FLOROSCENT SECURITIES LTD, MUMBAI V. ITO 10(3)(1), MUMBAI

ITA 2268/MUM/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79031 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 05-09-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 22-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PITAMBAR DAS
• Assessee Lawyers: KIRAN S MEHTA
• Keywords: Depreciation; Speculation loss; Unabsorbed depreciation
• Section: 43(5); 32; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUM BAI , BEFORE SHRI D. MANMOHAN, VP AND SHRI SANJAY ARORA, AM I.T.A. NO. 2268/MUM/2010 ( / ASSESSMENT YEAR: 2006-07) FLOROSCENT SECURITIES LTD. SHOP NOS. 3 & 4, SAI SMRUTI, SHANKAR GOPAL JOSHI MARG, OFF L.B.S. MARG, MULUND (W), MUMBAI-400 080 VS. I.T.O.-10(3)(1), AAYKAR BHAVAN, MUMBAI ! ' ./PAN/GIR NO. AAACF 4429 M ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) !#&' / APPELLANT BY : SHRI KIRAN S. MEHTA $%!#&' / RESPONDENT BY : SHRI PITAMBAR DAS ( )*&+, / DATE OF HEARING : 10.04.2014 -./&+, / DATE OF PRONOUNCEMENT : 20.06.2014 0 O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-22, MUMBAI (CIT(A) FOR SH ORT) DATED 01.01.2010, DISMISSING THE ASSESSEES APPEAL CONTESTING ITS ASSESSMENT U/S .143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (A. Y.) 2006-07 VIDE ORDER DATED 26.12.2008. 2 ITA NO. 2268/MUM/2010 (A.Y. 2006-07) FLOROSCENT SECURITIES LTD. VS. ITO 2. THE SOLE ISSUE ARISING IN THE INSTANT CASE; THE ASSESSEE NOT PRESSING ITS GROUND NO. 2 RAISED BEFORE US, IS THE MAINTAINABILITY IN LAW OF THE NON-SET OFF OF THE BROUGHT FORWARD BUSINESS LOSS AGAINST THE SPECULATION INCOME ARISIN G TO THE ASSESSEE FOR THE CURRENT YEAR. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE S OUGHT TO ADJUST THE ENTIRE SPECULATION INCOME FOR THE CURRENT YEAR (RS.55,45,826/-), AGAIN ST THE BROUGHT FORWARD SPECULATION LOSS OF RS.25,28,285/- (BEING FOR A.YS. 2000-01, 2001-02 AND 2004-05), AND THE BALANCE RS.30,17,541/- AGAINST THE BROUGHT FORWARD BUSINESS LOSS (RELATING TO A.YS. 2003-04 AND 2003-04), I.E., AS PER THE ASSESSEES COMPUTATIONS OF INCOME, AT A TOTAL OF RS. 39,35,032/-, AS UNDER: DETAILS OF BROUGHT FORWARD BUSINESS LOSS: (AMT. IN RS.) A.Y. TOTAL/SET OFF A.Y. 2005-06 BALANCE 2002-03 21,33,477 (*) 1,13,335 20,20,142 2003-04 19,14,890 (**) - 19,14,890 TOTAL 40,48,367 1,13,335 39,35,032 (*) INCLUDING UNABSORBED DEPRECIATION AT RS.1,13,82 1/-. (**) INCLUDING UNABSORBED DEPRECIATION AT RS.56,585 /-. THE SAME WAS FOUND UNACCEPTABLE BY THE ASSESSING OF FICER (A.O.) IN VIEW OF SECTION 73 OF THE ACT, WHICH ALLOWS SET OFF OF THE LOSS OF ANY SPECULATION BUSINESS AGAINST THE INCOME BY WAY OF PROFITS AND GAINS OF ANY SPECU LATION BUSINESS. HE, ACCORDINGLY, ACCEPTED THE ASSESSEES CLAIM ONLY WITH RESPECT TO THE SPECULATION LOSS OF RS.25,28,285/- (SUPRA), BRINGING THE BALANCE UNADJUSTED SPECULATIO N INCOME