SH. AMARJIT SINGH , HOSHIARPUR V. INCOME TAX OFFICER, HOSHIARPUR

ITA 215/ASR/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9902 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 14-11-2018
• Assessment Year: 2009-2010
• Appeal Filed On: 22-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income; Speculation loss; Speculative transactions
• Section: 28; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER I.T.A NO.215/(ASR)/2017 ASSESSMENT YEAR: 2009-10 AMARJIT SINGH S/O MANOHAR SINGH, NANGAL ROAD, TEHSIL GARSHHANKAR, DISTRICT-HOSHIARPUR. [PAN: ADTPS 7163G] VS. INCOME TAX OFFICER, HOSHIARPUR. (APPELLANT) (RESPONDENT) APPELLANT BY: WRITTEN SUBMISSIO NS RESPONDENT BY: SH. CHARAN DAS (D .R) DATE OF HEARING : 14.11.2018 DATE OF PRONOUNCEMENT: 07.12.2 018 ORDER PER SANJAY ARORA, A.M. THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-1, JALANDHAR ( CIT(A) FOR SHORT) DATED 27.03.2017, PARTLY ALLOWING THE ASSESSEES APPEAL C ONTESTING HIS ASSESSMENT U/S. 143(3) OF THE INCOME TAX ACT, 1961 ('THE ACT' HEREI NAFTER) FOR ASSESSMENT YEAR (A.Y.) 2009-10 VIDE ORDER DATED 14.12.2011. 2. THE PRINCIPAL ISSUE ARISING IN THE INSTANT APPEA L IS THE EXTENT OF THE SPECULATION LOSS, IF ANY, SUSTAINED BY THE ASSESSEE , AND WHICH IS THEREFORE NOT LIABLE TO BE SET OFF AGAINST THE NORMAL BUSINESS PROFIT, I .E., IN VIEW OF SECTION 73 OF THE ACT, BUT IS TO BE COMPUTED SEPARATELY AND IS LIABLE TO BE SET OFF AGAINST PROFITS AND GAINS OF ANOTHER SPECULATIVE BUSINESS. THE ASSESSEE -INDIVIDUAL, ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF CATTLE FEED, AL SO UNDERTAKES TRANSACTIONS IN ITA NO.215/(ASR)/2017 (A.Y.2009-10) AMARJIT SINGH V. ITO 2 PURCHASE AND SALE OF SHARES ON THE STOCK EXCHANGE, BOTH WITH AND WITHOUT DELIVERY, ON A REGULAR BASIS, ON WHICH HE HAS RECOR DED A LOSS OF RS.11,82,841/- ON A TOTAL SALE OF RS.1048.52 LACS. THE SHARE TRANSACTIO NS BEING CARRIED IN A REGULAR, SYSTEMATIC MANNER, THE REVENUE HAS REGARDED THE SAI D LOSS AS A SPECULATIVE LOSS. THE DELIVERY ASSUMES SIGNIFICANCE IN VIEW OF IT FOR MING THE FULCRUM OR THE DEFINING ATTRIBUTE OF A NON-SPECULATIVE TRANSACTION; THE ACT , PER SECTION 43(5), DEFINING THE SPECULATIVE TRANSACTION, THE RELEVANT PART OF WHICH READS AS UNDER: 43. IN SECTIONS 28 TO 41 AND IN THIS SECTION, UNLESS CO NTEXT OTHERWISE REQUIRES- (5) SPECULATIVE TRANSACTION MEANS A TRANSACTION I N WHICH A CONTRACT FOR THE PURCHASE AND SALE OF ANY COMMODITY INCLUDING STOCKS AND SHARES, IS PERIODICALLY OR ULTIMATELY SETTLED OTHERWISE THAN BY THE ACTUAL DEL IVERY OR TRANSFER OR THE COMMODITY OR SCRIPS: THE REVENUE AUTHORITIES HAVE, ON AN EXAMINATION OF THE ASSESSEES TRADE TRANSACTIONS IN SHARES, FOUND THEM TO BE CARRIED ON IN A SYSTEMATIC MANNER, CONSTITUTING A BUSINESS. EXPLANATION 2 TO SECTION 28 IS ALSO RELEVANT IN THIS REGARD, AND READS AS UNDER: PROFITS AND GAINS OF BUSINESS OR PROFESSION. 28. THE FOLLOWING INCOME SHALL BE CHARGEABLE TO INCOME TAX UNDER THE HEAD PROFIT AND GAINS OF BUSINESS OR PROFESSION, - (I) THRO (VII) EXPLANATION 2 WHERE SPECULATIVE TRANSACTIONS CARRIED ON BY AN ASSESSEE ARE OF SUCH A NATURE AS TO CONSTITUTE A BUSINESS, THE BUSINESS (HEREINAFTER REFERRED TO AS SPECULATION BUSINESS) SHALL BE DEEMED TO BE DISTI NCT AND SEPARATE FROM ANY OTHER BUSINESS. 