAL AGAINST THE ASSESSMENT OF THE SHOR T TERM CAPITAL GAIN AS BUSINESS INCOME. THE LD. CIT INVOKED THE PROVISIONS U/S 263 OF THE ACT AND BEING NOT SATISFIED WITH THE CAUSE SHOWN BY THE ASS ESSEE, HE HAS HELD THAT THE ASSESSMENT FRAMED IS ERRONEOUS AND PREJUDICIAL TO T HE INTEREST OF REVENUE ON THE ISSUES. ON THE ISSUE OF CLAIMED LONG TERM CAPITAL G AIN, LD. CIT HELD THAT THE AO HAS ACCEPTED THE SAME WITHOUT SUFFICIENT INQUIRIES TO ASCERTAIN AS TO WHETHER THE STOCK OF SHARES DECLARED AS INVESTMENT IN LONG TERM CAPITAL ASSET HAS BEEN CORRECTLY SHOWN AND THE SAME DO NOT CONSTITUTE STOC K IN TRADE IN THE REGULAR BUSINESS ACTIVITIES OF PURCHASE AND SALE OF SHARES CARRIED OUT BY THE ASSESSEE COMPANY. AGAIN ON THE ISSUE OF TRANSACTIONS IN SECU RITIES DEALING BY WAY OF DERIVATIVES TRADING CONSTITUTED SPECULATIVE TRANSAC TIONS WITHIN THE MEANING OF SECTION 43(5) OF THE ACT AND AS TO WHETHER SUCH TRA NSACTIONS ARE ENTITLED TO NECESSARY EXEMPTIONS AS PER CLAUSE D OF PROVISO TO SUB SECTION 5 OF SECTION 43 OF THE ACT, THE LD. CIT HELD THAT THE AO HAS NOT MADE ANY INQUIRIES. THE LD. CIT HAS ACCORDINGLY SET ASIDE THE ASSESSMENT ORDER ON T HE AFORESAID ISSUES WITH THE DIRECTION TO REFRAME THE ASSESSMENT ORDER BY CAUSIN G NECESSARY QUERIES AFTER PROVIDING DUE OPPORTUNITY OF BEING HEARD TO THE ASS ESSEE COMPANY. THIS ACTION OF THE LD. CIT(A) HAS BEEN QUESTIONED BY THE ASSESS EE ON THE ABOVE GROUNDS. 3. IN SUPPORT OF THE GROUNDS THE LD. AR SUBM ITTED THAT BEFORE ACCEPTING THE CLAIMED LONG TERM CAPITAL GAIN AND LOSS THE AO HAD MADE THROUGH INQUIRIES ON THESE ISSUES. IN THE NOTICE ISSUED U/S 142(1) DATED 21.4.2009 THE AO RAISED ITA NO. 2114/DEL/12 4 QUERIES REGARDING DETAILS OF INCOME / LOSS DECLARED ON ACCOUNT OF PURCHASE / SALE OF SHARES ALONGWITH A NOTE ON THE NATURE OF SUCH IN COME AND AS TO UNDER WHICH HEAD OF INCOME SUCH INCOME / LOSS HAS BEEN DECLARED . THIS QUERY WAS RAISED VIDE QUESTION NO. 25 OF THE NOTICE. VIDE QUERY NO. 28 D ETAIL OF INCOME CLAIMED TO BE EXEMPT UNDER THE ACT IN THE GIVEN FORMAT WAS SOUGHT FOR. VIDE LETTER DATED 25.9.2009 THERETO THE ASSESSEE HAD FURNISHED ALL TH E REQUISITE DETAILS TO THE AO AGAINST THE ABOVE QUERIES. AGAIN VIDE LETTER DATED 28.10.2009 THE ASSESSEE CLASSIFIED HOLDING OF TWO TYPES OF INVESTMENT NAMEL Y CURRENT INVESTMENT AND LONG TERM INVESTMENT. THE ASSESSEE ALSO SUBMITTED THE DE TAILS THEREOF. THE LD. AR SUBMITTED FURTHER THAT COMPLETE DETAILS OF THE LOSS OF RS. 1,87,33,352/- IN DERIVATIVE TRADING WERE ALSO FURNISHED BY THE ASSES SEE TO THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS VIDE LETTER DATED 25.9.2009. THUS IT IS WRONG TO ALLEGE BY THE LD. CIT THAT SUFFICIENT INQUIRIES