OF RS.30,17,541/- FOR THE CURRENT YEAR TO TAX. THE SAME STOOD CONFIRMED IN AP PEAL BY THE LD. CIT(A); THERE BEING NO DISPUTE QUA FACTS, BEING IN FACT EVIDENCED PER THE ASSESSEES O WN COMPUTATION OF INCOME FOR A.Y. 2005-06, WHEREIN THE LOSS, SET OFF IN RESP ECT OF WHICH STOOD NOT ALLOWED IN ASSESSMENT, HAD BEEN REFLECTED AS BUSINESS LOSS, WH ILE THE SPECULATION LOSS (BUSINESS), CLAIM IN RESPECT OF WHICH STANDS ALLOWED, STOOD REF LECTED SEPARATELY. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD, BEING THE ASSESSEES STATEMENT OF INCOME FROM A.YS. 2000-01 T O 2006-07, AT PB PGS.1-2, 5-6, 10, 3 ITA NO. 2268/MUM/2010 (A.Y. 2006-07) FLOROSCENT SECURITIES LTD. VS. ITO 14, 17-18, 21-22 AND 24-25 RESPECTIVELY. WE FIND TH E REVENUES OBJECTION TO THE ASSESSEES CLAIM AS MISPLACED. THE SECTION GOVERNIN G THE CARRY FORWARD AND SET OFF OF BUSINESS LOSS, I.E., OTHER THAN OF A SPECULATION BU SINESS, IS COVERED BY SECTION 72 AND NOT BY SECTION 73, WHICH IS ONLY QUA THE CARRY FORWARD AND SET OFF OF SPECULATION LOSS, I.E., LOSS OF A SPECULATION BUSINESS , WHICH STANDS, TO THE EXTENT BROUGHT FORWARD, ALRE ADY ALLOWED SET OFF BY THE A.O. IT IS THE SET OFF OF TH E BROUGHT FORWARD BUSINESS LOSS (I.E., NON- SPECULATIVE) THAT IS IN DISPUTE, AND WHICH, IN TERM S OF SECTION 72, IS TO BE AGAINST THE PROFITS AND GAINS OF ANY BUSINESS (OR PROFESSION), I.E., ASSESSABLE U/S.28. CLEARLY, THEREFORE, THE SAME WOULD INCLUDE SPECULATION BUSIN ESS AS WELL, WHETHER IT IS SO BY VIRTUE OF SECTION 43(5) READ WITH EXPLANATION TO S. 28 OR EXPLANATION 2 TO SECTION 73. THE BROUGHT FORWARD BUSINESS LOSS THUS STANDS TO BE ALL OWED SET OFF OF AGAINST THE SPECULATION INCOME (I.E., INCOME OF A SPECULATIVE BUSINESS) ASS ESSABLE FOR THE CURRENT YEAR. WE ACCORDINGLY ALLOW THE ASSESSEES CLAIM IN PRINCIPLE . HOWEVER, THE QUANTUM OF THE BROUGHT FORWARD LOSS LI ABLE TO BE SET OFF IS THAT ASSESSED FOR THE RELEVANT YEARS, AND NOT THAT AS RE TURNED. FURTHER, THE FIGURES OF THE BROUGHT FORWARD BUSINESS LOSS ADOPTED BY THE ASSESS EE INCLUDE (UNABSORBED) DEPRECIATION AS WELL. WE, ACCORDINGLY, RESTORE THE MATTER BACK T O THE FILE OF THE A.O. TO ALLOW THE SAME IN TERMS OF SECTIONS 32 AND SECTION 72 OF THE ACT A ND OTHER APPLICABLE PROVISIONS OF THE ACT. WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED ON THE AFORESAID TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON JUNE 20, 2014 SD/- SD/- (D. MANMOHAN) (SANJAY ARORA) / VICE PRESIDENT / ACCOUNTANT MEMBER ( 1* MUMBAI; 2 DATED : 20.06.2014 )3 ROSHANI , SR. PS 4 ITA NO. 2268/MUM/2010 (A.Y. 2006-07) FLOROSCENT SECURITIES LTD. VS. ITO !' # $%&' (!'% COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. ( 4+ 5 6 / THE CIT(A) 4. ( 4+ / CIT - CONCERNED 5. 7)89$3+3:; ,:;/ ( 1* / DR, ITAT, MUMBAI 6. 9<=* GUARD FILE !' ) / BY ORDER, */)+ , (DY./ASSTT. REGISTRAR) , ( 1* / ITAT, MUMBAI