3. WE HAVE HEARD THE PARTY BEFORE US, AND PERUSED T HE MATERIAL ON RECORD, INCLUDING THE ASSESSEES WRITTEN SUBMISSIONS. THE AFORE-NOTED FINDINGS BY THE REVENUE ARE UN-REBU TTED AND NEITHER IS THERE ANY DISPUTE WITH REGARD TO THE OBTAINING LEGAL POSI TION. UNDER THE CIRCUMSTANCES, WE ARE UNABLE TO SEE AS TO HOW THE LOSS OF THE ASSE SSEES SPECULATIVE BUSINESS, I.E., COMPRISING TRANSACTIONS, SPECULATIVE IN NATURE, IS NOT TO BE SEGREGATED FROM NON- ITA NO.215/(ASR)/2017 (A.Y.2009-10) AMARJIT SINGH V. ITO 3 SPECULATIVE TRANSACTIONS, AND THE INCOME OR, AS THE CASE MAY BE, LOSS THEREOF, COMPUTED SEPARATELY. THIS IS FOR THE REASON THAT, A S AFORE-NOTED, WHERE THE SAME RESULT IN A LOSS, IT CANNOT BE SET OFF AGAINST NORM AL BUSINESS INCOME, BUT ONLY AGAINST PROFITS AND GAINS OF ANOTHER SPECULATIVE BU SINESS. THE ONLY INFIRMITY WE OBSERVE IN THE FINDING BY THE REVENUE IS THAT IT HA S CONSIDERED SPECULATIVE BUSINESS AS INCLUSIVE OF EVEN DELIVERY BASED BUSINESS, I.E., NON-SPECULATIVE TRANSACTIONS, BY DEFINITION. WE, ACCORDINGLY, DIRECT FOR COMPUTING T HE INCOME OR, AS THE CASE MAY BE, LOSS OF THE INTRA-DAY TRANSACTIONS AS WELL AS I NTER-DAY TRANSACTIONS, I.E., TO THE EXTENT THEY DO NOT INVOLVE OR STAND TO BE SETTLED T HROUGH DELIVERY OF THE RELEVANT SCRIPS, SEPARATELY, FOR BEING ALLOWED SET OFF OR OT HERWISE CARRIED FORWARD IN TERMS OF THE RELEVANT PROVISIONS, I.E., SECTIONS 73 AND 7 3A OF THE ACT. THE ASSESSEE SHALL PROVIDE THE NECESSARY DETAILS TO THE ASSESSING OFFI CER (AO), I.E., IF AND TO THE EXTENT NOT ALREADY AVAILABLE ON RECORD, EXTENDING F ULL COOPERATION IN THE MATTER. THE AO SHALL DECIDE ACCORDINGLY, ISSUING SPECIFIC F INDINGS UPON VERIFICATION. WE DECIDE ACCORDINGLY. 4. THE ONLY OTHER ISSUE IN APPEAL IS THE MAINTAINAB ILITY OF THE ADDITION ON ACCOUNT OF LOW HOUSE-HOLD WITHDRAWALS, EFFECTED AT RS. 80,000/-. THE ASSESEE HAS DISCLOSED A TOTAL WITHDRAWAL OF RS. 1.0 LAC FOR THE YEAR, INCLUSIVE OF HIS CONTRIBUTION OF RS. 0.41 LACS, FOR A FAMILY OF FIVE, INCLUDING T WO COLLEGE GOING CHILDREN. THE AO, IN THE ABSENCE OF DETAILS, ESTIMATED THE SAME A T RS. 1.80 LACS, I.E., @ RS. 15,000/- P.M., AND MADE AN ADDITION FOR THE BALANCE , WHICH STANDS CONFIRMED IN FIRST APPEAL AS REASONABLE UNDER THE CIRCUMSTANCES. NO IMPROVEMENT IN HIS CASE STANDS MADE AT ANY STAGE. NO DETAILS OF THE EXPENDI TURE, VIZ. ON EDUCATION, ELECTRICITY, TELEPHONE, CONVEYANCE, ETC. WHICH ARE REGULAR EXPENSES, NOT TO SPEAK OF MEDICAL EXPENSES, STAND FURNISHED, DESPITE BEING CA LLED FOR. THE ESTIMATE IS, WE MAY ADD, IN CONSONANCE WITH THE LIVING EXPENDITURE FOR SMALL TOWNS, WITH THAT FOR BIG TOWNS BEING A FEW TIMES OVER. WHY, THE EXPENDIT URE ON EDUCATION ITSELF COULD ITA NO.215/(ASR)/2017 (A.Y.2009-10) AMARJIT SINGH V. ITO 4 BE IN THE RANGE OF THE TOTAL HOUSE-HOLD EXPENSE EST IMATED. WE FIND NO EXCESS BY THE REVENUE. WE DECIDE ACCORDINGLY. 5. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON DECEMBER 07, 2018 SD/- SD/- (N. K. CHOUDHRY) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 07.12.2018 PKK COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: AMARJIT SINGH S/O MANOHAR SINGH, NANGAL ROAD, TEHSIL GARSHHANKAR, DISTRICT-HOSHIARPUR. (2) THE RESPONDENT: INCOME TAX OFFICER, HOSHIAR PUR. (3) THE CIT(A)-1, JALANDHAR (4) THE CIT CONCERNED (5) THE SR.D.R., I.T.A.T. TRUE COPY BY ORDER