OR ANY INQUIRY WAS NOT MADE BY THE AO BEFORE ACCEPTING THE CLAIMED LONG TERM CAPIT AL GAIN AND THE LOSS IN DERIVATIVE TRADING. HE SUBMITTED FURTHER THAT MAINL Y BECAUSE THE LD. CIT WAS HAVING ANOTHER VIEW CONTRARY TO THE VIEW TAKEN BY T HE AO, PROVISIONS U/S 263 OF THE ACT CANNOT BE INVOKED. HE POINTED OUT THAT LONG TERM CAPITAL GAIN OF RS. 13,55,68,839/- CLAIMED IS ON SHARES HELD AS INVESTM ENTS FROM THE ASSESSMENT YEARS 2004-05 TO 2006-07. THE ASSESSEE HAD DECLARED THE TRANSACTIONS AS INVESTMENTS IN THOSE ASSESSMENT YEARS AND IT WAS AC CEPTED AS SUCH BY THE AO IN THOSE ASSESSMENT YEARS. THE GAIN OR LOSS ON SOME OF SHARES SOLD IN THE ASSESSMENT YEAR 2006-07 OUT OF THE PURCHASES IN ASS ESSMENT YEARS 2004-05 AND ITA NO. 2114/DEL/12 5 2005-06 HELD AS LONG TERM INVESTMENTS AND LONG TERM CAPITAL GAIN DECLARED THEREON HAS BEEN ACCEPTED. HE SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE DERIVED INCOME IN THE FO RM OF DIVIDEND AND LONG TERM CAPITAL GAIN AND SHORT TERM CAPITAL GAIN ON SALE OF INVESTMENTS. BESIDES THE CAPITAL GAIN (LONG TERM AND SHORT TERM), THE ASSESS EE COMPANY HAD ALSO DECLARED BUSINESS INCOME FROM SALE OF SHARES (CURRENT INVES TMENT) AND THIS MATERIAL FACT APPEARS TO HAVE ESCAPED ATTENTION OF LD. CIT RESULT ING INTO WRONG INFERENCE IN THE SHOW CAUSE NOTICE. THE ASSESSEE COMPANY IS HAVI NG A DUAL PORTFOLIO ( ONE OF CAPITAL ASSET AND ANOTHER OF TRADING / REVENUE A SSET) . THIS MATERIAL FACT ALSO APPEARS TO HAVE ESCAPED THE ATTENTION OF LD. CIT. T HE LD. AR ALSO DREW OUR ATTENTION ON THE BRIEF SYNOPSIS OF HISTORY OF THE C ASE, SINCE THE ASSESSMENT YEAR 1995-96 AND OTHERS AND THE APPROACH OF THE DEPARTME NT ON SIMILAR TRANSACTIONS OF THE ASSESSEE. 4. LD. AR SUBMITTED FURTHER THAT THE LOSS IN DERIVATIVE TRADING IS NOT A SPECULATIVE LOSS IN VIEW OF EXPRESS PROVISIONS OF C LAUSE (D) OF PROVISO TO SUB- SECTION (5) OF SECTION 43. HE ALSO DREW OUR ATTEN TION TO THE NOTIFICATION NO. 2/ 2006 SO 89(E) DATED 25.1.2006 OF THE CENTRAL GOVERNM ENT WHEREBY NATIONAL STOCK EXCHANGE OF INDIA LIMITED, MUMBAI AND BOMBAY S TOCK EXCHANGE LIMITED, MUMBAI HAVE BEEN NOTIFIED AS RECOGNIZED STOCK EXCHA NGE. HE POINTED OUT FURTHER THAT IN THE EXPLANATORY MEMORANDUM IN RESPECT OF TH E ABOVE NOTIFICATION IT HAS BEEN MADE CLEAR THAT AN ELIGIBLE TRANSACTION IN RES PECT OF TRADING IN DERIVATIVE CARRIED OUT OF THESE TWO STOCK EXCHANGES W.E.F 25 TH JANUARY, 2006 SHALL NOT BE ITA NO. 2114/DEL/12 6 DEEMED TO BE SPECULATIVE TRANSACTIONS. THE EXPRESSI ON ELIGIBLE TRANSACTION HAS BEEN DEFINED IN THE EXPLANATION APPEARING AFTER THE PROVISO TO SECTION 43(5) OF THE I.T. ACT 1961. THE LD. AR SUBMITTED THAT ALL TH E DERIVATIVES TRANSACTIONS ENTERED INTO WERE ELIGIBLE TRANSACTION AND WERE CAR RIED THROUGH RECOGNIZED NATIONAL STOCK EXCHANGE OF INDIA LTD. MUMBAI AND AS SUCH THE LOSS IN THESE TRANSACTIONS WAS BUSINESS LOSS AND NOT SPECULATIVE LOSS. THE LD. AR REFERRED PAGE NO. 1 TO 173 OF THE PAPER BOOK I.E. COPIES OF ASSESSMENT ORDER FRAMED U/S 143(3) FOR THE YEAR, SHOW CAUSE NOTICE ISSUED U/S 2 63 OF THE ACT, REPLY OF THE ASSESSEE SUBMITTED THERETO, NOTICE ISSUED U/S 142(1 ) BY THE AO RAISING THE QUERIES AND REPLY THERETO SUBMITTED BY THE ASSESSEE TO THE AO. THE LD. AR SUBMITTED FURTHER THAT DURING THE ASSESSMENT YEAR U NDER CONSIDERATION THE AO HAS ACCEPTED THE CLAIM OF LONG TERM CAPITAL GAIN IN THE ORDER U/S 143(3). LD. CIT(A) AS PER THE PAST HISTORY OF THE CASE HAS ALSO ACCEPTED THE ASSESSEES CLAIM OF SHORT TERM CAPITAL GAIN. IN THE APPEAL FILED BY THE REVENUE BEFORE THE TRIBUNAL THE REVENUE HAS NOT RAISED ANY GROUND ON THE ISSUE OF CAPITAL GAIN. THE LD. AR PLACED RELIANCE ON THE FOLLOWING DECISIONS :- 1. CIT VS M/S. ESCORTS LTD. (DELH I HIGH COURT ORDER DATED 1.2.2011, ITA NO. 14 / 1999) 2. CIT VS. GULMOHAR FINANCE LTD. (2008) 170 TAXMAN 483 (DELHI) 3. MALABAR INDUSTRIES CO. (243 I TR 83) 4. CIT VS. MAX INDIA LTD. (2007) 295 ITR 282 (SC) 5. CIT VS. ANIL KUMAR SHARMA (2 010) 194 TAXMAN 504 (DELHI) ITA NO. 2114/DEL/12 7 6. CIT VS. SUNBEAM AUTO LTD. (2 010) 189 TAXMAN 436 (DEL) 7. ITO VS. D.G. HOUSING PROJECT S LTD. (DELHI) HIGH COURT ORDER DATED 1.3.2012 ITA NO. 179/2 011 8. CIT VS. HERO AUTO LTD. (DELH I HIGH COURT ORDER DATED 12.3.2012, ITA NO. 146/2012) 9. CIT VS. GABRIEL INDIA LTD. ( 1993) 71 TAXMAN 585 (BOM) 5. THE LD. DR ON THE OTHER HAND TRIED TO JUSTIFY THE REVISIONARY ORDER IN QUESTION. HE SUBMITTED THAT FREQUENCY OF THE TRANSA CTIONS HAS NOT BEEN EXAMINED BY THE AO. HE HAS SIMPLY ACCEPTED THE CLAI MED GAIN AND LOSS. 6. IN THE REJOINDER THE LD. AR SUBMITTED THAT ALL THE DETAILS OF THE TRANSACTION AS REQUIRED FROM TIME TO TIME BY THE AO WERE FURNIS HED BY THE ASSESSEE BEFORE THE AO AS IT IS EVIDENT FROM PAGE NO. 169 TO 173 OF THE PAPER BOOK. 7. CONSIDERING THE ABOVE SUBMISSIONS AND HAVIN G GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW, MATERIAL AVAILABLE ON RECORD AND THE DECISIONS RELIED UPON, WE FIND THAT IN THE ABOVE ASSESSMENT YEARS LIKE ASS ESSMENT YEARS 1995-96, 1996-97, 2001-02, 2002-03, 2003-04, 2005-06 AND 200 6-07, THE CLAIMED INVESTMENT AND CAPITAL GAIN CLAIMED THEREON HAVE BE EN ACCEPTED BY THE AO OR AT THE APPELLATE STAGE. EVEN IN THE FUTURE ASSESSMENT YEARS 2008-09 AND 2009-10, THE AO HAS ACCEPTED THE CLAIM OF LONG TERM CAPITAL GAIN AS WELL AS SHORT TERM CAPITAL GAIN IN ASSESSMENT ORDERS FRAMED U/S 143(3) OF THE ACT. IN THE ASSESSMENT YEAR 1995-96 THE CAPITAL GAIN WAS ASSESS ED AS BUSINESS PROFIT BY THE AO. THE LD. CIT(A) UPHELD THE ASSESSEES CLAIM OF C APITAL GAIN. THE TRIBUNAL DISMISSED THE REVENUES APPEAL. THE HONBLE HIGH C OURT UPHELD THE ORDER OF THE ITA NO. 2114/DEL/12 8 TRIBUNAL AND DISMISSED THE REVENUES APPEAL. IN THE ASSESSMENT YEARS 1996-97, 2001-02, 2002-03, AO HIMSELF HAS ACCEPTED THE CLAIM ED CAPITAL GAIN / LOSS IN THE ASSESSMENT FRAMED U/S 147(3) OF THE ACT. IN ASSESS MENT YEAR 2003-04 THE AO TREATED THE CAPITAL LOSS AS SPECULATIVE BUSINE SS LOSS BY APPLYING PROVISIONS OF EXPLANATION TO SECTION 73. THE TRIBUNAL GAVE A CATEG ORICAL FINDING THAT ASSESSEE IS DOING BOTH THE BUSINESS AS WELL AS INVESTMENT AC TIVITIES IN SHARES. THE TRIBUNAL FURTHER UPHELD THE CLAIM OF CAPITAL LOSS AND HELD T HAT THE PROVISIONS OF EXPLANATION TO SECTION 73 CANNOT BE APPLIED TO CAPIT AL LOSS. IN THE ASSESSMENT YEAR 2005-06 THE AO TREATED THE SHORT TERM CAPITAL GAIN AS BUSINESS PROFIT. THE LD. CIT(A) ALLOWED THE ASSESSEES APPEAL UPHELD THE SHORT TERM CAPITAL GAIN. THE TRIBUNAL ALSO UPHELD THE CLAIM OF SHORT TERM CAPITA L GAIN AND DISMISSED THE REVENUES APPEAL. IN THE ASSESSMENT YEAR 2006-07 LO NG TERM CAPITAL GAIN HAS BEEN ACCEPTED BY THE AO. ONLY SHORT TERM CAPITAL GA IN WAS DISPUTED BY THE AO. THE LD. CIT(A) ALLOWED ASSESSEES APPEAL. AND THE R EVENUE WENT IN APPEAL BEFORE THE TRIBUNAL WHICH HAS BEEN DISMISSED. IN TH E ASSESSMENT YEAR UNDER CONSIDERATION THE MATERIAL FACT ALSO REMAINED THAT THE AO ACCEPTED THE CLAIMED LONG TERM CAPITAL GAIN IN THE ORDER FRAMED U/S 143( 3). THE LD. CIT(A) KEEPING IN VIEW THE PAST HISTORY OF THE CASE HAS ALSO ACCEPTED THE ASSESEES CLAIM OF SHORT TERM CAPITAL GAIN. THE REVENUE IN ITS APPEAL BEFORE THE TRIBUNAL HAS NOT RAISED ANY GROUND ON THE ISSUE OF CAPITAL GAIN. THE HONBL E DELHI HIGH COURT IN THE CASE OF CIT VS. M/S. ESCORTS LTD. (SUPRA) HAS BEEN PLEASE D TO HOLD THAT WHERE THE NATURE OF TRANSACTIONS HAVE BEEN ACCEPTED IN THE PA ST, THE CIT COULD HAVE HAD ITA NO. 2114/DEL/12 9 NO OCCASION TO TAKE RECOURSE TO REVISIONARY POWERS U/S 263 OF THE ACT ON THE FUNDAMENTAL ASPECT OF THE TRANSACTIONS IN ISSUE ON WHICH A VIEW HAS BEEN TAKEN IN EARLIER YEARS. AS PER THE PAST HISTORY OF THE CA SE AND IN ACCORDANCE WITH THE PRINCIPLE OF CONSISTENCY, WE ARE OF THE VIEW THAT T HE ONLY VIEW WHICH THE AO COULD HAVE TAKEN WAS TO ACCEPT THE LONG TERM CAPITA L GAIN AS SUCH. HAVING GONE THROUGH THE QUERIES RAISED BY THE AO IN THE NOTICE U/S 142 (1) OF THE ACT ISSUED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND REP LY THERETO SUBMITTED BY THE ASSESSEE BEFORE HIM, COPIES THEREOF HAVE BEEN MADE AVAILABLE AT PAGE NOS. 146 TO 147 OF THE PAPER BOOK, WE FIND THAT NECESSARY QU ERIES WERE RAISED BY THE AO ON THE ISSUES WHICH REMAINED THE SUBJECT MATTER OF THE REVISIONARY ORDER. THE LD. CIT WAS THUS NOT RIGHT IN HIS FINDING THAT SUFF ICIENT ENQUIRES OR ANY INQUIRY WAS NOT RAISED BY THE AO ON THE ISSUES BEFORE ACCEP TING THE CLAIMED LONG TERM CAPITAL GAIN AND LOSS IN DERIVATIVE TRADING. WE ALS O FIND SUBSTANCE IN THE SUBMISSION OF THE LD. AR THAT THE LOSS IN DERIVATIV E TRADING IS NOT A SPECULATIVE LOSS IN VIEW OF EXPRESS PROVISIONS OF CLAUSE (D) OF PROVISO TO SUB-SECTION (5) OF SECTION 43 OF THE ACT AND ALSO AS PER THE NOTIFICAT ION DATED 25.1.2006 (SUPRA) AND EXPLANATORY MEMORANDUM IN RESPECT OF THE SAID N OTIFICATION (SUPRA) ISSUED BY THE CENTRAL GOVT. THE AO HAD ALSO RAISED QUERY O N THIS ISSUE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND BEING SATISFIE D WITH THE REPLY OF THE ASSESSEE THERETO, HE HAS ACCEPTED THE CLAIMED LOSS IN DERIVATIVES TRADING. THE HONBLE DELHI HIGH COURT IN ITS RECENT DECISION IN THE CASE OF CIT VS. HERO AUTO LTD. (SUPRA) HAS BEEN PLEASED TO HOLD THAT WHERE TH E AO HAS RAISED QUERIES AND ITA NO. 2114/DEL/12 10 IN RESPONSE TO THAT EXPLANATION IS FILED BY THE ASS ESSEE AND BASED UPON THAT IF A CLAIM WAS ALLOWED BY THE ITO SUCH DECISION OF ITO C ANNOT BE HELD TO BE ERRONEOUS. THE HONBLE BOMBAY HIGH COURT IN THE CAS E OF CIT VS. GABRIEL INDIA LTD. (SUPRA) HAS BEEN PLEASED TO HOLD THAT U/S 263 SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE ITO IS NOT PERM ISSIBLE. IT HAS FURTHER BEEN HELD THAT ITOS ORDER CANNOT BE TERMED AS ERRONEOUS SIMPLY BECAUSE COMMISSIONER DOES NOT AGREE WITH HIS CONCLUSION OR BECAUSE IN THE ASSESSMENT ORDER, THE AO DID NOT MAKE AN ELABORATE DISCUSSION. UNDER THESE CIRCUMSTANCES AND RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY T HE DECISIONS OF THE HONBLE COURTS RELIED UPON BY THE LD. AR WE HOLD THAT THE A SSESSMENT ORDER IN QUESTION WAS NOT ERRONEOUS AS THE AO HAS ACCEPTED THE CLAIME D LONG TERM CAPITAL GAIN AND LOSS IN DERIVATIVE TRADING AFTER CONDUCTING INQ UIRY THERETO AND THUS THE ASSESSMENT ORDER CANNOT BE HELD ERRONEOUS AND THUS ALSO PREJUDICIAL TO THE INTEREST OF REVENUE. WE THUS WHILE SETTING ASIDE TH E REVISIONARY ORDER IN QUESTION RESTORE THE ASSESSMENT ORDER ON THE ISSUES RAISED I N THE REVISIONARY ORDER. GROUNDS ARE ACCORDINGLY ALLOWED. 7. CONSEQUENTLY APPEAL IS ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 04.01.2013. SD/- SD/- (B.C. MEENA) ( I .C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 04.01.2013 VEENA ITA NO. 2114/DEL/12 11 COPY OF ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER DEPUTY REGISTRAR, ITAT